• Tue
  • Dec 23, 2014
  • Updated: 11:47am
BusinessEconomy

What would happen if the US government shuts down?

PUBLISHED : Monday, 30 September, 2013, 1:08pm
UPDATED : Monday, 30 September, 2013, 1:48pm

A partial shutdown of the US government will begin at midnight on Monday if Republicans and Democrats fail to agree on a funding bill.

In a government shutdown, spending for essential functions related to national security or public safety would continue, along with benefit programmes such as Medicare health insurance and Social Security retirement benefits for seniors.

But civilian federal employees – from people who process forms and handle regulatory matters to workers at national parks and museums – would be furloughed.

The last government shutdown ran from December 16, 1995, to January 6, 1996, putting about 800,000 federal workers on furlough.

Here is a roundup of the expected impact of a shutdown.

Financial markets: Apart from potential market swings, companies hoping to raise money in an initial public offering could face delays.

Businesses will still be able to file certain documents to the Securities and Exchange Commission, but the agency said on Friday that processing and approving applications will be discontinued during a shutdown.

“Capital-raising will have a huge hiccup if the SEC shuts down as it has said,” said Eric Jensen, a partner with law firm Cooley in Palo Alto, California.

Drug companies waiting for a decision from the Food and Drug Administration could also experience delays. The FDA said it would continue “limited activities” related to programmes that are paid for by user fees from drug approval applications.

Government contractors: A shutdown lasting less than two weeks would not hurt big defence contractors, which can survive temporarily without federal contract payments, rating agency Standard & Poor’s said. But a longer shutdown could weaken the financial profiles and liquidity positions of smaller defence contractors.

“It is felt a heck of a lot more keenly by small contractors,” said Bradley Wine, co-chairman of Morrison & Foerster’s government contracts practice.

Federal workers: Up to one million US federal workers could face furloughs without pay beginning on Tuesday.

Most federal agency workers would be furloughed, but a small number of “excepted” employees must continue to work. These include security workers, such as air traffic controllers and prison guards.

Congressional staffers could work if requested by the lawmaker or committee that employs them. Congress has previously paid federal workers for their furlough days.

Federal workers could face penalties if they tried to do any work during the furlough.

US armed services: All military personnel would continue in a normal duty status. But a large number of civilian employees would be temporarily furloughed, according to the Pentagon.

Official furlough notices will be issued on Tuesday if no agreement to fund the government has been reached.

Federal courts: Federal courts will remain open for about 10 business days. By October 15, the Judiciary will need to provide more guidance.

The Supreme Court, which is scheduled to start its fall this year session on October 7, declined to comment on whether it has plans for a government shutdown. But a court spokesman noted that in past shutdown situations, the court continued operating as normal.

The IRS: The Internal Revenue Service has a major tax due date on October 15 for Americans who got an extension to file their last year taxes, which were due on April 15. The IRS will be accepting tax returns and other tax payments during a shutdown, but will suspend many other activities, including audits.

About 90 per cent of the IRS’s 90,000 workforce would be furloughed, the agency said on Monday, meaning call centres would be closed and audits halted.

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This article is now closed to comments

donniemcm
no war? no spying?
nabanita.javed
Astrology of the US shutdown. ****bit.ly/1aGXFOy
EHI
The people of Earth would probably experience their rare moment of freedom.
 
 
 
 
 

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