How a Government Shutdown Can Affect Your Finances
If Congress does not convene it within the next two weeks, millions of Americans could feel the effects of the government shutdown right in their wallets.
Last week, House and Senate members decided on a short-term extension of funding, leaving the government open until December 22, and the GOP is expected to introduce another limited law that will leave the government open until January. By then, Democrats, Republicans and the White House will have to make some concessions : the GOP wants more defense spending, Dems wants to fund the Children’s Health Insurance Program, and President Trump wants his wall.
The latest government shutdown in 2013 cost taxpayers $ 2 billion in retroactive payments to laid-off employees, according to the Office of Management and Budget (the report is not currently available on the White House website, although many media outlets wrote about it). Here’s what you need to know this time.
Civil servants
Most civil servants will be fired during the shutdown, which is another way of saying “not working”. In 2013, this amounted to about 800,000 people who are temporarily unemployed and who have received wage arrears.
Those of the “critical services”, which include air traffic controllers, law enforcement, prisons, border control agents, TSAs, hazardous waste handlers and food inspectors, will continue to operate. The US Postal Service will also continue to operate in the event of an outage.
Employees, even those who were dismissed on vacation, are paid back debts at the end of the shutdown.
Travel
If closed, all national parks, zoos and museums will be closed, affecting more than 700,000 visitors per day. If you are waiting for your passport for an international trip, you will probably wait a little longer, so we hope that you have submitted an application with sufficient time before travel.
Airports will remain open, although some “non-essential” employees (see below) will be laid off.
Social Security
Social Security checks will still come in, but new signers will have to wait to sign up for their benefits until employees are laid off.
Medicare will continue to work as well as Medicaid. However, new applicants will face delays because they will not have enough workers to process their documents.
Food stamps
According to USA Today , the Supplemental Nutritional Assistance Program (SNAP) is independent of annual bills, so you will still get these benefits if you are already enrolled. However, new candidates are likely to face delays in getting them.
It is unclear if this will affect the free school lunches, although some schools may have enough money to continue providing them, as they did mostly in 2013. However, if the subsidies do end, the School Feeding Association wrote a letter to Congress at the time stating that “millions of students who rely on school meals as their main source of nutrition will be harmed.” The same is probably true this time too.
Unemployment insurance
Unemployment insurance benefits can be delayed or cut because although they are funded by the states, they rely on administrative assistance from the federal government. States are required to keep paying them technically, but they could run out of funds depending on how long the shutdown lasts , according to Thomas & Company, a national payroll verification firm. If that happened, they could receive Title XII advances from the federal government to continue paying them.
Buying a home
In 2013, an estimated 1.2 million people who applied for mortgages faced delays as the IRS, the Social Security Administration and the Federal Housing Administration were unable to process their paperwork, according to the Washington Post . Lenders need the IRS to verify the buyer’s income while the SSA verifies their identity. According to a poll by the National Association of Realtors, about 17% of closings were delayed during the last stop, while some realtors reported that they lost bids or received weaker bids. Most homebuyers, however, face more serious headaches.
Small business
Small business loan approval will also be suspended or slowed down during the closure as both the IRS and small business administration will close (or be severely understaffed) and unable to process requests .
Military
Military personnel are not subject to dismissal in the same way as other government employees, although other employees of the Ministry of Defense may also be harmed. The closure will not affect the Department of Veterans Affairs as it receives a year’s appropriation.
However, while essential medical services will continue to be provided to active members of the military, electoral procedures may not be followed. Thus, while military personnel are less affected than other groups, they may still experience some inconvenience and delays.
Investors
If the government closes temporarily, the same will happen with the ministries of trade and labor, which means that investors awaiting their economic reports are out of luck. The stock market also gets a little scared when these things happen, losing an average of 0.6% of its value over the past 18 federal outages. These are not irreversible consequences, but they could undermine the “economic momentum” that the president loves to brag about, according to a recent report from S&P Global.