US government shutdown: What happens and who is affected?

Congressional leaders express optimism they can reach a deal before deadline

What is a US government shutdown?

What is a US government shutdown?
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A partial government shutdown is days away in the US but congressional leaders offered some hope that a deal could be reached before the March 1 deadline.

Friday represents the first of two deadlines Congress faces to keep parts of the government open. The second is March 8, by which time they must reach a deal to fund eight other federal agencies.

President Joe Biden convened Republican House Speaker Mike Johnson, Democratic Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and House Minority Leader Hakeem Jeffries at the White House on Tuesday to find a path forward on a deal to keep the government open, as well as to pass more security assistance for Ukraine and Israel.

After the meeting, Mr Schumer said they were "making good progress and hoping we can get this done really quickly".

But for any deal to be made, Mr Johnson must find support within his Republican caucus, where a hardline group of US politicians represents a significant obstacle to overcome.

"We believe we can get to an agreement on these issues and prevent a government shutdown and that's our first responsibility," Mr Johnson said.

What happens if the US government shuts down?

Should Congress fail to fund the government, federal agencies will be required to halt all non-essential operations. Essential functions will continue, however.

This will affect a series of activities, from the national parks to passport applications.

Some federal employees will also be told to not report to work. More than 800,000 federal employees were furloughed during the 2013 shutdown, as explained by the Office of Management and Budget.

The furloughs would lead to prolonged wait times on passport applications and small business loans.

Most federal buildings and attractions – such as the Smithsonian museums in Washington – would be closed. National parks would be open, but travelling to one would come with an increased risk as the National Park Service would not be able to maintain visitor centres, restrooms and roads.

The White House also said a shutdown would put at risk nutritional assistance for 7 million people who rely on food programmes.

“With less than one week before the end of the fiscal year, extreme House Republicans are playing partisan games with peoples’ lives and marching our country towards a government shutdown that would have damaging impacts across the country,” the White House said.

How would a shutdown affect the economy?

A shutdown could also affect the US economy and the nation's credit rating, which has already taken a hit following the debt ceiling stand-off earlier this year.

“A shutdown would be credit-negative for the US sovereign,” credit ratings agency Moody's wrote in a note to clients.

But the overall economic impact of a government shutdown is marginal compared to that of what Congress faced with the debt ceiling crisis.

“However, compared to the debt limit, the less severe economic effect of a shutdown also makes it more likely that Congress fails to act in time,” Goldman Sachs's chief US political economist Alec Phillips wrote in the firm's report on the issue.

A governmentwide shutdown would reduce economic growth by about 0.15 percentage point for each week it lasts, Goldman Sachs says.

How many times has the government shut down?

The federal government has shut down 21 times over the last five decades.

The most recent shutdown was also the longest. From December 2018 to January 2019, former president Donald Trump forced a government shutdown to receive funding for the US-Mexico border wall.

That ended after 35 days without any funding for the wall.

It was one of three shutdowns to have happened during Mr Trump's term. The first lasted for three days, and the second only for a few hours.

Mr Trump has pushed Republicans to force a shutdown this year so as to interfere with the work of two federal cases against him, although criminal prosecutions will continue even if the government shuts down.

Updated: February 28, 2024, 10:53 PM