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What Happens if the Government Shuts Down? A Look at the Potential Impact and Economic Consequences

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Government Shutdown: What Happens Next?

What happens if the government shuts down? A lot, history tells us

The nation is barreling toward what could become one the largest government shutdowns in U.S. history beginning Oct. 1, with each of a dozen bills needed to keep funding flowing mired in Congress.

Key Takeaways:

  • Medicare, Medicaid, and Social Security payments won’t be affected.
  • The U.S. Postal Service will continue operating as it uses its own revenue stream.
  • An estimated 4 million workers, including half of them being active-duty military and reservists, could be affected by the shutdown.
  • A potential shutdown could result in roughly $5 billion a week in lost wages for civilian workers alone.
  • The Scope of the Shutdown

    Union officials and experts predict that this shutdown could surpass previous spending lapses in terms of its impact. As many as 4 million workers, including active-duty military and reservists, could be affected. The American Federation of Government Employees estimates that a shutdown could result in a loss of approximately $5 billion per week in civilian workers’ wages alone.

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    The Economic Impact

    A government shutdown has far-reaching economic consequences. It is estimated that roughly $5 billion a week in wages could be sucked out of the economy. This loss of income could have a devastating impact on federal workers, many of whom live paycheck to paycheck. The shutdown also affects businesses that rely on government contracts and services, leading to a broader economic downturn.

    The Political Landscape

    The possibility of a government shutdown arises from disagreements over federal spending. While President Joe Biden and House Republicans had agreed on a spending cap for the 2024 budget year, far-right House Republicans are pushing for further cuts in federal spending. This political standoff puts government operations at risk and creates uncertainty for federal workers and the economy.

    Despite the potential consequences, using government operations as political leverage is seen as inefficient and harmful by union officials and experts. The impact of a shutdown extends beyond the Washington area, with 85% of federal workers residing outside of the capital. Many workers struggle to make ends meet and face financial hardships during a shutdown.

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    What Happens Next?

    If a deal on spending is not reached by the end of the day on Sept. 30, the government will begin to experience a funding shortage at midnight. Many government employees, including service members and other essential workers, may be required to report to work without pay. Critical services like the power grid and space operations will continue, but the With that being said functioning of the government will be severely disrupted.

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