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October 7, 2013
TBT Financial Services
Congress failed to agree on a spending bill for the fiscal year starting October 1, 2013, resulting in the first government shutdown since 1995. According to the Congressional Research Service, this is the 18th time the federal government has shut down as a result of a failure to agree on an annual appropriations bill. Most shutdowns have lasted only a few hours or a few days. The most recent shutdown, in 1995, lasted three weeks.
What happens when the federal government shuts down?
When the government shuts down, federal agencies must generally suspend operations and furlough their employees. However, there are significant exceptions for government functions that promote national security, or protect human life and property. As a result, a shutdown doesn't impact certain essential functions like the military, law enforcement, TSA, air traffic control, border patrol, emergency and disaster assistance, food safety, foreign embassies, prisons, and federal medical care (among others).
A shutdown also doesn't impact federal entitlement programs (like Social Security and Medicare) that aren't funded by discretionary annual appropriations. Funding for these programs is considered mandatory, because the legislation creating the benefit obligates the government to make payment. So benefits under these programs continue uninterrupted, and the employees who administer those benefits are generally exempt from furlough.
The shutdown is separate and distinct from another looming crisis--the debt ceiling. According to Treasury Secretary Jacob Lew, it's anticipated the United States will run out of funds as soon as October 17, and will default on its debts, unless Congress acts to raise the debt ceiling before then.
Finally, some agencies are funded by multiple year appropriations. Even though these agencies don't yet have any funds appropriated for the new fiscal year, they may still have funds remaining from prior appropriations, which they can use to continue operations until those funds run out.
So what does a government shutdown mean to you?
What you can do during the shutdown:
What you can't do during the shutdown:
If you need more information, most government agencies have posted their shutdown contingency plans on their websites.
And there's more to come...
The shutdown is separate and distinct from another looming crisis--the debt ceiling. According to Treasury Secretary Jacob Lew, it's anticipated that the United States will run out of funds as soon as October 17, and will default on its debts, unless Congress acts to raise the debt ceiling before then. More on that crisis to follow…
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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013.
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