A government shutdown occurs when Congress does not pass a spending bill to fund federal agencies for the next fiscal year. A government shutdown can cause financial disruptions to millions of Americans by interrupting essential services like national parks, IRS assistance, and passport processing; halting agribusiness loan applications and food safety inspections; and disrupting the work of tens of thousands of air traffic controllers, park rangers, Social Security workers, TSA agents, and other critical government employees. A shutdown can also lead to delays in a variety of government services for citizens such as disbursement of student loans and Medicare benefits, and can create backlogs for applicants.
Impact on Federal Employees and Contractors
A shutdown impacts the paychecks of millions of federal employees. Many of these workers would be furloughed or forced to work without pay during a shutdown, which can lead to economic hardships for families. In addition, businesses that depend on government contracts may experience delayed payments and inefficiencies resulting from the shutdown.
Economic Impact
The uncertainty and disruption caused by a government shutdown can deter investments, dampen investor confidence, and slow economic activity. The economy can suffer if the federal government halts important activities such as research and development, regulatory approvals, and business loans. Small businesses that rely on government loans, grants, permits, and certifications can be impacted as well, resulting in lost revenue, delayed growth opportunities, and long-term financial challenges. A shutdown can also undermine economic security and expose vulnerabilities by limiting the ability to collect information and respond to emerging threats, maintain military readiness, and conduct operations around the world.