As the US government shutdown grinds on, the impacts are being felt in Washington DC, across America, and around the world.
Both houses of Congress remained in session on Wednesday (2 October), mostly debating familiar talking points. Congressional leaders met at the White House with President Obama, but no major visible progress was made.
While the government funding lapse continues, attention is turning to Washington’s next looming crisis – raising the debt ceiling before a potential first-ever US default, which the Treasury Department warns would occur on 17 October. All signs are now pointing to the shutdown and the debt ceiling issues becoming closely intertwined in the coming weeks.
The government shutdown affects every department, agency, and program that relies on discretionary funding through the annual appropriations process. About 800,000 “non-essential” federal workers are on furlough. Congress has, however, exempted most military personnel.
Many key government functions carry on during a shutdown, including anything related to national security, public safety, or programmes written into permanent law, such as social security.
Effects of the shutdown have ranged from disappointment and inconvenience – tourists shut out of DC monuments and museums, national parks like the Grand Canyon closed to the public, the National Zoo’s online “Panda Cam” no longer showing images of the new-born cub – to potentially worrisome consequences for homebuyers seeking federally-administered loans and disruptions to some food and product safety enforcement. Businesses could notice the impacts of significantly reduced enforcement activities by the Commodity Futures Trading Commission (CFTC), while Securities & Exchange Commission (SEC) regulators expect to have enough leftover cash from the prior fiscal year to operate normally for a few weeks.
A potent symbol of many Americans’ frustration came on Tuesday when elderly veterans tried to push past barricades to gain access to Washington’s now closed World War II memorial. In fact, House Republicans are trying to move separate funding measures for certain agencies, such as the Department of Veterans Affairs, although such an approach is unlikely given the opposition of Congressional Democrats and the White House.
President Obama canceled his trip next week to the Philippines and Malaysia because of the budget standoff.
Ironically, the Affordable Care Act, popularly known as Obamacare, the root cause of the current disagreement over government funding, began its roll-out on Tuesday as scheduled, as it is paid for by funds not affected by the shutdown.
Since 1977, there have been 18 government shutdowns, including the current one, some lasting only a day. The longest shutdown, and the last one until now, lasted 21 days, from 16 December 1995, to 6 January 1996.
So the government has experience in preparing for funding gaps and government shutdowns. Since 1980, the Office of Management and Budget (OMB) has required every department and agency to develop and maintain a plan for “an orderly shutdown” in case of a lapse in appropriations. Last month, OMB sent a memo to all executive branch departments and agencies providing additional guidance for planning for a potential shutdown and ordered managers at all federal agencies to conduct reviews and make contingency plans to see which of their employees are deemed essential vs. non-essential.
Most of the members of Congress are bracing for an extended shutdown. However, there is some hope that the parties will start talking again soon, and that progress could be made behind the scenes. Then again, maybe not.
Steven Phillips is a partner in DLA Piper’s Washington DC office and co-chairs the firm’s federal law and policy practice group.