Senate Republicans blocked a bill late on Monday that would have funded the government at its current level and suspended the debt ceiling, raising concerns of an impending government shutdown.
Every fiscal year (FY), Congress passes a budget to determine how much money is distributed to different agencies and programs. The new fiscal year, FY 2022, begins on Oct. 1.
Twelve bills need to be approved and signed for the next fiscal year, one for each of the subcommittees in the House Committee of Appropriations. Of those 12, Congress has failed to sign a single one of them. If Congress fails to agree on a budget by the end of the day Sept. 30, the government will shut down.
How does a government shutdown affect us?
If the government shuts down, all federally-paid programs, agencies and their employees will be impacted. Non-essential programs, like national parks, will be closed, and several hundred thousand workers will be furloughed, or placed on a leave of absence.
During the last government shutdown in 2018, approximately 850,000 federal employees were put on temporary leave without pay, according to the Committee for a Responsible Federal Budget (CRFB).
In the case of a shutdown, essential workers have to work without pay, but they will receive back pay whenever the funding legislation is passed, meaning they will get paid for the hours worked whenever the government is up and running again.
Gerardo Vargas, a claims specialist at the U.S. Social Security Administration (SSA), processes Social Security payments and is considered an essential worker.
“I still have to show up, do my eight hours, text my boss when I’m in and out and then I’ll get back pay later,” Vargas said. “I am fortunate that once COVID-19 hit I moved back home, but I have coworkers getting letters signed by our boss that let their landlords know they aren’t getting paid, so they can’t pay rent.”
Vargas said he is frustrated with Congress as a whole for putting him and his fellow federal workers in this tough position.
“They had months to deal with this budget,” Vargas said. “Beyond the frustration, there’s this disconnect between [politicians] making the decisions [that harm] people who are not politicians and who are not in power.”
Frank V. Zerunyan, USC professor of the practice of governance, echoed these sentiments.
“All in all, it is not an effective way to do policy,” Zerunyan said. “The cost of shutdowns is typically enormous.”
According to Zerunyan, the last shutdown of 2018 cost the American people around $2 billion in losses of productivity and business. “Every time this happens, it’s always people, especially in underserved communities… who suffer the most,” Zerunyan said.
However, Senate Republicans are blocking the bill because they refuse to suspend the debt ceiling, prolonging the funding process.
What is a debt ceiling?
The debt ceiling is the limit on how much the government can borrow to fund federal operations. If the U.S. government spends more money than it brings in through taxes and other revenue, then it must borrow money to pay its bills.
This debt limit was first introduced by Congress in 1917 at the beginning of World War I. At the time, the limit was set to $1 billion. On Aug. 1, the debt ceiling was set to $22 trillion. Today, the United States is $28 trillion in debt, surpassing its limit.
“The debt ceiling has become meaningless,” Zerunyan said. “If the U.S. government wants to spend, it will spend what it needs to.”
Zerunyan also said local governments have debt ceilings that they cannot surpass for any reason, but in the case of the federal government, there are no such limitations keeping them from overspending. He said the reason Republicans do not want to raise or suspend the debt ceiling has more to do with ideology than economics.
“Ideologically, when you’re raising the debt limit, you’re kind of authorizing expenditure when one party shuns expenditures, especially on social programs,” Zerunyan said. “The other party wishes to spend on social programs.”
What if the debt limit isn’t increased?
If the ceiling is not raised, the Department of Treasury will have to implement “extraordinary measures.” These measures are actions that can be taken by the Secretaries of the Treasury to prevent the U.S. from defaulting while Congress debates whether or not to increase the debt limit for the new fiscal year.
But, these measures do have their limitations. Treasury Secretary Janet Yellen said the U.S. government could run out of funds to pay its bills by Oct. 18. If Congress fails to reach a consensus by then, the U.S. would default on its debt for the first time in history.
Yellen further warned Congress that the effects of the U.S. going into default would be “disastrous for the American economy.” Interest rates would increase, so mortgages and consumer loans would be more expensive. The government would also not be able to pay federal salaries or benefits, including Social Security, Medicare and Medicaid payments.
While Congress continues to debate, workers like Vargas will be waiting to find out if they will have paying jobs, on Friday.