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Relax, It’s Just a Shutdown

The fiscal year for the federal government begins on Friday, raising the temperatures of U.S. lawmakers with the supposed urgency of expiring government funding.

With two absurdly large and complex packages on the table – the $1 trillion infrastructure bill and the $3.5 trillion Biden social agenda – House Democrats would have you believe that inaction would result in a catastrophe. Rep. Debbie Dingell (D-MI-12) griped, “We’re going to shut the government down in the middle of a pandemic? It’s the most irresponsible action that anybody could take” and a “shame on all of us.”

The Senate voted yesterday on a measure to keep the government running through early December and to suspend the debt limit. Republicans opposed the measure.  Democrats are trying to harness the “urgency” of the ending fiscal year to move their bills.

As with previous shutdowns, common myths abound regarding the extent of the shutdown’s effects. In reality, the majority of government will not shut down. State and local governments continue at 99% of operation. Most of the federal government (roughly 70%) is on autopilot by statute, including major programs people rely on like Medicare, Social Security, and Medicaid. Even nonessential services can continue under the Antideficiency Act. In certain shutdowns, workers may see a disruption in pay – but they are guaranteed to be paid in full when a resolution is approved.

At the same time, the debt ceiling issue is also up for debate. Before the Treasury can issue more debt, Congress must increase the debt ceiling. This allows the Treasury to pay for already authorized expenses. Democrats will need to raise the limit anyway to cover new spending in the next several years. The debt ceiling has been raised or suspended nearly 80 times since 1960. A bill to fund the government at current levels and suspend the debt ceiling passed the House last week but has thus far stalled in the Senate.

In North Carolina, our sizeable military presence warrants some questions regarding shutdown effects there. However, active-duty service members will not stop work and “must continue operations necessary for the safety of human life or the protection of property,” but their pay may be delayed for the duration of any “shutdown.” Some civilian personnel, however, would be furloughed. And due to contingency plans, 96% of Veterans Affairs personnel would be unaffected, while critical services like medical care would continue uninterrupted.

Most likely, Congress will pass an appropriations bill to avoid a shutdown before the week’s end.

Paige Terryberry / Fiscal Policy Analyst