Nine ways the shutdown will get more painful as it drags on

October 10, 2013

House Republicans are now floating a plan to raise the debt ceiling for another six weeks, until Nov. 22. That would delay one possible crisis. But the federal government could remain shut down for the foreseeable future. Congress is still haggling over that.

What would happen if the shutdown dragged on until, say, Nov. 22? The impacts would get considerably more severe over time. Federal employees deemed "essential" would start missing paychecks. Millions of veterans wouldn't receive benefits. States would continue sending their employees home and cutting programs for the poor. And this is all on top of the disruptions that have already occurred.

So here's a partial timeline of how the shutdown would evolve if it lasted for a few more weeks.

1) Oct. 11-15: Around 1 million "essential" federal employees will start seeing their pay delayed.

paycheck delays

More than 1 million federal employees are still working during the shutdown, ranging from air-traffic controllers to federal prison guards to food-safety inspectors and nurses in veterans hospitals.

These workers are all entitled to pay, and they did get their last paychecks on Oct. 1 or Oct. 3. But if the shutdown drags on through their next paydays, they likely won't get fully paid on time, at least not until the government reopens.

That delay can cause obvious problems for these workers — cash crunches, unpaid bills. Plus, it means a lot of unhappy federal employees who will effectively be working without pay until the shutdown ends.

And this is all on top of the 400,000 furloughed employees and thousands of federal contractors who are already going without pay during the shutdown. (Many furloughed federal employees will get partial paychecks on Oct. 11 through Oct. 17 for the days they worked before the end of the fiscal year, but that's it.)

Note: There are two big exceptions here: The nation's 1.4 million active-duty military members will still get their paychecks on time thanks to legislation signed on Sept. 30. The 700,000 non-furloughed civilian employees at the Department of Defense should also get paid on time, starting on Oct. 11. These workers aren't included in the numbers above.

2) Oct. 15: Tax refunds for millions of October filers won't go out.


(AP)

More than 12 million Americans are expected to file their tax returns on Oct. 15, after asking for a six-month extension. That deadline remains, even with the shutdown, and there are still employees around to process these returns.

The problem? The employees who handle tax refunds at the IRS have been furloughed. So none of those late tax filers will receive a refund on time if the shutdown extends past mid-month. They'll have to wait.

3) Oct. 17: Federal courts may start sending some employees home.

Judges Mary Schroeder, from left, Mary Murguia and Michael Hawkins attend a hearing at the 9th U.S. Circuit Court of Appeals in San Francisco. (Jeff Chiu / AP)

So far, the federal court system has managed to stay open, thanks to fees and other separate funding. But that money could run out around Oct. 17.  Once that happens, essential employees will continue to work, as determined by the chief judge, but other employees are likely to be furloughed.

It's unclear how big an effect that would have on the federal court system, exactly. Prosecutors who handle criminal cases are expected to stay around, although they could see their paychecks delayed. On the other hand, some lawyers handling civil cases or support staff who take calls from the public could be sent home.

4) Late October: The District of Columbia's contingency fund to pay for services starts to run out.


(The Washington Post)

In theory, the District is supposed to suspend all but its most essential services during a federal government shutdown. But Mayor Vincent Gray has labeled all city services "essential" and has been using a cash reserve fund to keep most of those services running for the first two weeks of October.

That rainy-day fund is expected to run out by late October, although the city will stretch it out as long as possible. Once that happens, Gray is predicting "severely negative consequences." Some city employees may see their end-of-month paychecks delayed, for example. Note that the District has already made cutbacks as is, including a delay in Medicaid payments, which could affect mental-health services. [Update/correction: See below*]

“In no other part of our country are Americans facing the loss of basic municipal or state services due to the federal government shutdown,” complained Gray. He has asked Congress to approve a bill that specifically shields the District from the effects of the shutdown.

5) Late October: More than 3.8 million veterans won't get disability and pension payments.


(The Washington Post)

That's according to Eric Shinseki, secretary of Veterans Affairs. "If the shutdown continues into late October, November compensation payments to more than 3.8 million Veterans will halt. These include thousands of Veterans who have the most severe disabilities."

Shinseki also noted that if the shutdown dragged on through late October, "pension payments will stop for almost 315,000 Veterans and over 202,000 surviving spouses and dependents."  Also, "education benefits and living stipends under our GI Bill programs will stop for over 500,000 Veterans and Service members."

6) Late October: States will cut aid to the poor, including food stamps, welfare and heating assistance.

A farmers market in Roseville, Calif., accepts EBT (electronic benefit transfer) cards, which are used for food stamps. (Rich Pedroncelli/AP)

Many states have already pared back funding for various programs because of the shutdown. "Michigan is preparing to put as many as 20,000 workers on unpaid leave and eliminate cash and food aid to the poor," reports Bloomberg. "North Carolina sent 366 employees home and closed its nutrition aid program to tens of thousands of women and children."

But if the shutdown lasts until the end of the month, many states will have to cut deeper: "Without a resolution in coming weeks, state officials say they would be forced to cut programs including: Temporary Assistance for Needy Families, which provides cash to the poor; the Supplemental Nutrition Assistance Program, known as food stamps; and grants to help residents pay their energy bills," Bloomberg reports.

One example: California says it has enough money to continue providing food stamps, school lunches and aid to poor mothers and children through the end of October. But officials aren't sure whether they can stretch funds beyond that.

(Bryce Covert has been following many of the effects of the shutdown at the state level. She has a larger round-up of links here.)

7) Nov. 1: Dozens of schools will face layoffs and closings, affecting tens of thousands of kids.


Connecticut teacher Carmen Prybylski works with some of her students at a new Head Start building in Danbury. (Carol Kaliff /AP)

As a result of the shutdown, about 23 Head Start centers serving 19,000 children were on the verge of closing in October. That crisis was averted when two philanthropists offered  a $10 million donation to keep them open.

But if the shutdown lasts until Nov. 1, an even bigger wave of Head Start schools won't receive funding and will have to close down, affecting about 86,000 children in all. (Unless, of course, more philanthropists want to step in.)

Similarly, about 22 school districts that are on or near Native American reservations and military bases may have to make cutbacks come Nov. 1, as they were depending on early payments from the federal Impact Aid program. That's according to an estimate by the National Association of Federally Impacted Schools, via Bryce Covert.

8) Nov. 1: The federal shutdown will have cost the U.S. economy $5 billion to $50 billion.


The longer this goes on, the more it costs. (AP)

Estimates of the economic effects of the shutdown vary. IHS Inc. estimates that the shutdown costs us $160 million a day, assuming that much of the lost economic activity and spending will be made up when the government reopens. By that calculation, a monthlong shutdown would cost about $5 billion.

But Mark Zandi of Moody's Analytics estimates that a one-month shutdown would cost about $50 billion. He's factoring in indirect costs, such as the blow to the stock market, which would hurt spending; the affect on the mortgage market; the fact that some small businesses won't be able to get federal loans and will cut back on hiring...

9) Nov. 22: Federal employees will have seen three paychecks delayed.


Happy flying! Air-traffic controllers will have missed three paychecks by Nov. 22. (Jim Weber/AP)

If the shutdown extends all the way to Nov. 22 — the next debt-ceiling deadline — then more than 1 million "essential" federal workers will have seen three of their paychecks delayed. It's not clear how all these workers would be able to keep paying their bills.

The same goes for the 400,000 or so federal employees who are still furloughed during the budget impasse. The House has passed a bill to pay them retroactively, but that would only happen after the government has reopened. They'll also have to go awhile without pay.

Lately, the Department of Homeland Security has been writing letters on behalf of its furloughed employees asking creditors to be patient during the shutdown: "We extend our thanks for your patience and compassion toward our employees during this time when they may be negatively impacted by the lapse in appropriations." Needless to say, it seems unlikely that banks, landlords and other creditors will accept this request as payment.

----

Note that Congress could enact laws to ameliorate some of these effects at any time. House Republicans, for instance, have already passed bills that would fully fund veterans benefits as well as the city of Washington DC during the shutdown. And the Senate has passed a bill that would fund the entire government. But these bills would have to pass into law first, and the chambers are still wrangling over how to end the shutdown.

Correction: The city of Washington DC will continue basic services such as garbage collection and bus services once its contingency fund runs out, since Mayor Gray has labeled those "essential." But once that fund is empty, the city will run into a variety of related problems — paychecks may not go out on time, for instance.

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Neil Irwin · October 10, 2013