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DEADLINE: September 30, 2013
The most immediate challenge that Congress faces is coming to an agreement to keep the government running. September 30th marks the end of the fiscal year, so Congress only has a few days left to find a compromise on how much agencies can spend in fiscal year 2014.
Unfortunately, they have their work cut out for them. Even putting aside the highly controversial matter of "defunding Obamacare," none of the 12 appropriations bills have been brought to conference or enacted, and the two chambers are approximately $85 billion apart, with the Senate nearly 8% above the House level. One reason the gap is so large is the failure of the House and Senate to reconcile their two budgets by passing a concurrent budget earlier in the year, which would have provided guidance for the appropriations committees.
If Congress cannot close the gap, it risks a government shutdown on October 1. Without funding, all federal personnel except those engaged in protection of life or property will be furloughed, and those "essential" personnel — including soldiers in Afghanistan — will get IOUs instead of paychecks. Additionally, the services provided by many federal agencies will be sharply curtailed. For example, National Parks will be closed, drug approvals will be halted, and passport processing will be stopped. Although Social Security and Medicare benefits will continue, there may not be enough staff to help beneficiaries with administrative matters.
A likely (but far from certain) result is a short-term Continuing Resolution that funds the government for a temporary period, again delaying the difficult decisions until later this fall.
This crisis-driven process about the basic functioning of government raises uncertainty about the future, makes it more difficult for businesses to plan, undermines confidence in government, and reduces the efficiency of government programs. An actual shutdown would have more direct consequences for the economy and the efficiency of government operations.