4 Ways a Government Shutdown May Affect Your Money

For the first time in years, the U.S. government has partially shut down.

Congress and President Donald Trump failed to come to an agreement to keep the government funded and fully operational by the Tuesday deadline. Several federal agencies and programs not critical to national security are now closed or running on a skeleton staff.

The sticking point in negotiations is expiring health care benefits for millions of Americans receiving coverage through the health insurance marketplace, aka Obamacare. By the end of the year, enhanced subsidies that reduce the cost of health insurance for many low-income Americans are set to expire unless Congress extends them or makes them permanent. The nonpartisan Congressional Budget Office estimated in May that the expiration of these subsidies could result in over 4 million people losing their health coverage.

Democratic lawmakers said they won't let that happen — even if it means a government shutdown.

“We have made clear that under no circumstances will we support a partisan Republican spending bill that continues to rip away health care from the American people,” House Democratic Leader Hakeem Jeffries, of New York, said in a speech on the House floor last month.

Trump suggested Tuesday that he could use the government shutdown to further his plans to slash federal bureaucracy.

"We can do things during the shutdown that are irreversible," the president said, "like cutting programs [Democrats] like."

Meanwhile, Congress is working on a stopgap measure that would keep funding flowing for several weeks while a broader deal is negotiated. Even if the shutdown is short, experts warn that the financial consequences can be disastrous.

“Any shutdown is a bad shutdown,” Andrew Lautz, a director of federal tax policy at the Bipartisan Policy Center, previously told Money. “Even if it’s a one-day shutdown.”

That's because many government operations and agencies rely on discretionary appropriations, which is money that Congress must approve ahead of each fiscal year. About 30% of all government spending is authorized by this appropriations process, according to the center, including federal workers’ salaries, some benefits, certain lending programs and more.

Here are several ways a shutdown could affect your money.

1. Federal workers are furloughed and paid late

Perhaps the most directly impacted group of people during a government shutdown are federal workers and contractors who have nothing to do with the political negotiations over spending. (Lawmakers still get paid during government shutdowns.)

According to the Department of Labor, the federal government employs almost 3 million non-military workers. On top of that are “hundreds of thousands of federal contractors whose businesses in large part depend on the federal government,” Lautz says.

So far, the government has furloughed about 750,000 federal workers — which means they must stay home without pay. Many others are forced to work without pay because they are classified as essential workers. A 2019 law guarantees back pay for these workers when the shutdown ends, but they are forced to make do in the meantime with no clear timeline for their next payday.

“One missed paycheck can be a missed payment on your car, a missed payment on your mortgage,” Lautz says. “It can mean going into credit card debt.”

Given the size of the federal workforce, Lautz also notes that the missed paychecks could also have a ripple effect on the local economies with a high concentration of federal workers, given that they will likely have to curtail spending throughout the shutdown.

2. Travelers could see flight delays and closed attractions

For travelers, the good news is that air traffic control and airport security continue during the shutdown, so wide-scale cancellations and delays should largely be avoided.

“But that’s not to say there aren’t potential interruptions,” Lautz says.

According to the nonprofit Committee for a Responsible Federal Budget (CRFB), some TSA agents and air traffic controllers did not report to work unpaid — even though they were supposed to — during the last government shutdown in 2019. That did cause some air travel delays, the CRFB says.

Travelers should also note that there could be unstaffed or fully closed national parks during a shutdown. Open-air sites should remain open, but visitor centers and attractions will be closed. Museums, galleries and zoos run by the federal government may also be closed. The Smithsonian, for example, will remain open until Monday. Lautz recommends calling to confirm in advance.

3. Government benefits might be disrupted (but not Social Security payments)

Many federal benefits programs are affected during a government shutdown, but Lautz wants to make one thing clear: “Social Security benefits will continue to flow.”

However, the actual administration of the program, including customer service and verification of eligibility, could be halted. The Social Security Administration's latest shutdown plan says about 45,000 employees will stay on while 6,200 are furloughed.

Social Security benefits are one example of “mandatory” government spending, meaning the government is obligated to pay out these benefits even during a shutdown. Medicare and Medicaid benefits are also mandatory. However, the agency's shutdown plan says benefits verification and Medicare card replacement services will be put on hold.

SNAP food benefits and Section 8 housing benefits should continue through October but may be disrupted in November under an prolonged shutdown.

4. The release of economic data may be held up

Among the long list of agencies that are hobbled by a government shutdown are ones that monitor and report on the economy, namely the Department of Labor’s Bureau of Labor Statistics and the Bureau of Economic Analysis.

These agencies regularly release data related to the nation’s gross domestic product, unemployment rates, inflation and more. Economists, businesspeople and policymakers — especially the Federal Reserve — rely heavily on this data to make decisions.

On Friday, the Labor Department is supposed to release the closely-watched employment report for September, at a crucial time for the labor market. The shutdown threatens to delay the release — adding uncertainty to a delicate economy. Gregory Daco, chief economist at the consulting firm EY-Parthenon, told the New York Times that the situation is like "flying blind amidst heavy fog."

Lautz says he can't predict how markets will react, but one thing's for certain: "Markets do not like uncertainty."

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