US govt shutdown looms as Trump-backed spending deal fails. What's at stake for workers, economy? EXPLAINED
By Shweta Kumari | First Published Dec 20, 2024, 1:54 PM ISTA spending bill championed by Donald Trump met a resounding defeat in the US House of Representatives, as numerous Republicans broke ranks with the president-elect in a dramatic showdown.
A spending bill championed by Donald Trump met a resounding defeat in the US House of Representatives, as numerous Republicans broke ranks with the president-elect in a dramatic showdown. The bill, hastily cobbled together by Republican leaders to meet Trump’s demands, failed by a 174-235 vote, just hours after its unveiling.
The rejection comes on the heels of a bipartisan agreement that was derailed when Trump and billionaire Elon Musk publicly opposed the deal on Wednesday. Now, with the clock ticking toward a Friday midnight deadline, the United States faces an imminent government shutdown, casting a shadow over the holiday season.
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Millions of Americans, including federal workers, brace for disruptions that could reverberate across essential services and the economy.
Who stands to lose?
The looming shutdown threatens the livelihoods of hundreds of thousands of federal employees. An estimated 875,000 workers could be affected, while 1.4 million essential personnel, such as air traffic controllers and law enforcement officers, may continue working without pay.
The American Federation of Government Employees (AFGE) has raised alarms about the financial toll on these workers. While paychecks for essential employees are retroactively issued post-shutdown, contractors—such as janitors and cafeteria staff—often face the grim prospect of no back pay at all.
Past shutdowns have painted a grim picture: long lines at food banks, delayed paychecks, and federal workers struggling to make ends meet. The 2018 shutdown, which lasted over a month, left many unable to afford basic necessities, creating lasting anguish for millions.
Services on the brink
While critical programs like Social Security and Medicare will remain operational, the shutdown would disrupt several public services. National parks and monuments, under the National Park Service (NPS), are expected to close, mirroring the chaos of previous shutdowns. Inspections of critical infrastructure, including chemical factories and water treatment facilities, could also be suspended, raising public safety concerns.
Low-income Americans reliant on programs such as WIC and food stamps may face dire consequences if a prolonged shutdown interrupts these vital benefits. Meanwhile, the US Postal Service remains unaffected as it operates independently of federal funding, providing a rare glimmer of continuity.
Federal Agencies Brace for Impact
Government agencies are gearing up to prioritize only essential functions. For instance, the Department of Health and Human Services (HHS) plans to keep 50,000 employees working while furloughing over 40,000. Critical operations, such as the National Institutes of Health’s clinical care and the Food and Drug Administration's emergency monitoring of foodborne illnesses, will persist. However, routine functions, including food safety inspections, may slow to a crawl.
The Transportation Security Administration (TSA), with 59,000 of its 62,000 employees classified as essential, will continue screening passengers. However, TSA spokesperson Carter Langston has warned travelers to expect delays, as holiday volumes surge and resources thin out.
How Long Will This Last?
Federal employees face a nerve-wracking prospect, as a shutdown could last up to two weeks—the typical pay period for government workers. If prolonged, the economic strain will intensify, with missed paychecks adding pressure for a swift resolution. Historically, shutdowns shave off approximately 0.2 percentage points from US economic growth, according to Thibault Denamiel of the Center for Strategic and International Studies.
The record-breaking 35-day shutdown during late 2018 and early 2019 under Trump serves as a stark reminder of the far-reaching impacts. Though markets typically display resilience, experts caution that persistent disruptions could heighten economic uncertainty, particularly as Trump’s second term approaches.
Economic Ripples
The economic toll of a shutdown extends beyond federal workers. Reduced consumer spending and delayed government payments ripple through the private sector, threatening broader growth. Thibault Denamiel highlights the risks of heightened market anxiety, especially with speculation around a potential debt default under Trump’s administration, casting doubts on future stability.
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