Here's What Will Happen If The Government Shuts Down

Capitol Building
Capitol Building

(Reuters) - A partial shutdown of the U.S. government will begin at midnight on Monday if Republicans and Democrats fail to agree on a funding bill.

In a government shutdown, spending for essential functions related to national security or public safety would continue along with benefit programs such as Medicare health insurance and Social Security retirement benefits for seniors.

But civilian federal employees - from people who process forms and handle regulatory matters to workers at national parks and museums - would be furloughed.

The last government shutdown ran from December 16, 1995, to January 6, 1996, putting about 800,000 federal workers on furlough.

Here is a roundup of the expected impact of a shutdown.


Up to 1 million U.S. federal workers could face furloughs without pay beginning on Oct 1.

Most federal agency workers would be furloughed, but a small number of "excepted" employees must continue to work. These include security workers such as air traffic controllers and prison guards. Congressional staffers could work if requested by the lawmaker or committee that employs them.

Congress has previously paid federal workers for their furlough days.

Federal workers could face penalties if they tried to do any work during the furlough.


Apart from potential market swings, companies hoping to raise money in an initial public offering could face delays.

Businesses will still be able to file certain documents to the Securities and Exchange Commission, but the agency said on Friday that processing and approving applications will be discontinued during a shutdown.

"Capital-raising will have a huge hiccup if the SEC shuts down as it has said," said Eric Jensen, a partner with law firm Cooley LLP in Palo Alto, California.

Drug companies waiting for a decision from the Food and Drug Administration could also see delays. The FDA said it would continue "limited activities" related to programs that are paid for by user fees from drug approval applications.


A shutdown lasting less than two weeks would not hurt big defense contractors, which can survive temporarily without federal contract payments, said ratings agency Standard & Poor's. But a longer shutdown could weaken the financial profiles and liquidity positions of smaller defense contractors.

"It is felt a heck of a lot more keenly by small contractors," said Bradley Wine, co-chair of Morrison & Foerster's government contracts practice.


Meat inspectors for the U.S. Department of Agriculture, considered necessary to national safety would stay on job.


All military personnel would continue in a normal duty status. But a large number of civilian employees would be temporarily furloughed, according to the Pentagon.

Official furlough notices would be issued on October 1 if no agreement to fund the government has been reached.


Federal courts will remain open for about 10 business days. By October 15, the Judiciary will need to provide more guidance.

The Supreme Court, which is scheduled to start its fall 2013 session on October 7, declined to comment on whether it has plans for a government shutdown. But a court spokesman noted that in past shutdown situations, the court continued operating as normal.


The Internal Revenue Service has a major tax due date on October 15 for Americans who got an extension to file their 2012 taxes, which were due on April 15. The IRS will be accepting tax returns and other tax payments during a shutdown, but will suspend many other activities, including audits.

About 90 percent of the IRS's 90,000 workforce would be furloughed, the agency said on Monday, meaning call centers would be closed and audits halted.


President Barack Obama's 2010 healthcare reform law is scheduled to debut on October 1 when people can start shopping for health insurance.

Money to fund implementation of the healthcare law, known as Obamacare, has already been committed.