Shutdown: What Happens Now?

At 12:01 am Tuesday 1 October, a new financial year began in the US. But it started without a crucial new bill to approve funding, and as a result, all non-essential government services 'shutdown'. Here are the need to know numbers about how it happened and what the consequences might be.

18 times since 1976

US shutdowns aren't something new - since 1976, federal government has had to partially close down 18 times.

17 years ago

But it still seems surprising because the last time this happened was in 1996. Then, as now, the House of Representatives was deeply divided and a face-off ensued between President Bill Clinton and the Republican majority. It was the longest shutdown ever, lasting 21 days during which time 260,000 federal employees were laid off.

800,000 employees won't get paid

Current estimates reckon that between 800,000 and 1.3 million US federal employees will be sent home without pay as a result of the shutdown. Most would receive their pay retroactively once Congress agrees on how to fund government again.

But 1.4m active-service military members are protected because of a bill which the House and Senate passed for just such an eventuality – they'll be paid on time no matter how long the shutdown lasts.

$50bn in economic losses

Now, estimates of the impact of the shutdown vary widely. At the lower end, there Mark Zandi, chief economist at Moody's Analytics who told the Senate Banking Committee last week that a shutdown could cause a 1.4% reduction in GDP growth – note that's a reduction in growth, not GDP itself. So the economy wouldn't actually shrink, it would just grow at a slower rate than the 2.5% that was initially expected.

More pessimistically, Macroeconomic Advisers, an independent research firm reckons that GDP could drop by 0.3% in the fourth quarter if the shutdown lasts 2 weeks. Here's how they broke down those losses for specific areas.


How does that translate in monetary terms? Well, according to the US Bureau of Economic Analysis, current-dollar GDP (that's the market value of all US output of goods and services) was $16,661bn (£10.2bn)in the second quarter of this year. So, Zandi's estimate would result in a loss of about $233bn (because the economy would increase by $183bn rather than $416bn). And Macroeconomic Adviser's estimate would result in a loss of about $50bn.

Obama's personal aides from 90 down to 15

The White House has its own contingency plans. They show that 42 national security staff are required to support the President and co-ordinate US government policy on national security, homeland security and foreign policy issues. The President's personal aides who "provide for the care and maintenance of the Executive Residence at the White House" would drop in number from 90 to 15.

400 national parks and museums will close

Agencies across federal government have contingency plans for just such an eventuality as a shutdown - most of them were updated on 27 September 2013. At national park sites "staffing will be held to the very minimum for the protection of life, property, and public health and safety". Day use visitors will be told to leave the park immediately, and those staying overnight will be told to make alternative arrangements in 400 national parks and museums including Yosemite National Park in California. Other tourist attractions such as The Smithsonian and the National Zoo will also probably close.

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