Parts of the federal government are soon set to start shutting down in the absence of a deal to extend funding, with some consequences for Americans’ pocketbooks — but not, traditionally, the stock market.
With leaders in Congress remaining apart on a spending deal as of Tuesday, a handful of agencies including the Department of Agriculture would partially close early Saturday. The remaining agencies, including the Pentagon, would partly shutter after March 8.
Here’s a quick guide to what to expect this week and afterward.
How would you be affected beginning Saturday morning?
Funding expires at 12:01 a.m. Saturday for the Departments of Agriculture, Energy, Housing and Urban Development, Transportation and Veterans Affairs.
Before a previous shutdown threat, the Department of Housing and Urban Development said nearly all of its fair-housing activities would cease during a lapse in funding. The agency’s contingency plan says it would have limited staff, and the processing of FHA-insured loans may be delayed.
Air-traffic controllers would remain on the job, but wouldn’t be paid.
And for those who rely on the Supplemental Nutrition Assistance Program, or SNAP, the clock will begin ticking, notes the Committee for a Responsible Federal Budget, a nonpartisan group in Washington.
“Though funding for the SNAP program is mandatory, the ability to send out ‘food stamp’ benefits could be affected by a shutdown, since continuing resolutions have generally only authorized the Agriculture Department (USDA) to send out benefits for 30 days after a shutdown begins,” says the CRFB.
A USDA shutdown would also “block critical loans to American farmers, threatening increased food prices for all Americans,” Senate Majority Leader Charles Schumer, a New York Democrat, said in a letter to colleagues on Sunday.
What would close after March 8?
Starting on Saturday, March 9, the shutdown stakes get higher.
That’s when more agencies, including the Pentagon, Homeland Security and the Securities and Exchange Commission, would be affected.
There’s a risk to companies that are looking to go public. Last September, when the federal government was facing another shutdown threat, Securities and Exchange Commission Chairman Gary Gensler told a House panel that a lapse would force his agency to furlough more than 90% of his staff, thus freezing initial public offerings.
And while U.S. military troops would continue to serve, they would go without pay.
“For folks that are not getting paychecks, that impacts, you know, how and when you can buy groceries, childcare — all of these things,” Deputy Pentagon Press Secretary Sabrina Singh told reporters in September.
The second deadline comes a day after President Joe Biden is due to give his State of the Union address, potentially heightening the drama around a funding deal.
How has the stock market been affected by shutdowns?
While a shutdown would be disruptive for those who rely on government services, investors may not be hurt.
As MarketWatch has previously reported, there have been six government shutdowns since 1978 that lasted five days or more, and the S&P 500
SPX
index gained in the four most recent ones.
Tobin Marcus of Wolfe Research said in a note that a partial shutdown lasting less than a week “should be a market non-event.”
What services would continue if there is a shutdown?
Americans would still get letters and packages through the U.S. mail, as the Postal Service is an independent body not funded by tax dollars and would continue to operate in the event of a shutdown.
Social Security and Medicare checks continue to be sent during shutdowns, but card issuance would come to a halt and benefit verification would stop, as the CRFB notes.
The source of funding for Social Security payments is the program’s trust fund and not part of the annual government budget cycle.
What comes next?
The House of Representatives returns to Washington on Wednesday, giving lawmakers just three days to avoid the first shutdown.
Biden and Vice President Kamala Harris on Tuesday met with the top four congressional leaders, and all four leaders sounded optimistic about avoiding a shutdown after the meeting, which also dealt with aid for Israel and Ukraine.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said preventing a shutdown is something “which I think we can all agree on.”
In addition to McConnell, Biden and Harris met with Schumer, House Speaker Mike Johnson, a Louisiana Republican, and House Minority Leader Hakeem Jeffries, a New York Democrat.
