In 2013, the US Government shut down for 16 days when the US Congress was unable to pass a budget for the next fiscal year. This started with the “Patient Protection and Affordable Care Act”, otherwise known as Obamacare, when the Republican lawmakers began pushing to remove budget from Obamacare. This led to an impasse between the Senate Democrats and Republicans as the former rejected the latter’s proposals. Consequently, nearly 800,000 federal employees were out of work without pay. Nonessential departments and employees were furloughed, Veteran Affairs financial benefits were disrupted, and it cost the country roughly $24 billion, or $1.5 billion a day.
In 2018, the US Congress threatens another partial shutdown as leaders looked to pass a massive two-year budget deal, but was unable to agree so. But what does it mean for your finances? Can the government shutdown affect us financially, personally?
During a government shutdown, travelers are greatly affected. Most national parks will be closed affecting thousands of visitors per day. Getting passports for international travel might take a bit longer but airports will still remain open.
Since most government services stop during a shutdown, government employees will stop working for an amount of time and will, however, receive back pay after a shutdown. Those in critical services, such as air traffic control and law enforcement, will continue to work. This cost taxpayer $2 billion in 2013. Social security checks will still arrive but for new signees, they might need to wait a little longer until employees are no longer on hold.
Insurances and other benefits funded by the government will be reduced or delayed for the meantime. However, the government may run out of funds depending on how long the shutdown lasts. People who have been applying for mortgages and business loan approvals may experience delays on the application since the assigned government institutions could not be able to process their papers.
Aside from the locals, investors will also be affected. For every government shutdown, the stocks will automatically drop its value. All sectors will be affected so make sure to finish your transactions before the implementation of a government shutdown.