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U.S. Government Starts Notifying Federal Employees About Imminent Shutdown Amid Funding Deadlock

The U.S. government started notifying federal workers on Thursday that a shutdown seems to be imminent, as the Congress remains deadlocked over how to fund the government just three days before funding for this fiscal year is set to expire.

“During this time, some of you will be temporarily furloughed while others who perform excepted functions will continue to execute your assigned duties,” according to one of the notices sent to employees at the Homeland Security Department, reported by The Washington Post.

The messages acknowledged the growing likelihood of a government shutdown amid funding fight in the Congress, which means millions of federal government employees might not be able to receive paychecks starting from October unless lawmakers can reach a last-minute deal to extend government funding.

During what could be the 22nd government shutdown in history, all non-essential operations will be suspended, and all but the government’s most essential workers will be furloughed. Essential departments such as the military, border defense, and public security are not affected.

An “unscientific” poll of budget experts released Tuesday by the Committee for a Responsible Federal Budget, an independent budget watcher, showed that the probability of a government shutdown has soared to 87 percent, up from 58 percent at the end of August.

A Senate-proposed stopgap funding measure, unveiled Tuesday, has a slim chance to advance in the House in its current form amid Republican infighting, which has complicated the already intense fight between the two parties.

Traditionally, the House of Representatives moves first on spending and revenue bills but House Speaker Kevin McCarthy failed to gain enough support from his own party on a stopgap funding bill, forcing senators to make the first move in the last week ahead of a shutdown “deadline.”

The Senate-proposed bill is expected to fund the government until Nov. 17, the week before Thanksgiving, with the funding levels continuing at the same levels as before. It includes roughly 6 billion U.S. dollars of aid for Ukraine and about 6 billion dollars in disaster relief funding.

However, it remains uncertain whether the House will advance the plan in time to avert a shutdown. “I don’t see the support in the House” for the Senate bill, McCarthy told reporters Wednesday.

One point of contention is the aid to Ukraine. Conservative Republicans in the House oppose providing more aid to Ukraine, arguing that the Biden administration should make deep spending cuts and the aid to Ukraine should be part of it. The second point of contention is that House Republicans want to pass a bill that includes border security provisions, which revealed the partisan divide over immigration policy.

Senate Majority Leader Chuck Schumer on Wednesday lashed out at McCarthy for “constantly adhering to what the hard right wants,” saying that this approach will inevitably lead to a shutdown. Referring to Donald Trump’s “Make America Great Again” slogan, Schumer said “Speaker McCarthy needs to stop letting the MAGA radicals drive his decisions.”

But McCarthy’s difficult situation in the House leaves him little choice. After last year’s midterm elections, the Republican Party retook control the House, with a narrow majority of 221 seats, just 9 more than the Democratic Party’s seats, meaning that even five “rebels” are enough to defeat a Republican legislative agenda.

McCarthy previously proposed a short-term funding bill that would cut spending for most federal agencies by 8 percent and tighten immigration restrictions, but the bill is opposed by conservatives within the Republican Party and is unlikely to win support from Democrats. Republican conservatives oppose any “patchwork” funding package and wants Congress to negotiate all 12 annual spending bills individually.

In an attempt to appease hard-line Republicans, the House on Tuesday voted to advance four bills that would fund the Departments of Defense, Homeland Security, State and Agriculture for another fiscal year. But such efforts won’t be able to prevent a government shutdown.

At a press conference in the U.S. Capitol, Republican Senator Joni Ernst said “Congress is not working.”

Moody’s Investors Service warned earlier this week that a government shutdown could hurt America’s top credit rating, as it would underscore the weakness of U.S. institutional and governance strength relative to other AAA-rated sovereigns.

Although a short-term shutdown would have limited impacts on the economy, the effects could become more significant if the stalemate persists. Furloughed federal workers could reduce spending during the shutdown, dragging down consumption growth, while the government would also temporarily cut back on purchases of goods and services.

If the stalemate continues for a long time, the negative impact on the economy will go up. JPMorgan estimates that each week of government shutdown reduces GDP growth by 0.1 percentage point.

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