government shutdown 2024

government shutdown 2024

The Impact and Implications of a Government Shutdown in 2024

1. Introduction

The shutdown of the federal government for any length of time in 2024 would significantly disrupt lives and the economy. In this report, we simulate the impact of a funding gap that all the subsequent year’s appropriations bills are enacted, is in effect from the first quarter to the second quarter and is resolved in the third. We apply a standard macroeconomic model (the FRB-US model) to calculate the broader consequence of a shutdown. We reduce changes in macroeconomic policy (such as declines in consumption or cash information) from the typical current quarter because this assertion typically would be slow and not opportune as might be a government shutdown. Overall, our results suggest a government shutdown in 2024 will have significant negative outcomes for the U.S. economy’s real economic gross domestic product currently in the current.

If a long-term spending agreement is not reached in Congress prior to the end of the fiscal year and the government does not enact a delay in appropriations through a continuing resolution, then discretionary spending ceases until an agreement is reached and enacted into law. Non-essential federal workers cannot work, and many federal services and programs are suspended. The debt limit also acts to constrain Treasury’s financing authority. If a debt limit were breached and the Treasury could not issue debt to meet its obligations, then the government would need to use its other cash management tools to continue operations and would be forced to delay or default on its obligations.

2. Causes and Triggers of a Government Shutdown

Some shutdowns are situational – resulting from natural disasters or the government’s failure to address the effects of catastrophic events. In some situations, an extended lapse in appropriations is the culmination of friction between Congress and the President about fiscal policy; in other cases, it is a dominant factor. Although the discretionary spending limits and corresponding automatic spending cuts instituted by the BCA are the primary reasons for most contemporary government shutdowns, political disputes including those over the BCA’s pending expiration have led to shutdowns in recent years.

Shutdowns typically occur because Congress and the President cannot agree on the conditions for funding government operations, or when the President refuses to spend the funds that Congress has appropriated. The absence of agreement by these two branches of government on funding measures delineates when most government shutdowns occur. The discretionary spending limits imposed by the Budget Control Act (BCA), or corresponding budget enforcement mechanisms like sequestration, also bring on government shutdowns from time to time, often at the start of the fiscal year. Failure by Congress and the President to come to an agreement on the amount of spending or revenue over the budget window, however, usually results in a government funding gap or lapse in appropriations that starts a shutdown.

3. Effects on Economy and Society

The cost of the federal government’s borrowing is crucial to the determination of investment levels in the broader economy, the functioning of financial and banking sectors, and the advanced spread of development in developing countries. As such, a continued disruption of these transactions can have serious consequences for foreign exchange and financial markets, especially for third world emerging markets, which are dependent on the decision-making of the transnational corporations, as well as for the pace of world output and employment growth. In total, those forecasts show a significant economic and social cost associated with every additional day of federal government shutdown.

The economic effects of a federal government shutdown generally entail both disruptions and uncertainties. If expenditures continue at established levels, these effects are muted, though some shutdown still seems essential to determine revised spending priorities. Interest rates and the budget deficit may differ slightly. The Social Security program impacts an area where shutdown effects are fundamental. Without authority to drawdown the necessary trust funds, benefit payments cannot be made. The shutdown will result in the income cutoff for both Social Security and Medicare recipients currently being determined to be around the 14th of that month. As a result, the program is unable to pay any benefits to recipients after that date.

4. Political Ramifications and Public Perception

Before speculation and research exit about how the citizens will react as a result of the shutdown in 2024 or in future crisis negotiations, research should evaluate the government shutdown. Probably the lack of cooperation and control a president has could play negatively on this leader’s ratings. We are joining recent research that expands to additional issue areas other than the ACA to continue the discussion about the cooperative approach and conditional agreement models. This research continues work by Blitz (2014) and Beitran (2014) studying the 2013 American Shutdown. We contribute to the challenges of legislative volatility and observe the U.S.’s legislative dynamics in this critical moment. We discover that if Republicans believe that voters gain an individual slice of their desired policies, they protract these negotiation positions. It is worth evaluating whether public opinion appears to back these increased obstacles, such as President Obama’s normal political approach of utilizing the powers of the office as a means to create ideal points in public opinion to advantageously move the bargaining here.

The Obama administration’s involvement in the 2013 shutdown was linked to moving the policy from funding to further the ACA to delay it. Using an innovative survey experiment, research sought to determine if this mattered to public opinion and found that support for compromise was strong when the government shutdown about funding the ACA or paying for it was explored but weaker when the delay of its implementation was proposed. Opinions were driven in part by the negative implications for the US economy of shutting the government down because of a delay. This was driven by partisanship, ideology, or the highly educated sought. Winter (2018) also found that individuals brought into a negotiation did not have better outcomes when their preferences were overturned and actually felt less warmly towards the institution that forced change against their own desired policy.

5. Strategies for Mitigation and Prevention

The modern Congress faces what Don Wolfensberger calls “The Closure Problem” in his book by the same name. The organization has struggled to find a direction done during the past three decades. One of the most frustrating symptoms of the present congressional gridlock is the failure to pass even the basic tax and spending measures needed to avoid regular federal government shutdowns. Although the blame is frequently directed at the President, and the President and the use of the veto certainly play an important role in all of these events, they are ultimately the result of the dysfunctional budgeting process. Hence, some of the strategies that we outline start with changes to that process and the laws and rules that govern it.

It is clear that the possibilities for government shutdown are real and that the consequences are significant. Although it has not been taken seriously in research programs, there are strategies that could be implemented to mitigate and prevent these events. Building on prior research and what we have learned from previous events, we outline some strategies that could potentially work to mitigate shutdown effects or avert them altogether. These strategies range from rule changes and budget reform to institutional changes in the budget process. While some of these strategies have seen some success in the past, they have only been partial solutions.

Strategies for mitigation and prevention