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The federal government is barreling towards a shutdown as Congress remains deadlocked over passing critical spending bills before the end of the fiscal year on September 30th. With only days left to avert a closure, deep divisions between Republicans and Democrats over government funding priorities have brought negotiations to a standstill, leaving federal agencies and services in limbo.

The most contentious issue is the level of funding for Ukraine’s defense against Russia’s invasion. President Biden has requested $20 billion in military and economic aid, but some Republican lawmakers argue that is too high amid rising inflation and debt at home. A group of House conservatives known as the Freedom Caucus is blocking passage of any funding bill that doesn’t include major cuts to federal programs.

If Congress doesn’t pass a continuing resolution to temporarily extend current funding levels beyond Thursday midnight, the impacts would reverberate across the country. According to contingency plans, a shutdown would force the furlough of over 800,000 federal employees deemed “non-essential”, while around 1.5 million “essential” personnel would be expected to work without pay until funding is restored.

Vital services like Social Security, Medicare, Medicaid, food stamps, air traffic control, postal delivery, and veteran’s health benefits will continue operation. However, many other government functions will grind to a halt. National parks and monuments will close. Applications for federal small business loans, passports and visas will stop being processed. Routine food safety and environmental inspections will be postponed. And low-income housing support is at risk if the stalemate drags on.

“A government shutdown would wreak havoc on Americans’ lives and livelihoods,” said House Speaker Nancy Pelosi. “We must keep the government open and operational.”

Sources of Stalemate

On September 27th, a bipartisan group of Senators introduced a stopgap bill to extend funding through mid-November and provide the $6 billion in Ukraine aid favored by moderates. But the Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023 faced bleak prospects in the House where the Freedom Caucus’ influence has grown.

The Freedom Caucus, led by Rep. Scott Perry of Pennsylvania, argues the aid fuels inflation and wants to pare federal spending by lowering budgets for non-defense agencies. They proposed a rival continuing resolution with an extension until mid-December but no Ukraine aid and a cut of over 15% to all agencies outside defense and veterans’ affairs.

Most House Republicans oppose the caucus bill, but with a slim GOP majority, the Freedom Caucus has leverage if its roughly 30 ultra-conservative members withhold support for other options. This bind leaves the path ahead murky since some spending deal needs 218 votes to clear the closely divided House.

On September 26th, six House Republicans put forward a “clean” continuing resolution to fund agencies at current levels through October 28 without extra Ukraine funding. But Democratic leaders swiftly rejected it as a “non-starter” that leaves Ukraine vulnerable.

The White House has stood firm on maintaining assistance to Ukraine as critical support against Russian aggression. G.O.P. leaders want to provide funds too but differ on the amount. Stripping out aid would face backlash from mainstream Republicans, military officials and Ukrainian President Volodymyr Zelensky.

“It’s reckless for members of Congress to advocate defunding Ukraine defenses as Russia escalates attacks on civilians,” said Rep. Liz Cheney of Wyoming, a prominent House Republican critic of the Freedom Caucus’ tactics.

Agencies Brace for Closures

Absent a last-minute deal, federal agencies are preparing for the upheaval of suspending non-essential operations.

The Office of Management and Budget (OMB) asked department heads to review shutdown plans specifying which functions can continue under lapsed appropriations. “Prudent management requires that agencies be prepared for the possibility of a lapse,” said OMB Director Shalanda Young.

According to contingency plans, the Internal Revenue Service would cease taxpayer services like audits and hotlines. National parks and Smithsonian museums will close. The Small Business Administration would stop approving any new loans. The Department of Housing and Urban Development may lack funds for low-income rental assistance if the impasse continues into November.

The Department of Defense outlined over 400,000 civilian employees — over half its workforce — will be furloughed. Servicemembers on active duty would serve without pay until funding resumes. Critical activities like space operations, cybersecurity and childcare still continue. But many routine activities at military bases will halt.

“Our servicemembers and their families will bear a heavy burden,” said Defense Secretary Lloyd Austin. “But they will continue to stand watch.”

The Department of Homeland Security would retain most law enforcement and security personnel as essential but still furlough over 10% or nearly 30,500 employees. Airport security screeners and border agents will stay on duty but miss paychecks until the shutdown ends.

Past Shutdowns

Government shutdowns stemming from lapsed appropriations are disruptive but not unprecedented. The most extensive occurred under President Clinton in 1995–1996 lasting 21 days and affecting around 800,000 federal staff.

Another 16-day shutdown happened in 2013 under President Obama after Congress hit an impasse over the Affordable Care Act. Around 850,000 employees were furloughed while service disruptions affected tax audits, small business loans, federal research, Head Start centers and more.

The most recent closure stretched 35 days from December 2018 to January 2019 during a dispute between President Trump and Congress over funding for a southern border wall. Around 380,000 federal workers were furloughed while another 420,000 essential employees worked without pay, including TSA airport screeners, FBI agents and Coast Guard crews.

While federal employees have always received back pay, shutdowns still inflict financial pain by delaying paychecks. Contractors also lose income with no guarantee of recouping lost wages. The 16-day 2013 shutdown trimmed 0.3% from economic growth that quarter, according to the OMB.

With so much at stake, lawmakers are facing urgent pressure to reach a deal. But with the Freedom Caucus blocking the path forward, fears are rising that a partial government closure will soon ensue. Critical services and the livelihoods of federal workers hang in the balance as this high-stakes spending showdown enters its final hours.

Summary and Implications

Deep partisan divisions in Congress over budget priorities have brought the federal government to the brink of shutting down on October 1st if spending bills are not passed in time. A closure would suspend funding for agencies whose bills are still awaiting approval. Vital services like Medicare and Social Security will continue, but many others would curtail operations. Over 800,000 federal employees could be furloughed without pay until an agreement is reached. Essential personnel like military members and TSA screeners will keep working but receive IOUs until appropriations are restored.

Previous government shutdowns caused widespread disruption and economic loss. But the stakes are especially high now with support for Ukraine and stubbornly high inflation amplifying tensions over spending decisions. Lawmakers are scrambling to break the stalemate before the looming deadline. But with the impasse persisting, all signs point to an imminent halt in federal funding.

The path ahead remains murky. Compromise will require concessions from both parties. But extreme positions on either side are hindering progress towards middle ground. All Americans have a vested interest in functional, well-funded governance. So pressure is mounting on leaders to set aside rigid ideology and come together in the national interest. With flexibility and good faith from all sides, a shutdown can still be averted before it’s too late.

I hope you found this overview on the latest developments around the risk of a government shutdown insightful. Please check back regularly for additional reporting as this critical situation continues unfolding. We are committed to delivering the key facts and context to keep you fully informed. Thank you for reading.