Risk & Compliance

Shutdown to Affect 800,000 Federal Workers

With no agreement on a funding bill apparently in the offing, employees are facing being furloughed or working without pay.
Matthew HellerDecember 25, 2018

With Congress having adjourned Friday without reaching an agreement on a government funding bill, hundreds of thousands of federal employees are facing the prospect of being furloughed or working without pay.

The impasse on Capitol Hill ensured a shutdown of nine federal departments and several agencies. President Trump refused to sign any spending bill that doesn’t include funding for a border wall but such legislation would be doomed in the Senate.

The shutdown will affect about 25% of government agencies, including the departments of Homeland Security, Justice, Transportation, Interior, Agriculture, and State.

According to the office of Sen. Patrick Leahy (D-Vt.), vice-chairman of the Senate Appropriations Committee, it could result in 380,000 federal workers being furloughed and 420,000 working without pay.

A shutdown “comes with relatively low stakes in terms of real economic impact due to the relatively small number of federal agencies impacted,” Height Capital Markets analysts wrote in a client note.

“However, a shutdown would drive significant headline risk and increase investor fears that government dysfunction will exacerbate the impact of trade disputes and other instability,” they added.

House members could return from recess at noon Saturday but the House doesn’t plan to vote on anything else until there is action in the Senate. “At this point, there doesn’t appear to be any easy agreement in the offing,” the Huffington Post reported.

The New York Times noted that “with Democrats set to reclaim the House in two weeks, there is little motivation for [minority leader Nancy] Pelosi to acquiesce to the president’s demand.”

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