How a government shutdown could impact you
ARI SHAPIRO, HOST:
Whether or not you work for the federal government, a shutdown has sweeping consequences, from food and health benefits to the military, to the economy as a whole. And these effects keep rippling out the longer a shutdown lasts. If Congress doesn't agree on a plan, a shutdown could begin this weekend. We're going to look at what this could mean across a few different sectors. And let's start with NPR's Selena Simmons-Duffin, who covers health policy. Hey, Selena.
SELENA SIMMONS-DUFFIN, BYLINE: Hi, Ari.
SHAPIRO: OK, if the government does shut down this weekend, what impact is that going to have on people who depend on federal benefits for food and other assistance?
SIMMONS-DUFFIN: OK, so SNAP benefits, which used to be known as food stamps, would not be affected in the short term. So people should still receive their October benefits, be able to buy their groceries as usual. Nothing changes there. But perhaps the most dramatic immediate impact would be for families that rely on another food program called WIC, which stands for Women, Infants and Children. And that would be cut off within days of a shutdown, according to the Agriculture Secretary Tom Vilsack, who spoke with NPR yesterday.
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TOM VILSACK: It helps nearly 7 million pregnant moms, postpartum moms and children under the age of 6. Nearly 50% of all young children in the country participate in this program. When there is a shutdown, within a matter of days, benefits are cut off to these families.
SIMMONS-DUFFIN: Now, the impact on WIC would likely be staggered because some states might have carryover funds or might be able to use their own state funds to keep things going for a little bit. Other programs that could be affected include Head Start, which supports little 3- and 4-year-old kids, and Meals on Wheels, which brings food to the elderly. And that could get interrupted as well. And then there's federal workers themselves, who would have to go without a paycheck. The Capital Area Food Bank here in Washington told me it's preparing for as many as 100,000 federal workers to need food assistance if the government shuts down.
SHAPIRO: Wow. Well, let's bring in NPR Pentagon correspondent Tom Bowman. Tom, you've been looking at what a shutdown would mean for the U.S. military. What is the headline there?
TOM BOWMAN, BYLINE: Well, some 1.3 million active military personnel will have to keep working and not get paid, along with - get this - more than 400,000 Defense Department civilians. Their last paycheck will be on Friday if there is a shutdown that begins over the weekend. Now, beyond the potential for no paychecks after Friday, there are some other problems for the military. The military commissaries on bases, which are basically like neighborhood grocery stores with good prices, most of them will close around the country but remain open overseas. Now, the USAA, which is the United States Automobile Association, which provides insurance and banking services for active military and veterans, has said it will provide no-interest loans and also extensions for loan and credit card payments for its members. The big issue, of course, Ari, is if there's a shutdown, how long does it last?
SHAPIRO: And these people who might stop getting their paychecks live in communities that depend on service members spending the money they earn. So how might that ripple out beyond the armed forces?
BOWMAN: Well, there's no question there'll be ripples in the event of a shutdown in certain areas with large numbers of military personnel. Get these numbers. California - 163,000. Virginia - 129,000. Texas - 114,000. And then North Carolina, Florida, Georgia each have tens of thousands of military personnel. And there are clusters of military folks in these states around bases and other facilities. So, you know, a lot of people will be going to restaurants, bars. They're military areas, so you'll see tattoo parlors, motorcycle shops.
And the other thing people talk to me about is, you know, young military families living off base. They could, over time, have trouble making ends meet, buying groceries, child care costs. And they might put off purchases - like clothing, car repairs, things like that - which would, of course, hurt local businesses, again, if this shutdown happens. And then, does it continue for weeks or longer?
SHAPIRO: Yeah, and this could obviously impact the U.S. economy as a whole. NPR's David Gura has been looking at that. David, I know you've been examining the impact of past shutdowns. What have you learned?
DAVID GURA, BYLINE: Yeah, the most recent shutdown bridged 2018 and 2019. It was during the Trump administration, and it was the longest shutdown on record. It went on for 35 days. And I'll just note here, it was a bit different than this shutdown. HHS wasn't affected, the Defense Department wasn't either. The funding was separate there. Even still, 800,000 federal workers were furloughed. The Congressional Budget Office says it delayed about $18 billion worth of spending. It affected economic growth. GDP in those two quarters, Ari, was fractionally lower, between 0.1 and 0.2% lower than what economists expected.
SHAPIRO: And as you mentioned, that last shutdown went on for longer than a month. What would change if we were to see a shorter shutdown, like a few days or a week, versus those 35 days last time?
GURA: It would be a big difference. As Tom said just a minute ago, this is the big issue here, how long this shutdown lasts, if we get one. The longer it lasts, the greater the negative impact on both the U.S. economy and on U.S. financial markets. In a new note, the ratings agency Moody's says it expects a short shutdown this time around and one that would have, quote, "limited ramifications for the broader U.S. economy and GDP."
Past is prologue, but something different this time around is the economy is already facing a host of headwinds. The Federal Reserve has been trying to cool down the economy to fight high inflation, and as a result, growth is slowing. On top of that, energy prices are going up. Russia and Saudi Arabia recently agreed to extend production cuts. That could push up gas prices, which, of course, has a big impact on how people feel about the economy and on their willingness to spend. And in just a few days, tens of millions of Americans will have to start repaying their student loans. So while there is all this optimism about the Fed achieving that soft landing, getting high inflation under control without triggering a recession, there are a lot of factors that could make the Fed's job even more difficult, a shutdown would be another one.
And very quickly here, something else that could complicate things is, if there were a shutdown, the agencies that collect and distribute the data the Fed relies upon could be closed. And that may sound like a small thing, just some data, but the Fed has said and continues to say it's making its decisions about interest rate hikes based on those economic data. Jobs numbers for the month of September, they're supposed to be released next Friday, new inflation data the week after that. At that point, we're getting very close to the Fed's next meeting, which is scheduled to start on Halloween, October 31.
SHAPIRO: OK, so there are a lot of unknowns. There are a lot of reasons to be concerned. But there are also some things that Americans don't need to worry about even if there is a shutdown. So, Selena, let's turn back to you for a sigh of relief. Sixty-seven million Americans rely on Social Security checks. Those will keep going out, right? What about Medicare and Medicaid? Will people be able to keep seeing the doctor?
SIMMONS-DUFFIN: Yes, that is a little bit of good news. So people who get health insurance or even health care from the federal government, whether that's through Medicare or the Indian Health Service or VA health care, they shouldn't have any interruptions because of a shutdown. So everyone out there who uses these programs, you can still go to the doctor, you can still make appointments. And HHS says it has enough money to keep paying states for Medicaid and CHIP. That's the Children's Health Insurance Program. At least they have enough for a few months, which is good because around 90 million low-income people rely on those health insurance programs.
Again, those programs should not be affected, assuming that it doesn't - the shutdown doesn't last for more than a few months, which is pretty unlikely. But it is not all good news on this front, I should say. One area of concern is community health centers. Those are basically safety net primary care clinics that get their funding from federal grants. And that funding would likely be disrupted by a shutdown. Some clinics are going to local news. They're talking to their Congress members and warning that they may need to cut back on services or staff depending, again, on the timing of the possible shutdown and how long it lasts.
SHAPIRO: So much depends on how long it lasts.
SHAPIRO: NPR's Selena Simmons-Duffin, David Gura and Tom Bowman. So nice to have all three of you here in the studio.
GURA: Great to be here.
SIMMONS-DUFFIN: Great to be here. Thank you.
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