Hollywood writers and actors have been on strike for months.
If Detroit union members and the Big 3 automakers don’t reach a contract agreement, automotive manufacturing could come to a halt.
Washington, D.C., is preparing for a looming federal government shutdown by the end of September if Congress doesn’t reach a budget deal. With that stated from the outset, it appears that many areas of the country have reached an economic breaking point defined by stress and desperation.
All of this means that if Congress doesn’t reach an agreement on the federal budget by the end of the fiscal year 2023 on Sept. 30, 2023, a shutdown could happen.
Right now, there are three scenarios in play. In one scenario, Congress does nothing and shuts down the government at midnight on Sept. 30 because the House and Senate don’t agree to the proposed budget. Another scenario is that Congress passes one or more continuing resolutions that extend FY2023 funding at current levels until a certain date, which would move a potential shutdown date to sometime around the Christmas holiday. Finally, Congress could pass some or all of the 12 separate appropriations bills to fund the government through Sept. 30, 2024, and completely avoid a federal shutdown.
According to the federal Office of Management and Budget, “in a “shutdown, federal agencies must discontinue all non-essential discretionary functions until new funding legislation is passed and signed into law. Essential services continue to function, as do mandatory spending programs.”
But there could very well be other implications with the potential shutting down of national parks at airports with federal TSA agents, the closure of the IRS, SNAP benefits, and even food inspectors being furloughed. This has the potential to interrupt everyday life for everyday Detroit residents.
Republicans who control the House by a slim majority are pushing for across-the-board cuts and have argued that the government is spending too much as Washington continues to rack up substantial debt. The Democratic minority argues that additional funding is needed to sustain and bolster programs, many of which benefit Black people across the country.
So, who gets hurt the most in a shutdown? Federal workers.
“Federal employees get put on a furlough,” said Danii Manaenkov, University of Michigan U.S. Forecasting Specialist. “There will be people not getting paid for several weeks if we go to a severe shutdown scenario.”
“There may be a higher demand for some temporary loans to make sure people can maintain the basic things such as keeping your lights on and buying groceries. It’s a temporary disruption, which for most people will eventually work itself out, but will mean some temporary hardship.”
Manaenkov says federal workers who won’t get paid during this shutdown period will eventually be back-paid once the government resumes business. How severe a potential shutdown could become depends upon several factors.
For example, if a shutdown affects federal employees who oversee data collection – which the Federal Reserve relies on for making rate decisions – their inability to have a clear outlook on the economy based on unavailable data information could lead them to make decisions that result in another rate increase. Therefore, in a scenario like that, a trickle-down effect on higher rates to pay a mortgage or student loans would happen.
The 2013 federal government shutdown during Barack Obama’s presidency, which ran from September through October, was worse than the partial 2019 shutdown under President Donald Trump.
So, what does this all mean for local and social organizations that depend on federal funding?
“Nonprofits that depend on federal funding, they may get a temporary disruption in disbursements …but it’s less disruptive a business or nonprofit entity level than at a personal level because people are a lot more credit restrained,” Manaenkov said.
He pointed out that contractual payments will continue and not so much a scenario “where we stop paying our bills or as if social security checks will stop rolling in. It’s typically just federal workers were not allowed to work because there’s no provision for their money.”
However, if a shutdown moves forward, it could create an uptick in the nation’s unemployment numbers for those workers.
The budget fight between Republicans and Democrats in Congress means certain federal programs could be on the chopping block, such as food stamps, WIC, EBT benefits, and rollback in spending for Medicaid, creating a lifeline deficit for many households who need these federal programs.
“What comes out of the budget negotiations, it could have a lasting implications, because if they cut a lot or slow down the future rate of growth, that’s going to lower the level of federal support provided to families and they typically go to people who are less well-off and unfortunately Detroit is pretty low on the average income distribution.”
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