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What Would a Government Shutdown Mean for You?

What Would a Government Shutdown Mean For You?

The last day of September was the last chance for Congress to fund the government. Thankfully, a last-minute agreement was passed by the House and Senate to keep the government funded through to November 17th, narrowly avoiding the expiration of funding and a resulting government shutdown. But, what happens when November 17th comes around? Will we have to go through this again? And how would it affect you, as a retiree or pre-retiree? What should you do to prepare?

First, it’s important to understand what a government shutdown is, and what causes it. It refers to when the government fails to pass or enact a budget or spending bill to fund government operations. As a result, many government services and functions are temporarily halted or disrupted. Furthermore, a shutdown affects government employees and contractors and can harm the economy.

Shutdowns are usually the result of a budgetary impasse or a failure to reach an agreement on government funding between the legislative and executive branches of government. Here in the U.S., they’ve occurred periodically when there has been a failure to pass federal budgets or funding bills, as there nearly was last month.

Government Shutdowns in the Past

Since Congress introduced the modern budget process in 1976, there have been 20 “funding gaps,” during which funds were not appropriated for at least a day. However, prior to 1980, the government did not shut down, but rather continued normal operations through funding gaps. Since 1981, ten funding gaps of three days or fewer have occurred, although, during these gaps, government operations were only minimally affected.

There have now been a total of 4 “true” shutdowns, in which operations were affected for more than one business day. The first two, each lasting 26 days, happened during the winter of 1995-1996. The third was in 2013, and lasted for 16 days. The fourth shutdown in December of 2018 and January 2019 was the longest, lasting 35 days.

Frequently Asked Questions

How is a government shutdown likely to affect you, personally? Well, obviously, that varies depending on your situation. But, here are answers to some frequently asked questions, that may help you gain a better understanding of what you should expect from a shutdown.

Things That Likely Wouldn’t Be Affected

Would Medicare and Medicaid benefits be affected?
Current Medicare, Medicaid, and disability insurance beneficiaries will continue to receive their benefits (assuming the shutdown only lasts three months or less).

Would a government shutdown affect when I receive my Social Security?
Nope! A government shutdown does not impact Social Security’s funding. However, in the event of a shutdown, some Social Security Administration employees will be furloughed, meaning their customer service could be impacted.

Would military and federal retiree benefits be suspended?
Rest assured, military and federal retirees will continue receiving their retirement benefits. Processing new applications or other requested changes will be delayed, however.

Would you still receive your mail?
Yes. The U.S. postal service will be completely unaffected in the event of a government shutdown.

How would a shutdown impact state and local services?
A federal government shutdown will not immediately affect any state or local services. However, some state or local governments may change their operations with federal funding cut off. Check with your own state and local agencies for specific questions.

Things That Will Be Negatively Affected

Would air travel be affected?
Air traffic controllers, TSA officers, and Customs and Border Protection agents will remain on the job without pay. However, if some do not report to work (something which has happened in previous shutdowns) there will be significant delays across the country.

How would this affect environmental protection and cleanup?
The EPA will stop inspecting most hazardous waste sites, as well as drinking water and chemical facilities. Efforts to address dangerous contaminants linked to adverse health effects will be delayed.

What would this mean for disaster relief efforts?
FEMA staff will still respond to emergencies. Long-term projects, however, will be delayed due to a lack of funding for the Disaster Relief Fund.

What would the impact on food safety activities be?
FDA food safety activities, such as routine inspections of facilities, will be delayed across the country.

What would be the impact on food assistance?
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) will quickly run out of funding, and be unable to provide food for children and parents in need.

What is the effect on housing?
The Federal Housing Administration (FHA) will stop insuring some new mortgages, and the Department of Housing and Urban Development (HUD) will stop processing some new loans. Funding for federal housing assistance programs, such as Housing Choice Vouchers, may be jeopardized in a prolonged shutdown.

What would this mean for medical research?
The National Institutes of Health will be forced to delay new clinical trials. Furthermore, new patients who are waiting for a chance at new treatment through a clinical trial will be turned away.

What Can You Do?

What can you do to generate extra income in case a shutdown does happen? A fixed indexed annuity (FIA) offers a source of income that can last you your entire life, and isn’t affected in the event of a government shutdown. And right now, one of our annuity products is offering a 40% bonus. That means if you contributed $100K to your annuity, and additional $40K would be added to your income and death benefits. This is the best offer we have ever seen. Contact us to learn more.

Source: Debbie Dingell

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