What a Government Shutdown Could Mean for Your Wallet

Mandatory Credit: Photo by Shutterstock (11553986i)United States Senate Majority Leader Mitch McConnell (Republican of Kentucky), conducts a news conference in the U.
Shutterstock / Shutterstock

If Congress does not reach an agreement on the stimulus package and the federal budget by 11:59 pm on Friday, the federal government will not be allowed to spend money. The result will be yet another government shutdown, but most effects would not show up until the start of business on Monday.

See: Refusing to Wait for Congress, These Cities and States Are Handing Out COVID-19 Relief
Find: How Big Will Your Stimulus Check Be?

The last shutdown lasted from December 22, 2018 to January 25, 2019, the longest in U.S. history. At that time, the key issue was immigration, not the budget per se. This time, there seems to be less rancor among members of Congress, making it likely that any shutdown this year would be considerably shorter. The main sticking points seem to be the amount of any stimulus checks sent to taxpayers and the length of any unemployment benefit extension, according to the Washington Post.

Make Your Money Work for You

A shutdown may still be painful, especially given that the economy is nowhere near as strong as it was in 2018-2019. If a deal can’t be reached until Monday morning, the following events are likely to happen:

  • Federal employees will not receive paychecks until a funding agreement is reached.
  • Government contractors will not be paid, and it is likely that their missed checks will be paid up later.
  • U.S. government facilities, ranging from National Parks at home to consulates abroad, will close up shop.

See: The Stimulus Check Secret You Need to Know Before You File Your 2020 Taxes
Find: Stimulus Negotiations Signal Unemployment Changes

Social Security and Medicare benefits should continue without interruption, and states will continue paying unemployment benefits.

In other words, most people will not be affected, but government employees could be hit hard. A shutdown is also unlikely to calm a nervous economy.

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About the Author

Ann Logue is a writer specializing in business and finance. Her most recent book is The Complete Idiot’s Guide: Options Trading (Alpha 2016). She lives in Chicago.

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