Not initially, though there maybe some delays in payments being made. Non-essential federal workers may be furloughed (i.e a few days off work without pay), and Congress won’t be able to pass any new appropriations bills. Salaried employees will likely see no interruption in their payments, though hourly or contract workers may see temporary pay freezes since they will not be working.
Social Security benefits would remain largely unaffected as they are held in a separate trust fund called GAS (Government Account Series) which is funded by FICA payroll taxes. Social security administration employees will likely be more impacted than recipients.
Military pay and benefits would also remain intact, thought certain civilian workers and contract staff, who are paid on hours worked, may see pay freezes.
What is the cause of the Government shut-down?
House Republicans passed legislation that would slash over $60 billion in government spending between now and the end of September, setting up a showdown with President Barack Obama and the Democratic controlled Senate who oppose many of the cuts. After more than 90 hours of debate and many round-the-clock sessions, the House decided 235-189 to send the measure to the Senate. No democrats voted for the bill. The bill contains spending cuts and also the funds required to keep the government funded. If a bill (continuing resolution) is not approved by Congress and the President by March 4th, the government’s non-essential services will lose their funding and be forced to shut-down.
Republicans argue that they will not approve government funding unless the proposed spending cuts are approved. The cuts (more than 100 in total) are aimed at cutting entitlement programs but also at big government agencies like the Environmental Protection Agency($3.08 billion in cuts), the Securities and Exchange Commission ($131 million), the Consumer Financial Protection Bureau and the Commodity Futures Trading Commission. It also contains provisions to de-fund health care. Senate Democrats already have said they won’t accept the cuts in the $1.2 trillion spending bill, and Obama’s budget office has threatened a presidential veto.
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