If a shutdown does begin after a Friday deadline passes, hundreds of thousands of federal employees would be furloughed, tax refunds from paper-based filers would not be processed and federal loans for small businesses and new federal home loans would not be processed, Senior Obama Administration officials said on Wednesday.
The number of federal employees furloughed by a shutdown in 2011 would be in the same vicinity as a 1995 shutdown, which saw 800,000 employees furloughed in the 21-day span needed to reach an agreement once the shutdown began, a senior official told reporters during a conference call.
There will be significantly lower level of staffing at the White House and other agencies, the official said.
Congress has until April 8 to reach a deal to fund the federal government. That is when an existing three-week extension expires. House Republicans and Senate Democrats are negotiating to avoid a shutdown. It would be the first shutdown since the last one which began in late December of 1995 and lasted for a record 21 days.
Past experience shows that a shutdown in the government would necessitate furloughing many employees not directly related to saving lives or protecting property, with the exception of programs which have multi-year funding such as Social Security.
President Obama said Tuesday that Republicans and Democrats are closer than they have been during negotiations to reaching a deal. House Speaker John Boehner has publicly stated there is not agreement yet.
The White House is required to have plans in place in case of a shutdown of its agencies.
Government shutdowns have necessitated furloughs of several hundred thousand federal employees, required cessation or reduction of many government activities, and affected numerous sectors of the economy, according to the Congressional Research Service.
Employees not subject to furlough include: Members of Congress, the President, presidential appointees, certain legislative branch employees, and federal employees deemed excepted. Such employees provide emergency work needed to save human life or protect property, work to suspend agency operations or perform other functions exempted from a furlough.
Examples of excepted employees and activities from a possible shutdown will include some of those who provide for the national security and foreign relations, provide benefit payments for programs under multi-year funding laws, medical care, public health and safety activities such as those related to food and drugs and hazardous materials.
Others include air traffic control, border and coastal protection, protection of federal property, care of prisoners, emergency and disaster assistance, essential activities needed to presser the U.S. money and banking system, and activities needed to maintain the U.S. power distribution system.
While the Constitution says no money should be paid from the Treasury unless an appropriation is made by law. Federal employees and contractors could not be paid if appropriations had not been enacted, the report states.
It would still be possible under the Constitution, nevertheless, for the government to make contracts or other obligations if it lacked funds to pay for these commitments, the report states.
A law known as the Antideficiency Act generally prohibits agencies from continued operations in the absence of appropriations. However it makes an exception for emergencies involving the safety of human life or the protection of property.
A court ruling in 1981 further constrained the exception, saying emergencies do not include ongoing, regular functions of government the suspension of which would not imminently threaten the safety of human life.
The longest previous shutdown in U.S. history took place for 21 days starting from December 16, 1995 to January 6, 1996.