Airport security screeners could quit en masse, grounding flights. The federal courts could stop hearing civil cases. City buses could stop running.
And 38 million Americans could stop getting food stamps.
Officials from Washington to Wall Street are pondering nightmare scenarios if the partial U.S. government shutdown that is already the longest on record extends into spring — or beyond.
“Shutdowns don’t get bad linearly; they get bad exponentially,” said Sam Berger, a senior adviser at the Center for American Progress, who worked at the Office of Management and Budget under President Barack Obama.
President Donald Trump’s administration has found creative means to blunt some of the shutdown’s effects — figuring out ways to process tax refunds, for example. Yet agencies that have been able to dip into user fees, leftover funds and other revenue streams are running out of those reserves.
Lawsuits are already testing the administration’s ability to keep on the job unpaid workers, hundreds of thousands of whom missed their first paycheck last week.
Efforts by Republicans such as Senator Lindsey Graham of South Carolina to cut an immigration deal to resolve the impasse have failed, and Trump on Monday rejected his latest proposal. An administration official said the White House is game-planning for the shutdown to continue through at least the end of February.
Beyond its direct effects on businesses, economists say the shutdown threatens to shake consumer confidence and chip away at retail sales, particularly as unpaid federal workers and contractors forgo spending on cars, new homes and even entertainment.
To be sure, three-quarters of the government was funded by appropriations enacted before the standoff began. Departments such as Defense, Labor and Health and Human Services remain in business. Still others, like the U.S. Postal Service and U.S. Federal Reserve, have funding streams separate from what Congress provides.
But the shuttering of more than a dozen departments and agencies — from Homeland Security to the Environmental Protection Agency — is being felt across the country, threatening the economy, public safety, businesses and people’s wallets.
And it’s only going to get worse.
The U.S. Department of Agriculture said there may not be enough money to keep food stamp benefits flowing to 38 million recipients past February.
That spending accounts for about 10 percent of the food U.S. families buy for their homes, with purchases spread across some 260,000 retailers, according to the Center on Budget and Policy Priorities.
Joe Brusuelas, chief economist with financial consultant RSM US LLP, estimates the loss of food stamp funding alone would strip at least 0.53 percent from the GDP.
Other portions of the safety net are also at risk. The Department of Housing and Urban Development has said it can’t renew 1,150 rental assistance contracts with private landlords that expired in December or will expire in January, accounting for some 40,000 low-income households.
Another 550 rental assistance contracts expire in February, affecting an additional 16,000 households. And if the shutdown stretches into March, subsidies for the great majority of contracts will end, along with all subsidy payments for the largest rental assistance program, jeopardizing the vouchers used by 2.2 million low-income households, said Sharon Parrott, a senior fellow at the Center on Budget and Policy Priorities.
Landlords nationwide may then face an increasingly dire choice, possibly forcing tenants to pay full monthly rent or evicting them.
Work Without Pay
An extended shutdown will also test the limits of how long government employees and contractors will keep working without pay — an issue for those designated as “essential” and told to remain on the job even though paychecks have been suspended. While most workers have complied so far, an extended shutdown, combined with employers eager to hire in the tight labor market, could challenge both their loyalty and savings.
Transportation Security Administration security officers are already calling in sick at twice the usual rate, forcing airports in Miami, Houston and Virginia to consolidate security lanes. Hydrick Thomas, TSA council president for the American Federation of Government Employees, said in a statement that if the government continues to ask employees to work without pay, “we’re risking losing them.”
If TSA officers leave in large numbers, the government would struggle to replace them during a shutdown, potentially crippling air travel and exposing passengers to greater risk.
That danger goes beyond the TSA. Federal workers considered essential include border patrol agents, air-traffic controllers and the firefighters who battled some of California’s wildfires last year along with correctional officers at federal prisons.
At the U.S. Penitentiary, Hazelton in West Virginia, absenteeism is already at triple the normal rate and that’s diminishing safety and working conditions, said Rick Heldreth, president of the local American Federation of Government Employees union that represents federal workers at the prison.
“The further this goes and the less gas money, and childcare money and food money people have, it’s going to fuel the absenteeism even more,” he said.
Even furloughed government workers who aren’t considered essential could begin drifting away, creating openings that will have to be filled when the shutdown ends.
“Now is the time when people are going to start looking for other options,” said Steve Lenkart, executive director of the 110,000-member National Federation of Federal Employees. “The rent is due, and a lot of these feds live paycheck to paycheck.”
The federal government may stop paying its own rent because there is no one to process the checks.
The drop in revenue would hit property owners as soon as the end of this month, when the General Services Administration would usually send out its January payments, according to Darian LeBlanc, director of the government services group at Cushman & Wakefield PLC.
The GSA leased more than 190 million square feet in nearly 7,000 buildings nationwide at the start of its 2018 fiscal year, representing roughly $5.6 billion in annual rent payments, according to an agency report. That means landlords could be out some $460 million a month if the agency stops issuing checks.
And even if the GSA were to designate the staff who process those rent checks as essential, making them work without pay, there’s another risk: The Federal Buildings Fund, which is the source of the GSA’s rent payments, could go broke, as other closed-down federal agencies stop paying the GSA for using its buildings.
“It is just a function of time before that happens,” LeBlanc said in a phone interview.
If the government stops paying its rent, landlords have no good options. The law prevents them from evicting federal tenants; their only recourse is to sue. In the meantime, landlords must continue to honor their commitments under the lease, such as servicing the property.
“It becomes a very, very bad situation for these lessors,” LeBlanc said. “They’ve got debt payments and all the things that they have to meet. It could become very problematic.”
Douglas Development Corp, which rents almost 1 million square feet of space to the GSA, has set aside money in case the government stops paying, according to Norman Jemal, a principal and senior vice president.