The definition of a government shutdown is the impasse of decision-making in Washington that results in the halting of all or parts of federal government operations. The last federal government shutdowns happened in 2013 and 2018. It is likely November 2020 will be added to the list as the deadlock on the new stimulus relief bill has caused both parties to struggle to reach an agreement.
If a government shutdown occurs, about 800,000 government employees will be furloughed, leaving them without pay for the duration of the shutdown. With the November deadline looming, citizens are curious about what would happen to their Social Security payments should a government shutdown occur.
In the event of a shutdown, Social Security payments will not cease. Checks for Social Security and Supplemental Security Income benefits are expected to continue uninterrupted to retirees and the disabled, as the Social Security Administration is funded through the end of fiscal year 2021 under the Continuing Appropriations Act of 2021. Likewise, those receiving Medicare benefits can expect the same continuity of coverage.
Despite the continuation of essential services, a government shutdown does have a ripple effect on government services. Any services not deemed essential, such as processing of passport and visa applications, will not be available. The processing of tax refunds could also be delayed.
A government shutdown will also have far-reaching consequences on the stock market. A shutdown could cause investors to become increasingly jittery over the political stalemate and the resulting loss of confidence in the stability of the US government. This uncertainty could lead to market volatility and an overall downturn in the stock market.
Finally, it is important to note that the effects of a government shutdown go beyond the political realm. Government employees affected by this impasse, as well as the American people, will be adversely impacted economically, emotionally, and socially by the disruption in government services.
While the current scenario in Washington continues to be up in the air, it is important to remember the potential implications of a government shutdown on the American people and the US economy should an agreement be unable to be reached. Though it is likely Social Security and Medicare payments will continue for the duration of any potential shutdown, other important services, such as processing of visa applications, will certainly be disrupted. Additionally, capital markets will be affected as investors could become unsettled by the political impasse leading to an overall market downturn.