How to stop the shutdown on the books
With the shutdown in place, it’s now up to Congress to figure out how to make good on its promise to avert the fiscal cliff.
It’s not clear yet how many weeks it will take to reach a deal, and the House and Senate are expected to both take up a new budget on Monday.
But for now, the shutdown appears to be ending.
The latest numbers from the Congressional Budget Office show that the federal government’s $16.8 trillion in debt is shrinking.
That’s good news for millions of Americans who rely on government assistance programs.
But it’s also a problem for the average American who relies on the tax code for their paycheck.
The CBO estimated that for every $1 of additional revenue that the government raises, it would increase its $10.9 trillion in outlays by $2.25.
And it projects that for each $1 in revenue, the government would raise $1.10 in taxes.
Those extra taxes, the CBO says, will eat into the economy’s already-stagnant tax revenue.
So Congress could save some money by simply delaying the tax increases, but it could also make it harder for many Americans to make ends meet.
Here’s what you need to know about the fiscal crisis.
What’s the fiscal impact?
The CBO estimates that the shutdown would increase the government’s annual deficits by $7 billion, to $21.6 billion.
The agency projects that the economic impact would be roughly the same as a temporary partial shutdown.
But the CBO has not yet estimated how much of a fiscal impact that shutdown would have on the economy, or how many jobs would be lost.
How did we get here?
Congress began to negotiate a budget deal in October 2011, two months after the first round of government shutdowns began.
That year, Republicans, backed by Democrats, had demanded that Congress delay tax increases by two weeks.
That agreement included $800 billion in spending cuts, but Congress also extended the payroll tax holiday.
It also included $1 trillion in spending increases, mostly in entitlement programs.
Democrats and some Republican lawmakers wanted to extend the payroll deduction, but Republicans and Democrats agreed to extend a provision that made it harder to claim the deduction.
It took another three weeks for the fiscal deal to be signed into law.
Why the deal was made is unclear.
The agreement included a $50 billion tax increase that the GOP opposed.
But Republicans wanted the money to be used to pay down the national debt.
They also wanted to raise taxes on the wealthy, and Democrats supported the deal because it included spending cuts to help pay for those priorities.
The two parties also agreed to allow the debt ceiling to be raised later, at the end of the year, rather than early in the year.
But Democrats blocked the $50-billion tax increase.
In November 2011, President Barack Obama signed the Fiscal Year 2012 budget, which included a provision allowing Congress to raise the debt limit in the spring of 2012.
But that debt ceiling increase was scheduled to take effect in July, when the economy would be starting to improve.
So the two sides couldn’t agree on a way to reach agreement on how much longer the government could continue operating.
So in December 2011, Obama signed a short-term extension of the payroll deductions.
That was enough time to agree on how to raise that money and to avert a partial shutdown, but there was still some uncertainty about how long it would take to raise it.
Republicans also opposed raising the debt threshold to $10,000.
But a few months later, the Treasury Department decided to make that possible, and Congress voted to raise $3.3 trillion in new revenue.
The Treasury Department had previously warned that raising the ceiling could cost the economy $4 trillion in lost tax revenue over the next decade.
How are taxes paid?
In addition to raising taxes, a partial shut down would also have a ripple effect on the budget.
Some people who receive unemployment insurance payments would lose their benefits, and some people who rely primarily on Social Security Disability Insurance would lose benefits, as well.
That would hurt the economy in a number of ways.
The payroll tax cut has saved more than $700 billion over the last 10 years.
But some economists say it could cost another $1 billion in lost revenue in the next 10 years, if that money is not available for Social Security and Medicare.
And many workers who receive food stamps would also see their benefits cut.
What will happen if I lose my job?
Most Americans who receive benefits from the government or the private sector do not lose their jobs during a shutdown.
The government will continue to provide food, housing, health care and other services, and workers in the private sectors will continue working, but many workers are still working.
Those workers will be required to work longer hours and pay higher wages, but some people will likely still be able to find work.
What happens to the rest of the federal budget?
Congress also has to figure how to pay for the spending cuts and tax increases that are expected over the coming years.