The House is about to vote, and the U.S. government is starting a "long reboot."

Written by: Zhao Ying

Source: Wall Street Journal

According to media reports, the U.S. House of Representatives is scheduled to vote on Wednesday evening local time to pass a spending bill that will end the record-long government shutdown.

The shutdown that began on October 1 has lasted for 43 days, forcing hundreds of thousands of federal employees to take leave or work without pay. Flights are delayed, the release of key economic data is hindered, food assistance for millions of families is threatened, and national parks and museums are closed. House Speaker Mike Johnson is optimistic about the passage of the bill, and the House Freedom Caucus has expressed its support.

Senate Democrats had previously insisted that any agreement to restart the government must include an extension of the Affordable Care Act ( ACA ) subsidies, but ultimately, 8 Democratic caucus members turned against this position and supported the Republican proposal to first restart the government and then vote on healthcare subsidies in mid-December. House Democratic leaders are urging members to oppose the bill, stating that it lacks healthcare provisions.

After the shutdown ends, the government will face a long reboot process. It may take several days or even more than a week for the government to resume normal operations, updates to the payroll system are needed to pay for weeks of back wages, and there is a backlog of grants, loan applications, and customer calls that need to be addressed. Transportation Secretary Sean Duffy stated that flight restrictions will begin to be lifted within a week of the government reboot, just in time for the Thanksgiving travel peak. The Congressional Budget Office estimates that a six-week shutdown will reduce GDP by 1.5 percentage points in the fourth quarter, ultimately resulting in a net loss of about $11 billion.

The controversy at the last moment did not hinder the progress.

A provision in the bill allowing senators to claim $500,000 if federal investigators collect their phone records without their knowledge has sparked backlash from bipartisan lawmakers before the vote. This provision is believed to be designed for eight senators whose records were obtained during former special prosecutor Jack Smith's investigation into Trump's efforts to overturn the 2020 election.

Multiple Republican lawmakers have stated that they do not want to delay the government restart by opposing this provision, but instead plan to later pass separate legislation to repeal the provision. Johnson stated on Wednesday that the Republicans will introduce a standalone bill next week to repeal this regulation.

The House Freedom Caucus praised the funding plan in a memo as a “comprehensive victory for the HFC, conservative leadership, and messaging.” Republican Representative Victoria Spartz, who voted against the stopgap funding measure in September, stated that she would vote in support of this bill. The Republicans hold a slim majority in the House, and most Democrats are expected to oppose the measure, but potential defectors include Maine Representative Jared Golden and Texas Representative Henry Cuellar.

House Minority Leader Hakeem Jeffries stated that the Democrats will continue to push for legislation to extend health care subsidies, including a new bill that would extend the subsidies for three years. At a press conference on Wednesday, he mentioned that the Democrats will pressure the Republicans to support the proposal. “This fight is not over,” he said.

Restarting the process may take several days or even weeks.

The government will officially restart work only after the funding bill is passed by Congress and signed by President Trump. The House is expected to pass the Senate-approved legislation as early as Wednesday evening, but many agencies may not be able to resume operations until Friday or even next Monday, depending on the speed of the legislative process.

Federal officials have warned that some restrictions related to the shutdown will remain in place. Transportation Secretary Duffy stated on Wednesday that flight restrictions will begin to be lifted within a week after the government reopens, just in time for the Thanksgiving travel peak. Delta Airlines CEO Ed Bastian said on Wednesday that travel for the Thanksgiving holiday should be “good.”

Although federal employees will receive back pay, agencies warn that recalculating salaries may take time. A law from 2019 requires agencies to pay employees their full wages for the duration of the shutdown “as soon as possible” after the funding interruption ends. However, after the 2019 shutdown, air traffic controllers took about two to two and a half months to receive full compensation, according to National Air Traffic Controllers Association President Nick Daniels.

Duffy promised that this action would be faster. He stated that the regulators would receive 70% of the overdue wages within 24 to 48 hours after the government restarts, with the remaining amount to be paid in about a week.

The economic impact is difficult to completely eliminate.

Gregory Daco, the chief economist at the accounting firm EY, stated that this is more of a stimulus than a shock to the economy, but this stimulus is becoming increasingly significant. A government shutdown lasting more than a few weeks will leave a lasting mark on the economy, and we are just beginning to see this.

The report released by the Congressional Budget Office last month indicated that the comprehensive impact of the six-week shutdown will reduce GDP growth by 1.5 percentage points in the fourth quarter. The government restart will reverse most of the impact, as back pay will be distributed to employees. However, there will still be a net loss of about $11 billion in GDP. Some canceled travel plans will not be rescheduled, and some federal contractors will not be able to make up for all the losses.

A shutdown will not save the government money. A bipartisan report from the Senate in 2019 found that the shutdown caused the U.S. to spend over $300 million on extra administrative work, lost revenue, and late fees. Additionally, although the White House laid off thousands of employees during the shutdown, legislation to fund the government requires them to be rehired. Regardless of whether federal employees are on the job, they will receive back pay.

Nutritional Assistance Program ( Food Stamps ) will return to normal payment cycles after weeks of uncertainty, during which states were forced to delay and ration benefits. But this will not happen immediately: states have indicated that they need up to a week to update beneficiary profiles and recharge debit cards. With only two major card suppliers, there may be bottlenecks when each state simultaneously seeks to supplement benefits.

The shutdown also led to the cancellation or delay of economic data releases. More importantly, there was no collection of new statistics on prices and employment, leaving policymakers with a data gap that could distort forecasts for months. Analysts estimate that the shutdown costs the economy between $10 billion and $15 billion for each week it lasts. While backpay and paused federal spending can be reversed, economists say that some costs of this record shutdown will never be recouped.