The US economy could be hit by a Double Whammy on September 30

If a government shutdown occurs and/or a strike is not avoided, substantial parts of the US economy could be impacted a little more than a month before the 2024 presidential election.

Of course, there is still time for members of Congress to negotiate an interim spending bill. On Wednesday, September 18, the House of Representatives rejected a bill introduced by GOP House Speaker Mike Johnson that would have funded the government for another six months. On Thursday, Johnson and other GOP leaders signaled they are interested in keeping the government open.

There’s also time for the International Bankruptcy Association to hammer out a contract with the United States Maritime Alliance — though as of Wednesday, there have been no negotiations so far and none on the books, The Wall Street Journal reported this week .

The two potential crises have no connection other than sharing an ominous deadline. Here’s what happens with each.

A government shutdown

Wednesday’s rejection of Johnson’s plan raised tensions in Congress as the September 30 deadline looms ever closer.

The 220-202 vote saw fourteen Republicans join Democrats in blocking the bill, which is opposed by both the White House and Senate Democrats.

While the bill had been expected to fail for days, former President Donald Trump likely didn’t help Johnson’s cause by pushing Republicans to fully include a voter registration bill that requires proof of citizenship to vote in national elections or to go ahead with a shutdown. .

With Johnson now forced to work across the aisle, Democrats are likely to propose a three-month continuing resolution, The Washington Post reported. On Thursday, The Wall Street Journal reported that GOP leaders were in talks over a bill that would keep the government open until mid-December.

The fallout from a government shutdown ahead of the presidential election would be damaging for both parties, but Senate Minority Leader Mitch McConnell told reporters on Wednesday that he believed Republicans would bear the brunt.

If Congress fails to pass a bill by Sept. 30, the government would be partially shut down on Oct. 1, meaning unfunded federal agencies would cease all nonessential work until the new funding legislation takes effect. be adopted and signed into law.

During a shutdown, non-essential government workers are laid off, social service programs like Social Security, Medicare and veterans benefits can suffer disruptions, and national parks are closed to the public.

The 2018-2019 shutdown, which lasted 35 days, reduced GDP by $11 billion, according to an estimate by the Congressional Budget Office.

The three previous shutdowns, which occurred in 2013, 2018 and again in 2018-2019, cost taxpayers nearly $4 billion, according to the Senate Appropriations Committee.

A closing of the docks

Meanwhile, the likelihood of 45,000 dock workers in ports from Maine to Texas grows by the day.

The dock workers’ contract expires at the end of this month and the International Liquidators Association has said its members will strike if no deal is reached.

The union is demanding a 77 percent pay increase over six years, The Journal reported.

The looming economic threat is prompting U.S. importers to begin holiday shipping, with millions of dollars worth of items rushed to try to avoid the possible recall, according to the publication.

A strike would likely lead to mass cargo diversions to West Coast ports that could clog the gateways, according to The Journal.

If these high-traffic ports cease operations before the peak holiday season, the economic consequences for retailers and consumers could be dire.

A recall could lead to mass delays, high shipping costs and possible shortages, all of which could hurt the broader economy, according to the Retail Industry Leaders Association.

Some analysts predicted that each day of the strike would require five days to deal with the backlog, according to the industry group.

The government could step in to help the two sides reach an agreement, though the Longshoremen said they don’t want government intervention. President Joe Biden could also “seek an 80-day court order under the Taft-Hartley Act,” according to RILA. This would halt the strike while negotiations continued.