The government is currently operating on a pared-back two-week continuing resolution. House Republicans are now preparing another two-to-three week CR, to buy congressional leaders time to work out a longer-term funding bill. A veto of that, or a similar future measure, would trigger a government shutdown.
Economists warn that even a short government shutdown would have negative economic consequences -- and that a long one could upend the recovery.
"If it is a short government shutdown on par with 1995, the fallout would probably be modest," said Mark Zandi, chief economist at Moody's Analytics, and an adviser to both parties. "There will be some economic impact, but it would be quickly made up down the road. But if it were more than a couple of weeks -- if it dragged on for a month -- that would be meaningful, especially in terms of sentiment. People are still very much on edge right now."
A shutdown "impacts consumer spending, business investment. If there's no confidence, people will stop spending, businesses will stop hiring. We have an economy that's fine but it's still pretty fragile. It would be a disruption that I think would set back our recovery," according to Phillip Swagel, who was assistant Treasury secretary under President George W. Bush.
Funding for the government expires a week from today. Republicans are using short-term spending bills to clawback government spending across the board. That inches them toward their goal of cutting scores of billions of dollars from Obama's budget, but, by not setting new spending levels for all government programs, creates waste and makes it difficult for the government to function in accordance with its current priorities.