One consequence of a government shutdown -- which will occur on April 8 unless Congress passes a new funding bill -- is that members of the military will no longer be paid, even though they will continue to work and fight. And as legislators and the Obama administration struggle to avoid a shutdown, officials are preparing contingency plans to keep key national security and foreign policy activities running when the money tap runs dry.

Programs that are essential for the safety and security of the country are exempted from a shutdown, but the administration still has to figure out where to draw the line between essential and non-essential functions, and how to keep key national security functions going without money.

The White House Office of Management and Budget sent an e-mail to deputies of most government agencies Monday night to direct them to prepare for a shutdown.

"The president has been clear that he does not want a shutdown... But we are aware of the calendar, and to be prudent and prepare for the chance that Congress may not pass a funding bill in time, OMB today encouraged agency heads to begin sharing their contingency plans with senior managers throughout their organization to ensure that they have their feedback and input," OMB senior advisor Kenneth Baer said in a statement about the email. "As the week progresses, we will continue to take necessary steps to prepare for the possibility that Congress is unable to come to agreement and a lapse in government funding ensues."

In the event of a shutdown, all uniformed military personnel would continue to work but would stop receiving paychecks, an official familiar with the government's planning told The Cable. As April 8 falls in the middle of the Defense Department's two-week pay period, military personnel would actually receive a paycheck totaling half the normal amount. A large number of Pentagon civilians would be furloughed without pay for the duration of the shutdown. Support structures for military families, such as military schools, would remain open. When the shutdown ends, the soldiers would get their back pay but the civilians might not.

Most personnel at U.S. foreign missions would be retained, the official said, although about two-thirds of the State Department and USAID staff in Washington would be furloughed. Non-emergency passport services for Americans would also likely be suspended. Up to three-quarters of the staff at the Office of the U.S. Trade Representative would be sent home without pay.

U.S. diplomats and military officials would still be able to travel for important meetings, but "it will be a much, much, much tougher standard," the official said, explaining that travel would be approved only "if it is integral to the foreign relations and safety and security of the country."

The shutdown would also impact government organizations that help American companies do business abroad. For example, the Export-Import Bank would stop approving new loan guarantees or insurance policies, the official said, which could cost American exporters $2 billion to $4 billion each month in income and jeopardize deals already in progress.

Veterans are actually exempted from the consequences of the shutdown because the Veterans Administration receives advance appropriations and therefore already has its money for the rest of the year. Law enforcement activities at the Justice Department and the Homeland Security Department would also continue without interruption, the official said. 

Pentagon spokesman Geoff Morrell told reporters on Tuesday that if the shutdown happens on April 8 at midnight, the Defense Department would "retain the ability and the authority to continue to protect our vital interests around the world, to continue to safeguard the nation's security, to wage the wars we're fighting and the operations that we are conducting right now."

Morrell said that Deputy Secretary Bill Lynn was leading the internal effort to plan for a shutdown. He also said that no decision on suspending military paychecks had been made, although our sources said that the checks would definitely stop.

Obama made the case on Tuesday that a government shutdown would hurt America's fragile economic recovery and its credibility with a range of domestic and international actors.

"At a time when the economy is just beginning to grow or we're just starting to see a pickup in employment, the last thing we need is a disruption that's caused by a government shutdown; not to mention all the people who depend on government services," Obama said.