When Congress fails to appropriate funding for the government by the of the next fiscal year on Oct. 1, the government shuts down. Interruptions in federal agency funding at the beginning of a fiscal year have become the norm. For years, many federal agencies continued to operate during a funding gap, while “minimizing all nonessential operations and obligations,” believing that Congress did not intend for the agencies to close. However, that view changed when then U.S. Attorney General Benjamin Civiletti issued two memoranda 1980 and 1981. The Attorney General stated that the act required agencies to terminate all operations when their current appropriations expired.
The longest shutdown occurred in FY2019, beginning at the end of the day on Dec. 21, 2018, and lasting 35 days.
It is not uncommon for parts of the government to be funded by the beginning of the next fiscal year and thus remain operating while unfunded departments shut down. However, this year no appropriations bills have passed both bodies of Congress for any part or function of the government.
What happens when the government shuts down?
The executive agencies receive instructions for the Office of Management and Budget (OMB) on how to prepare for and operate during a shutdown. The guidance establishes two policies:
- A prohibition on incurring obligations unless the obligations are otherwise authorized by law.
- Permission for agency heads, in consultation with their general counsels, to decide what agency activities are exempt, or otherwise legally authorized to continue during a lapse in appropriations.
This year, OMB has also stated the intention to fire employees who work on programs that have expired authorizations and have not been renewed by Congress, even if Congress has previously continued to appropriate funding.
Does everything cease?
Each federal agency develops its own shutdown plan, including designating essential personal who must report to work and those who will be furloughed. There are differences among some programs and agencies depending on whether the spending is discretionary or mandatory.
Discretionary spending must be appropriated every year. Mandatory spending is authorized either for multiyear periods, or permanently. Thus, mandatory spending generally continues during a shutdown. However, some services associated with mandatory programs may be diminished if there is a discretionary component to their funding. For instance, during the 1996 shutdowns and the 2013 shutdown, Social Security checks continued to go out, but staff who handled new enrollments and other services, such as changing addresses or handling requests for new Social Security cards, were initially furloughed in 1996. In 2013, certain activities were discontinued, including verifying benefits and providing new and replacement cards, but the processing of benefit applications and address changes continued. During the 2018-2019 shutdown, the U.S. Department of Agriculture (USDA) had to rely on a special authority included in the previous Continuing Resolution (CR) to allow it to continue issuing Supplemental Nutrition Assistance Program (SNAP) benefits.
Essential services – many of which are related to public safety – continue to operate. In this case, payments covering any obligations are incurred only when appropriations are enacted. In prior shutdowns, border protection, in-hospital medical care, air traffic control, law enforcement and power grid maintenance have been among the services classified as essential, while some legislative and judicial staff have also been largely protected. Mandatory spending that is not subject to annual appropriations – such as for Social Security, Medicare, and Medicaid – also continues. Other examples of activities that continue are those funded by permanent user fees that are not subject to appropriations.
Although many programs are exempt, the public is still likely to feel the impact of a shutdown in several ways. For example, in a full shutdown:
- Social Security and Medicare: Checks are sent out, but benefit verification as well as card issuance would cease.
- Environmental and Food Inspection: During the 2013 shutdown, the Environmental Protection Agency (EPA) halted inspections for 1,200 sites that included hazardous waste, drinking water and chemical facilities, and the Food and Drug Administration (FDA) delayed almost 900 inspections. During the 2018-2019 shutdown, the FDA restored some food inspections a few weeks into the funding lapse for products that were considered high risk.
- National Parks: In 2013, the National Park Service (NPS) turned away millions of visitors to more than 400 parks, national monuments and other sites. NPS estimated that the shutdown led to more than $500 million in lost visitor spending nationwide. Many parks remained open during the 2018-2019 shutdown, though no visitor services were provided, and damage and trash build-up were reported at many sites.
- Air Travel: During the 2018-2019 shutdown, air travel was slowed as a result of air traffic controllers and Transportation Security Administration (TSA) agents working without pay. Travelers faced longer lines as some TSA agents did not report to work and security checkpoints were closed.
- Health and Human Services (HHS): In 2013, states were forced to front the money for formula grant programs such as Temporary Assistance for Needy Families. HHS also administers many programs that have not been reauthorized by Congress and as a result of the OMB directive, those programs are likely to cease.
- Internal Revenue Service (IRS): In the event of a shutdown, the IRS, which verifies income and Social Security numbers, would not be able to perform this service. In 2013, a backlog of 1.2 million income and Social Security number verification requests delayed mortgage and other loan approvals, and billions of dollars of tax refunds were also delayed. At least 26,000 furloughed IRS employees were recalled to work during the 2018-2019 shutdown in preparation for tax season, but many did not report to work without pay.
- Supplemental Nutrition Assistance Program (SNAP): Though funding for the SNAP program is mandatory, the ability to send out “food stamp” benefits could be affected by a shutdown, since continuing resolutions have generally only authorized USDA to send out benefits for 30 days after a shutdown begins. During the 2018-2019 shutdown, the USDA paid February SNAP benefits early on Jan. 20, just before the 30-day window ended, but it would have been unable to pay March benefits had the shutdown continued. In addition, during any shutdown, stores are not able to renew their Electronic Benefit Transfer (EBT) card licenses, so those whose licenses expire would not be able to accept SNAP benefits during a shutdown.
- The funding of certain activities, which are typically specified with reference to the prior fiscal year’s appropriations acts.
- Budget authority for a specified duration of time that may be as short as one day or as long as the remainder of the fiscal year.
- Funding based on an overall funding rate rather than specified amounts.
What is a Continuing Resolution? And Why Can’t Congress just pass another one?
Continuing Resolutions (CRs) have been a significant element of the recent annual appropriations process. Congress has enacted one or more CRs in all but three of the 47 fiscal years since FY1977. There have been 14 CRs between FY1998 and FY2023. The current funding crises is because a CR passed in December 2025 is expiring.
CRs provide for:
CRs typically have not provided funding for new activities not funded in the previous fiscal year, but at times have included legislative provisions which create, amend or extend other laws.
Although the House passed a short-term CR that would fund the government to Nov. 21, the Senate was not able to pass that CR. In the Senate, the CR needs to pass with 60 votes. With margins between parties so close that means some Democrats would need to vote for the CR. However, Democrats also suggested a CR. That CR also failed to pass. The Democratic CR contained a number of health care provisions counter to the recently passed budget reconciliation legislation and included an extension of the Affordable Care Act’s premium tax credits that expire at the end of 2025. Republicans object to the health provisions being included in the short-term CR.
The true implications of a shutdown will be determined by whether it lasts a few days or stretches out longer. After the five week partial shutdown in 2018-2019, the Congressional Budget Office estimated that the U.S. economy lost about $3 billion even after government functions resumed.
