What Would Happen If The Government Shut Down

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What Would Happen If The Government Shut Down – Update: On November 15, 2023, Congress passed a continuing resolution (CR) that averts a government shutdown. In CR, some agencies and programs will remain in effect until January 19, 2024, and others until February 2, 2024.

Since 1980, the federal government has experienced 14 shutdowns. If Congress doesn’t pass a full-year spending bill or pass a “continuing resolution” (CR) to keep the government open, another shutdown could happen on Oct. 1. But what is it? What does this mean and how does it affect the American economy?

What Would Happen If The Government Shut Down

What Would Happen If The Government Shut Down

Closure occurs when a department or agency whose budget has expired does not have a full-year budget or CR in effect. Most government departments have this expiration date at least once a year at the end of the fiscal year that runs from October 1 to September 30. If a CR or full-year contract is not in effect, some federal agencies and programs. will not lose annual congressional funding authorization by requiring these agencies to suspend programs or activities not essential to national security or the protection of life or property.

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Instead of spending a full year, CR keeps programs and activities funded for a period of time set by Congress – usually weeks or months – at a set funding level, often the same level as the next fiscal year.

The 2023 suspension may resemble the 2013 shutdown more in both scope and impact than the 2018-19 shutdown. year exclusion.

Although the 2018-2019 season will be the longest in history (34 days), it is only partially closed. Some agencies and departments received a full year of funding from Congress before the doors closed on December 22, including the Department of Agriculture, Commerce and Homeland Security, while other agencies and departments are not fully funded each year and therefore. , he stopped some activities and projects. 2018-2019 closed in December and January after the end of CR.

The 2013 shutdown affects all departments and agencies that receive annual funding because Congress did not pass a full-year spending bill before the money was appropriated. The shutdown began on October 1, the first day of the 2014 fiscal year. Although the 2023 shutdown may occur as early as mid-November, the results of the 2023 shutdown will be similar to the 2013 shutdown, at least in the first few weeks. .

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This fall, Congress must address other programs that allow decades of taxpayer dollars to expire or expire, including farm subsidies and nutrition under the farm bill (expires Oct. 1, 2023), climate control measures. Traffic. with the Federal Aviation Administration (expires December 31, 2023) and the ability to purchase flood insurance through the National Flood Insurance Program (expires November 17, 2023). These shutdowns are a different issue than a government shutdown, but a shutdown on Capitol Hill.

Due to the lack of government funding, departments or agencies affected by the deficit must take a number of steps to “prevent”. The 1970s saw many financial problems

This led to the closure of programs and services, in part because the leaders at the time did not request it, but the closure was the first outage of more than a day or two since 1980.

What Would Happen If The Government Shut Down

The shutdown does not affect all federal government departments. Large programs and benefits, such as Social Security and Medicare, tend to be ineffective because Congress allows these programs to spend without expiration dates — so-called “forced spending.” Mandatory spending accounts for $7 of every $10 spent by the federal government.

What Happens If There Is A Government Shutdown?

The remaining $10 in the general budget is approved by Congress each year, called “discretionary spending,” and consists of 12 budget items (ie, expenditures) covering various sectors and programs. – Government projects. For example, one bill targets the Department of Defense, while the other provides funding for the Department of Labor, Health and Human Resources, and the Department of Education. Additional costs include fees for:

Many of these critical programs and services are at risk of disruption during the government shutdown, although services that protect lives or property, such as military operations at the Department of Defense, may continue.

When Congress passes some, but not all, of the 12 regular budget bills, there may be a partial shutdown that applies only to departments and programs without a full-year spending bill, or CR. For example, in 2018-2019 During the 2018 shutdown, jobs at the Departments of Defense, Labor, Health and Human Services, Education, Energy, and Veterans Affairs, including the Congressional Division, were not affected by the shutdown because their Congressional membership was full. An estimate of the annual expenditure of these Government Departments.

In Article 1, Article 9 and Section 7 of the Constitution, it is stated: “Money may not be withdrawn from the treasury, except in cases specified by law.” That means federal departments and programs can’t spend money unless Congress passes legislation giving them money.

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A 19th-century law, the Prohibition Act, also prohibited federal agencies from paying tax dollars without specific authorization from Congress. From the beginning, the law was created in response to ministries spending more than their budgets, and then went back to Congress to make up the difference. Subsequent recommendations by Justice Department officials in 1980 and 1995 confirmed the need for antitrust laws to cover unfunded programs and services.

The Office of Management and Budget (OMB) provides guidance and direction to departments and agencies affected by the government shutdown. OMB also requires them to develop and update a shutdown action plan that outlines the expected time period “to complete the shutdown activities” as well as estimates of the number of employees expected to be cut after the furlough (and they are . required). continue to work without pay).

Agencies are required to update these plans every few years, and the list of open and closed jobs varies from agency to agency. This means that no two shutdowns are the same, and the negative impact on government operations and the economy will vary from shutdown to shutdown.

What Would Happen If The Government Shut Down

The 2023 shutdown is likely to be broad because Congress hasn’t committed to a full year of spending on the law.

What Happens If The Government Shuts Down In 2023?

The government shutdown has wreaked havoc on the US economy. The Congressional Budget Office (CBO) estimates that in 2018-19 the year’s shutdown, which lasted 34 days, generated $3 billion.

Loss of economic growth. About 300,000 federal workers are out of a job during the shutdown, with tens of thousands working without pay until the shutdown in January. 800,000 staff at the agency affected in 2018-19 closing of the year, is about 40% of all state employees. (In 2018, Congress provided funding for some agencies.) The consequences would be even worse if some departments and agencies that make up five of the 12 regular budget bills Congress must pass each year were not paid up front. A full year of approval. .

Previous closures have sparked outrage among workers: 850,000 during the 2013 shutdown and 800,000 in 1995-96. at the beginning of the year. While the government has never shut down for months, such a collapse could cost billions of dollars in economic activity. Even a one-week shutdown could have an economic impact north of $1 billion.

A longer period in 2023 could delay the release of economic data from the Bureau of Labor Statistics and the Bureau of Economic Analysis, such as unemployment rates and gross domestic product (GDP) figures at critical times for the US economy. Monetary policymakers in Congress and monetary policymakers at the Federal Reserve rely on this information to make evidence-based decisions, while investors rely on data to make sound investments. A significant delay in the release of these data could make it difficult for policymakers and investors to navigate the US economy amid inflation and uncertainty.

Government Shutdown: Who Is Affected? What Does It Mean?

How much a shutdown hurts the U.S. economy depends on many factors, including the length of the shutdown and the government departments affected by the shutdown. Generally speaking, longer shutdowns result in greater economic losses.

The last government shutdown, from December 2018 to January 2019, was the longest government shutdown in history, lasting 34 days.

In total, there have been 14 blackouts since 1980. Mostly, 11 of the 14 were short-lived, lasting less than a week. The other three were more than two weeks old.

What Would Happen If The Government Shut Down

Yes. The causes of government shutdowns and debt vary, as do their effects on the US government and the US economy. While a government shutdown occurs when some ministries and government agencies do not have a budget approved by Congress, the debt limit limits the amount of money the federal government can legally receive. Once the debt level is reached, the Treasury Department cannot continue to borrow money to cover government operations.

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Unlike a government shutdown, which typically affects programs and departments with annual budgets (such as discretionary spending), failure to meet the debt ceiling in a timely manner can affect all types of government spending (such as discretionary and enforcement spending). including the Social Security, Medicare, and Medicaid programs.


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