Why Does the Government “Shut Down”?
If Congress and the President are unable to agree on new appropriations bills before the start of the new fiscal year (or prior to the expiration of a continuing resolution), a “government shutdown” can occur. A “shutdown” can be partial if only some of the appropriations bills are not enacted.
The Executive Branch may not legally spend funds on personnel, programs, or activities if appropriations have not been provided. The Constitution explicitly provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Antideficiency Act establishes criminal penalties for federal officials who allow expenditures that exceed available appropriations.
What Happens During a “Government Shutdown”?
A “government shutdown” could be more accurately called a “temporary slowdown of nonessential government activities.” Despite the “shutdown,” many government activities continue and much of the federal budget remains funded. Affected activities are limited in nature to only those subject to annual appropriations that have not been enacted for the new fiscal year. Affected programs and personnel (with certain exceptions) are required to halt operations until they have appropriations enacted.
“Essential” Activities May Continue Despite a Lapse in Appropriations
During a lapse in appropriations, certain essential activities can be deemed “excepted” from a shutdown. The Office of Management and Budget (OMB) provides guidance on excepted functions that may continue during a lapse in appropriations.
A government function may be carried out in the absence of appropriations if it is:
- Expressly authorized or required by another law or court order;
- Necessary to execute other lawfully continuing functions;
- Addressing an imminent threat to the safety of human life or the protection of property; or
- Necessary to discharge the President’s Constitutional duties and powers.
The OMB and agencies have significant flexibility in deeming personnel and activities as essential or nonessential. Each agency is required to have a “shutdown” contingency plan on file with the OMB. As such, the President has broad authority in determining the scope of affected activities that must halt during a “shutdown.”
Nonessential employees would be furloughed, or placed on leave without pay. Furloughed employees may not perform work activities. Essential employees are expected to continue work but would not be compensated during the lapse in appropriations. Of note, Congressional staff and other Legislative Branch employees are also subject to “shutdown” impacts if Legislative Branch appropriations lapse.
Many Programs Are Already Funded and Do Not Shut Down
Even during a “shutdown,” many programs, projects, and activities will already be fully funded. As OMB guidance clarifies, “functions that are financed with appropriations that have not lapsed may continue” during a shutdown.
Only about 27% of the federal budget is funded by annual appropriations. The remaining 73% of spending is on “autopilot” programs, such as Social Security and Medicare, whose funding is not contingent on appropriations bills.
While autopilot programs may have mandatory appropriations available to continue operations, the federal employees who administer them are often funded by discretionary appropriations that may have lapsed. While OMB guidance provides that employees who are necessary to carry out lawfully continuing functions (such as processing entitlement benefits) may be deemed as excepted from furloughs, operations could still be impacted.
Furthermore, certain discretionary programs may still have funding available because of multi-year and non-expiring appropriations or advanced appropriations.
What Happens After a “Shutdown”?
After a “shutdown,” operations resume based on the appropriations bills that have been enacted. Congress generally provides back pay to furloughed employees and allows agencies to pay for obligations incurred during the lapse in appropriations.
Background and History
Government shutdowns as we know them did not occur until a pair of opinions from the Carter Administration’s Attorney General in 1980 and 1981.
Before the Carter Administration opinions, agencies generally “continued to operate during periods of expired funding,” while minimizing nonessential obligations, according to the Government Accountability Office (GAO). This practice was followed because of “the belief that Congress does not actually intend that the Federal Government shut down while agencies wait for the enactment of appropriations.”
However, Attorney General Benjamin Civiletti opined that “on a lapse in appropriations, federal agencies may incur no obligations that cannot lawfully be funded from prior appropriations unless such obligations are otherwise authorized by law.” The Carter Office of Management and Budget then instructed agencies to “limit obligations incurred to those needed to maintain the minimum level of essential activities necessary to protect life and property” during any lapse in appropriations. This exception mirrors the Antideficiency Act which permits voluntary services for emergencies involving the safety of human life or the protection of property.
Since FY 1982, 14 temporary funding gaps have occurred. Most of these funding gaps lasted less than three days. The longest lapse in appropriations was the 34-day “Schumer Shutdown” in FY 2019, caused by opposition to border security funding.
