Cyclopedia

Government Shutdown

Summary

A government shutdown occurs when appropriations of budget authority for the Federal Government lapse. Most government administrative functions, though not all, are funded through annual appropriations and require the agencies of the Federal Government to have the authority to obligate budgetary resources. This authority is carried in appropriation Acts lasting for a fiscal year, after which, absent a newly enacted appropriation bill, lapse.

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References

• The Federal government shut down Friday Jan. 19 at midnight because full-year appropriations for FY 2018 (which began Oct. 1, 2017) have not been enacted due to disagreements on total spending levels, and the latest stopgap measure to continue funding at last year’s levels (known as a “continuing resolution”) expired Friday night.  The shutdown ended on Monday, January 22 when the 4th FY ’18 CR was enacted.
• Why does the government have to shut down?  The Anti-Deficiency Act of 1870 (31 U.S.C. 1341-42; 1511-1519) makes it strictly illegal for any government official to make payments or enter into contracts in excess of congressional appropriations.  The purpose is to enforce Congress’ constitutional authority over the public purse and the result is to require government shutdowns when appropriations lapse.  Background on Anti-Deficiency Act
• When was the last shutdown?  There was a 16-day shutdown in October 2013.  
• What was the longest shutdown?  The longest shutdown was 21 days in 1995-96.
• What happens when the government shuts down?  Federal agencies must discontinue all “non-essential” functions and furlough all “non-essential” employees.  Each agency develops its own shutdown plan following guidance released by the White House Office of Management and Budget (OMB);  here is a link to current shutdown plans.  In general, “essential services” are those related to the “safety of human life or the protection of property” and those services continue to be operated by federal employees classified as “essential” —  with back salary and contract payments made only when appropriations are eventually enacted.
• Entitlement benefits that are permanently appropriated, such as Social Security, Medicare, and Medicaid, continue to be paid although services such as new enrollments or fixing benefit problems might cease (depending on what OMB deems “essential”).
• Examples of government functions that might be impacted (the precise impact is uncertain since each Administration’s Office of Management and Budget makes the final determination on what is to be deemed “essential” for the safety of life or the protection of property):
  • Private-sector lending may be disrupted, because banks and mortgage providers cannot access government income and Social Security Number verification services.
  • Import and export licenses may be put on hold, negatively impacting trade.
  • Taxpayers may be unable to get answers to questions on the new tax law and tax refunds could be delayed.
  • Government contractors are likely to experience payment delays (see 2013 shutdown).
  • Centers for Disease Control analysis of data on disease outbreaks could be slowed.
  • Passport and Visa applications could be delayed.
  • Federal permitting and environmental reviews may stop, delaying transportation, energy and infrastructure projects.
  • Federal loans to small businesses, homeowners, and families in rural communities may stop.
  • Visitor services at national parks may close, hurting surrounding local economies.
  • NIH may discontinue processing medical research grants.
  • National Transportation Safety Board investigation of accidents could be delayed.
• What happens to federal employees?  Non-essential employees are furloughed and “essential” employees continue working but are not paid until appropriations are enacted.  Historically, Congress has granted back pay to furloughed employees, but it is not guaranteed.
• Do shutdowns save money?  No.  OMB estimated that the 2013 shutdown resulted in: $2 billion in lost worker productivity and the federal government had to pay millions of dollars in interest on late payments to contractors.

Click here for Federal Agency Shutdown Contingency Plans

FedWeb Appropriations Portal: latest news on continuing resolutions and FY ’18 appropriations

Background and Resources:

• CRS (2017): Shutdown of the Federal Government – Causes, Processes, and Effects
• CRFB (2017): Everything You Should Know About Government Shutdowns
• CRS (2016): Funding Gaps and Government Shutdowns
• CRS (2015): Funding Gaps and Government Shutdowns
• CRS (2015): The FY 2014 Government Shutdown Economic Effects
• GAO (2014): 2013 Government Shutdown: Three Departments Reported Varying Degrees of Impact on Operations, Grants, and Contracts
• CRS (2013): Federal Funding Gaps A Brief Overview
• CRS (2013): Government Shutdown Operations of the Department of Defense During a Lapse in Appropriations
• The Atlantic (2013) – The Odd Story of the Law That Dictates How Government Shutdowns Work
• OMB (2013): Impacts and Costs of the October 2013 Federal Government Shutdown
• CRS (2012): Government Procurement in Times of Fiscal Uncertainty
• U. of Md (1997) Late Appropriations and Government Shutdowns: Frequencies, Causes, Consequences, and Remedies – Fall 1997
• Department of Justice OLC Opinion from AAG Walter Dellinger (1995):
  • The Antideficiency Act permits the White House Office to employ personnel during an appropriations lapse for functions that are excepted from the Act’s general prohibition: functions relating to emergencies involving an imminent threat to the safety of human life or protection of property; other functions as to which express statutory authority to incur obligations in advance of appropriations has been granted; those functions for which such authority arises by necessary implication; and certain functions necessary to the discharge of the President’s constitutional duties and powers. Such personnel may not be paid, however, until appropriations are enacted.
  • The President may use his authority under 3 U.S.C. § 105 to create and fill nonsalaried positions in the White House Office during an appropriations lapse, but nonsalaried employees cannot receive an obligation of payment for the services they perform in that capacity.
  • White House Office employees appointed under 3 U.S.C. § 105 may waive their compensation, and if they do so, their services may be accepted during an appropriations lapse.
• GAO (1995): Government Shutdown – Funding Lapse Furlough Information
• 1981 Opinion from Attorney General Civiletti:  Authority for the Continuance of Government Functions During a Temporary Lapse in Appropriations
  • Statutory authority for an agency to incur obligations in advance of appropriations heed not be express, but may be implied from the specific duties that: have been imposed upon, or of authorities that have been invested in, the agency.
  • The “authorized by law” exception in the Antideficiency Act exempts from that Act’s general prohibition not only those obligations for which there is statutory authority, but also those obligations necessarily incident to initiatives undertaken within the President’s constitutional powers.
  • A government agency may employ personal services in advance of appropriations only when there is a reasonable and articulable connection between the function to be performed and the safety of human life or the protection of property, and when there is some reasonable likelihood that either or both would be compromised in some degree by delay in the performance of the function in question. (emphasis added)
• 1980 Opinion from Attorney General Civiletti: Applicability of the Antideficiency Act Upon a Lapse in an Agency’s Appropriation 
  • If, after the expiration of an agency’s appropriation, Congress has not enacted an appropriation for the immediately subsequent period, the agency may obligate no further funds except as necessary to bring about the orderly termination of its functions, and the obligation or expenditure of funds for any purpose not otherwise authorized by law would be a violation of the Antideficiency Act.
  • The manifest purpose of the Antideficiency Act is to insure that Congress will determine for what purpose the government’s money is to be spent and how much for each purpose.
  • Because no statute generally permits federal agencies to incur obligations without appropriations for the pay of employees, agencies are not, in general, authorized to employ the services of their employees upon a lapse in appropriations.
  • Historical Background

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