Table of Contents
- What Is a Government Shutdown?
- What Happens During a Government Shutdown?
- Impacts are Widespread
- Government Shutdown Effects on the Economy
- Special Considerations
- Real World Example
- What Happens In a Government Shutdown?
- When Was the Last Government Shutdown?
- Who Is Affected By a Partial Government Shutdown?
- The Bottom Line
What Is a Government Shutdown?
Let me explain what a government shutdown really means. It happens when nonessential U.S. government offices can't stay open because there's no funding approved. This usually stems from delays in passing the federal budget for the next fiscal year, and the shutdown drags on until new funding legislation gets through.
In a shutdown, a lot of federally run operations grind to a halt. Some might keep going on cash reserves for a bit, but once those dry up, they close too. Sure, shutdowns can hit state, territorial, or local governments, but when people say 'government shutdown,' they're typically talking about the federal level.
Key Takeaways
- A government shutdown kicks in when funding legislation for the next fiscal year fails to pass.
- Nonessential offices shut down, and essential workers keep going but might not get paid right away.
- Veterans' benefits and unemployment payments keep flowing.
- Prolonged shutdowns hit the whole American economy hard.
What Happens During a Government Shutdown?
When a shutdown hits, the federal government has to cut back on agency activities, services, and any non-essential operations, which includes furloughing non-essential workers.
Some agencies stay open because suspending them would risk public health, life, or safety. Essential employees in areas like protecting human life or property keep working, but they might not see a paycheck during the shutdown unless a specific bill covers it.
Think about workers in the DEA, TSA, CBP, and FBI—they're essential and stay on the job. Also, the Federal Reserve and Postal Service keep running since they don't rely on federal funds.
Payments for veterans' benefits and unemployment insurance don't stop; these come from earmarked budgets and prior appropriations. Furloughed federal workers can apply for temporary unemployment, though processing might take longer.
Impacts are Widespread
Shutdowns disrupt many government functions. Nonessential agencies without self-funding from fees or revenue have to furlough employees, meaning unpaid leave. You'll notice fewer services overall, like national parks and monuments closing, which is one of the most obvious signs.
The effects spread wide: processing new loans for homes, businesses, or education slows or stops. Social Security applications and unemployment claims drag on. Other hits include delayed USDA food inspections, CPSC unable to recall unsafe products, no new passports from the State Department, and the CDC struggling to track disease outbreaks.
If the shutdown lasts, more agencies cut services, and more people feel the direct impact.
Government Shutdown Effects on the Economy
As government slows or stops, private businesses feel it too. The economy can lose money from these disruptions, though the total cost varies. Take the 2013 shutdown—it lasted 16 days and cost about $24 billion.
Furloughed workers cut back on spending, hurting local businesses. Companies supplying federal agencies, like office suppliers, see sales drop. Hospitality spots near national parks lose out on tourists.
Banks can't access needed info for loan applications, like verifying tax records, which affects their revenues and ripples into markets like housing.
Special Considerations
Funding the U.S. budget is a complex process involving the president, House, Senate, and agencies. Delays come from economic issues, politics, or lobbying.
Agencies submit budget requests to the White House each year. The president reviews and revises them, then asks Congress for funds. Appropriations committees in the House and Senate tweak the amounts, reach consensus, and send a bill for debate and votes. It goes back to the White House for signing or veto.
Real World Example
At midnight on December 21, 2018, the U.S. went into shutdown because President Trump and Congress couldn't agree on 2019 funding. It affected around 800,000 federal employees—over 420,000 worked without pay, and more than 380,000 were furloughed. This one lasted 35 days, the longest in history.
What Happens In a Government Shutdown?
Simply put, non-essential services and agencies close due to lack of funding, and citizen services stop until funding is approved.
When Was the Last Government Shutdown?
The last one was a 35-day shutdown from December 2018 to January 2019.
Who Is Affected By a Partial Government Shutdown?
It varies by which appropriations are missing, but in early 2024, a potential partial shutdown threatened areas like Agriculture, Rural Development, FDA, Energy and Water, Military Construction, Veterans Affairs, Transportation, Housing and Urban Development, and related agencies.
The Bottom Line
Government shutdowns close non-essential services and agencies when the federal budget isn't approved on time, all tied to public safety considerations.
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