March 9, 2011 | Factsheet on Taxes, Budget and Spending, Entitlements

Government Shutdown 101: A Slowdown, Not a Shutdown

A Slowdown, Not a Shutdown

  • What Causes a Shutdown? A government “shutdown” occurs when an existing budget expires and Congress and the President cannot agree on a level of day-to-day government spending going forward. As the Administration lacks the legal authority to spend, all non-emergency (or “non-excepted”) federal government activities cease until Congress passes and the President signs new spending legislation into law.
  • What Might Cause This “Shutdown”? The House of Representatives is pushing hard to restrain the growth of federal spending and passed a bill to fund the government for the rest of 2010 for $61 billion less than last year. President Obama and his Senate allies are offering only miniscule cuts equal to roughly half of one day’s deficit so as to preserve their recent explosion of government spending.
  • Not Unusual: A government shutdown is unfortunate but not catastrophic or even unusual, especially when a divided government wrestles over issues of spending, taxation, deficits, and debt. A shutdown is even more likely when voters substantially change their views from one election to the next, as they did in 2008 and 2010.
  • Vital Services Keep Running: The term “shutdown” substantially overstates the matter. Even if Congress and the President fail to reach agreement, the most essential services continue, such as: (1) providing for national security, (2) conducting foreign affairs, (3) providing for the continuity of mandatory benefit payments, and (4) protecting life and property. These services include military, law enforcement, VA care, and others. Social Security checks are still mailed.
  • How Many Workers Would Be Affected? During the 1995 shutdown, approximately 800,000 federal workers were initially furloughed. Given the growth of the federal workforce since then, today that number would likely be higher. Still, that leaves most of the federal workforce and military still working. Congress can even pass a law altering the list of “excepted” and “non-excepted” employees to ensure that vital services continue.
  • Plans Are in Place: Federal agencies develop contingency plans in preparation for potential “shutdowns” and continually review their operations during a “shutdown” for situations in which some category of service may become essential to protect life and property.
  • Does Not Save Money: A shutdown is not a cost-saving measure. Back wages are typically paid even for furloughed employees.
  • 1995–1996: During the last shutdowns, only 20% of Washington-area federal contracts were suspended, as were visa and passport applications, bankruptcy cases, and firearm applications. About 368 national parks closed. But the Department of Defense, power grid maintenance, border patrol, Coast Guard, air traffic controllers, inpatient and emergency outpatient medical care, and other vital services continued.

Federal Spending per Household Is Skyrocketing

A “Shutdown” Can Be Avoided

  • Spending Cuts: The current debate is over whether Congress cuts federal spending by less than 2% ($61 billion out of $3.8 trillion). Even with this cut, this year’s spending will still be higher than last year’s because of increases in entitlement costs.
  • Obama and Reid Need to Get Serious: Federal spending is out of control, and soaring federal debt poses an immediate threat to the nation’s economic future. The House has already acted. The ball is now clearly in the Senate’s court. President Obama and Senate Majority Leader Harry Reid (D-NV) must now act to cut spending substantially, move the process forward, and avoid a shutdown.

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