When Congress fails to pass the budgetary legislation needed to keep a government agency running, that agency goes on hiatus, or shuts down. A government shutdown lasts until the end of the fiscal year or until a Continuing Resolution (CR) is passed to fund the agency for another year. During shutdowns, certain government activities are halted—including passport application processing, food safety inspections, and the awarding of federal grants. In addition, court systems may experience delays and some federal contractors stop work.
Each department and agency is required to issue a contingency plan outlining its procedures during a potential shutdown. The Office of Management and Budget maintains a list of each agency’s guidance. The plans are often very detailed. For example, the Securities and Exchange Commission’s contingency plan notes that “During a government shutdown, no new staff should volunteer to perform unpaid services because doing so violates the Antideficiency Act.”
Some functions are exempt from a shutdown if they don’t require annual funding, such as law enforcement, national security, military operations, and air traffic control. Social Security and Medicare checks are also unaffected because they’re part of mandatory spending that isn’t subject to annual appropriations measures.
Nevertheless, long-term shutdowns can have significant negative economic impacts. For example, CBO estimated that the 2018-2019 shutdown reduced GDP by $3 billion that will never be recovered. Shutdowns can also harm public service and erode the trust of Americans in their elected officials and institutions.
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