Back to Basics: What Happens When the Government Shuts Down?

As we enter a new fiscal year, the specter of a government shutdown hovers in the background. With that in mind, it is crucial to break down what this term means, how it comes about, and the real-world consequences it can yield for the American public.

A government shutdown halts non-essential federal government functions due to a failure to secure funding. This happens when Congress cannot pass appropriations bills or the President does not sign them into law. In 1974, Congress tried to tackle budget impasses with the Congressional Budget and Impoundment Control Act. President Richard Nixon signed the legislation to offer a more systematic approach to federal budgeting, yet shutdowns have transpired over the years.

Contrary to what the term may imply, a government shutdown does not mean that all government operations cease. Functions like military operations, law enforcement, and emergency medical services continue to operate, often with fewer resources. However, it's the non-essential functions that take a hit. During a shutdown, various federal employees are furloughed, which means they are sent home without pay until further notice.

The effect of a shutdown ripples beyond federal agencies to the everyday American. If you plan to get a new passport or apply for federal housing, be prepared for delays. National parks and museums could close down, affecting tourism and local economies. Scientific research often gets stalled, and even the legal system can face backlogs. Health services can also be impacted, as seen in previous shutdowns where agencies like the Centers for Disease Control and Prevention had to furlough staff.

The financial ramifications extend far and wide. According to Goldman Sachs, a week of a government shutdown can reduce the GDP by roughly 0.2%. Moreover, while furloughed employees have generally been paid back after previous shutdowns, the interim period can be stressful, affecting people's ability to pay bills or buy groceries. Businesses in proximity to federal agencies also need more consumer activity.

There have been instances where the government shutdown has lasted for more than one business day four times in recent memory. These prolonged periods of governmental inactivity burden the GDP and diminish the United States' reputation on the world stage, potentially affecting international relations and trade.

Currently, we are staring down the barrel of a potential shutdown due to disagreements over appropriations bills. While the Senate has made some strides, the House remains at a standstill. As the clock ticks down, the risks of a shutdown are heightening.
Understanding a government shutdown is vital for federal employees and every American. It affects us more than we might initially realize, from delayed services and economic hardships to broader societal impacts. As the new fiscal year gets underway, the onus is on our elected representatives to manage the budget effectively to avoid a shutdown, highlighting governance's essential role in the nation's well-being.