A Government Shutdown is Looming
Here’s what you need to know
Many people look to the end of August for the last days of summer vacations, Labor Day weekend plans, or getting kids ready to go back to school. But if you follow federal appropriations, you know this is the time to plan for a continuing resolution (CR) by September 30 or a government shutdown starting October 1. The authorities granted in federal spending bills to draw funds from the Treasury are only valid through September 30, the end of the fiscal year. If new appropriations bills are not enacted by October 1, no funds are available for government operations. Congress has two choices: (1) allow the government to shut down until 12 bills are passed and enacted into law, or (2) pass a CR to keep agencies operating temporarily through the date specified in the CR in hopes that Congress will finish its work before the resolution expires.
Over the past two decades, CRs have become commonplace in September, giving the Committees on Appropriations time to complete negotiations and draft the final bills, with the December holidays serving as a backstop deadline for Congress to finish their work before the new calendar year. The safe bet was that a “clean” CR would yield bipartisan votes by avoiding any new controversial policies, allowing executive agencies and departments to operate under the same terms and conditions as they did in the previous fiscal year: same spending levels, authorities, and prohibitions.
This year, we may not see a “clean” CR breeze through the House and Senate. The House Freedom Caucus and other conservative Members may seek to add new policies and lower the fiscal year 2024 funding level through a CR. However, there is little support in the Democrat-controlled Senate or the White House, and we could very likely have a government shutdown in October.
What happens when the government shuts down?
The country has weathered four shutdowns that lasted more than one day, most recently in January 2019, when only five of the 12 appropriations bills were enacted, and Congress and the Administration were fighting over border wall funding. Under a shutdown, nonessential government and congressional staff who are paid by federal appropriations are sent home without pay, as are contractors, and government functions from food safety inspections and National Institutes of Health research to national parks are shuttered and closed. This includes agency contracting officers, grant evaluators, program directors, and almost all staff. Contracts and programs are delayed or halted, and for new contracts and grants, even if an award was announced or expected, the staff are not allowed to work until a CR or full-year bill is enacted.
Some government programs maintain operations. Government employees who are essential to life and safety, such as military members, air traffic controllers, Transportation Security Administration officers, and law enforcement officers, must work without pay until a CR or full-year bills are enacted. Benefit programs like Social Security and Medicare stay in operation because those programs are paid for with mandatory funds outside the discretionary appropriations process. Some programs funded by service fees or funds outside the appropriations process, such as passport and visa processing or the U.S. Postal Service, will continue to operate. The Office of Management and Budget will post information on its website (https://www.whitehouse.gov/omb/information-for-agencies/agency-contingency-plans/) detailing how the agency will operate during the shutdown to help guide the public.
Both Speaker Kevin McCarthy and Majority Leader Chuck Schumer have spoken about the need for a short-term CR in September to keep the government operating. But ultimately, full-year appropriations bills need to be negotiated and enacted. Shutdowns are costly and disruptive to the taxpayers and the programs on which they rely, and some will suggest that the inability to complete basic legislative responsibilities harms the institutions of Congress and the White House. The Senate returns from recess on September 5, but the House is not scheduled to return until a week later on September 12, leaving only two and a half weeks to complete this must-pass resolution in a very contentious year. Stay tuned as these negotiations will be ones to watch as the CR process will likely foreshadow how the fiscal year 2024 bills play out.
