What Is a Government Shutdown? 2018 and 2013 Examples

Government Shutdown Postponed to February 8

US Economy

A government shutdown is when non-essential discretionary federal programs close. The president must do this when Congress fails to appropriate funds. In the normal budget process, Congress appropriates funds by September 30 for the following fiscal year. When that doesn't happen, then Congress enacts a continuing funding resolution. If Congress can't agree on one, it forces a shutdown. It signals a complete breakdown in the budget process.

U.S. Government Shutdown 2018 Explained

At midnight on January 20, 2018, the federal government shut down for almost three days. The Senate couldn't get the 60 votes it needed to extend spending until February 16, 2018. The Republican majority couldn't convince enough Democrats to vote for it. 

Democrats wanted the bill to protect immigrants eligible for Deferred Action for Childhood Arrivals. If Congress doesn't develop a permanent fix, Trump's immigration plan will end the program in February. Even some Republicans voted against the bill. They wanted to focus on passing the permanent budget instead another continuing resolution. 

On January 22, the Senate approved a continuing resolution that expires at midnight on February 8, 2018. The Senate bill was approved by the House and signed by President Trump. To get the Democrats' votes, Republicans agreed to work with them on DACA legislation.

The House passed its bill on January 18. House leaders couldn't get enough votes to support DACA. Instead, its bill extended funding for the Children's Health Insurance Program for six years. It delayed an Obamacare tax on health insurers for one year. It delayed taxes on medical devices and "Cadillac" insurance plans for two years.

The continuing resolution was necessary because the two houses of Congress could not agree on the budget for fiscal year 2018. The budget process broke down over increases in defense versus nondefense spending. Republicans want to increase the base budget for defense spending to $700 billion. Sequestration limits it to $549 billion. Democrats want a dollar-for-dollar increase in nondefense discretionary spending. Sequestration limits it to $516 billion. Democrats also want aid to Puerto Rico and increased spending on the opioid epidemic.

Meanwhile, the Tax Cuts and Jobs Act triggered the Pay-Go budget rule. The Pay-Go rule requires an automatic cut in Medicare when tax cuts increase the deficit. Senate Republicans may have a hard time convincing Democrats, who opposed the tax bill, to waive the rule. Without the waiver, the tax act would force Congress to cut Medicare by $25 billion in 2018. It would cut mandatory programs by $150 billion over the next 10 years. 

What Happens When the Government Shuts Down

The discretionary budget funds most federal departments. But those that provide essential services are not shut down. Essential services are those that include defense, national safety, and security.

 Many of these agencies are set up so they can operate for weeks without a funding bill. On January 19, 2018, the Defense Department warned it wouldn't pay military personnel during a shutdown. The next paycheck is due on February 1, 2018. Non-essential employees, such as instructors, will be furloughed.

Border Protection and Immigration, air traffic controls, and the Transportation Security Administration remain open. The Justice Department remains open, but gun permits will not be issued during the shutdown. The Postal Service has a separate source of funds, so mail continues to be delivered.

Here are the major departments that shut down. 

• Commerce, except National Oceanic and Atmospheric Administration.
• Education.
• Energy. Functions that oversee the safety of the nation's nuclear arsenal, dams and transmission lines remain open.

• Environmental Protection Agency.
• Food and Drug Administration.
• Health and Human Services.
• Housing and Urban Development.
• Interior, including National Parks. The Department of Interior announced on January 19, 2018, that parks will remain open despite a shutdown.
• Internal Revenue Service, except those processing tax returns.
• Labor, including Bureau of Labor Statistics.
• NASA.
• National Institute of Health.
• Smithsonian. The agency is using prior funds to remain open January 22, 2018.

The immediate effect is on furloughed government employees and Americans who depend on suspended services. As the shutdown continues, agencies use up saved funds, and more services start to close.

If the shutdown continues beyond two weeks, it will affect economic growth. That's because government spending is, itself, a component of gross domestic product. It contributes 18 percent of economic output.

What about Social Security, Medicare, and Medicaid payments? They are part of the mandatory budget. That budget also includes TARP and the Affordable Care Act. These programs are never shut down because their funding is automatic. They were created by separate Acts of Congress. The only way Congress can cut their funding is with another Act. 

Government Shutdown 2013

2013.  The government shutdown began on October 1, 2013. The Republican-controlled House submitted a continuing resolution without administrative funds for Obamacare. The Senate rejected the bill and sent one back that included Obamacare. The House ignored that bill. It sent one back that delayed the mandate that everyone should buy health insurance. It also deleted the subsidies for Congress and their staffers. The Senate ignored that bill, and the government shut down.

Ironically, the shutdown did not stop the rollout of Obamacare. That's because 85 percent of its funding is part of the mandatory budget, just like Social Security and Medicare. It was already authorized by the Affordable Care Act of 2010. The Department Health and Human Services had already sent out the funds needed to launch the health insurance exchanges. 

Here's what happened each day of the shutdown. 

October 1. TV news highlight how veterans can't visit the WWII Memorial and cancer patients can't take advantage of treatment trials at the National Institute of Health. 

October 2. Republicans feel they represent the majority of Americans. They submit a funding bill that delays Obamacare for a year and stand firm.

October 3. Obama calls on the House to vote on the Senate's continuing resolution.

October 4. Boehner considers negotiating a budget proposal that will fund the government and raise the debt ceiling. At the same time, he calls on the Senate to negotiate on Obamacare.

October 5. The Secretary of Defense calls back furloughed civilian workers.

October 6. The House passes a bill to reimburse furloughed federal employees, even though they aren't working. But no one gets paid until a funding resolution is passed.

October 7. Boehner won't fund the government or raise the debt ceiling unless Democrats agree to cut Medicare, Medicaid and Obamacare. These mandatory programs aren't even part of the discretionary budget that is shut down.

October 8. House Republicans propose a "Supercommittee" to negotiate a budget acceptable to both parties. But House Democrats want the shutdown ended and the debt ceiling raised before establishing such a committee. In addition, Senate Democrats might propose a stand-alone bill to raise the debt ceiling.

October 9. House Democrats meet with Boehner before meeting with Obama. 

October 10  Boehner and a team of House Republicans meet with Obama. They proposed raising the debt ceiling for six weeks to allow time to negotiate.

October 11. Following a successful meeting, the House Republicans put together a budget in exchange for raising the debt ceiling for six weeks and reopening the government.

October 12.  Talks between Boehner and Obama break down. The Senate creates a plan to gain bilateral support and force the House to an agreement, as it did during the 2011 debt ceiling crisis and the 2012 fiscal cliff crisis.

October 13. Senate bilateral negotiations continue. Republicans want to extend the debt ceiling for three months, fund the government at current levels for six months, establish a bipartisan Congressional committee to agree on spending cuts to Medicare, delay Obamacare's tax on medical devices for two years, and give agencies more leeway in implementing sequestration.

October 14.  Senate Democrats want to increase spending $70 billion on the sequestration cuts that hit in January, and want the debt ceiling raised for a year. Republicans want cuts in Medicare and Obamacare and a 3-6 month extension of the debt ceiling. 

October 15.  The House submits its own plan, which has thrown a wrench into the Senate's negotiations. Neither side of Congress will accept the other's proposal.

October 16. The House plan didn't get the support of Tea Party Republicans, so was dropped. Speaker Boehner put the Senate plan to a vote, where it passed through Democrat and moderate Republican votes. The President signed it Wednesday night.

October 17. The bill raised the debt ceiling until February 7, 2014, and reopened the Federal government until January 15, 2014. It set up a budget conference committee, led by Senate Budget Chairwoman Patty Murray, D-Wash, and House Budget Committee Chairman Paul Ryan, R-Wisc, to submit a unified budget to the president by December 15, 2013.

The Obama administration reported the shutdown slowed economic growth by 0.2 percent to 0.6 percent. It also cost 120,000 jobs. The government was unable to issue certificates for ships carrying U.S. exports, and 200 drilling permits were delayed. Around 850,000 federal employees were furloughed each day. 

Other U.S. Government Shutdown Examples

Here are examples of when the federal government either shut down or narrowly avoided one. 

2017. The government avoided a shutdown on April 28, 2017. That's when the continuing resolution, passed on September 30, 2016, expired. Congress hadn't allocated funds for the FY 2017 budget, which covered October 1, 2016, to September 30, 2017. The continuing resolution funded the government during the 2016 presidential election and transition. The Senate and House approved the spending bill on May 1, 2017. It appropriated $1.1 trillion in spending. 

In March 2017, the Trump administration submitted a request to add $14.6 billion to the FY 2017 budget. It wanted to expand the defense budget by $24.9 billion, Homeland Security by $3 billion, and the Emergency budget by $5.1 billion.  Trump asked Congress to cut $10 billion from all other departments.

Included in that budget was $1.6 billion for a border wall with Mexico. On August 23, 2017, Trump promised his administration would shut down the government if Congress didn't include funding for the wall. 

Many Republicans oppose the border wall. Those from California, Arizona, New Mexico, and Texas face the most consequences. They say the wall won't work, especially without added security forces. Others worry about the impact on the environment in their states. 

Democrats also oppose the wall. They would prefer to use the funds to keep Obamacare subsidies and the other domestic spending programs. They want to increase programs for opioid addiction and health care for coal miners.

For the continuing resolution to pass, the Trump administration withdrew its request for border wall funding. It also agreed to continue providing Obamacare subsidies. 

2011. In April, the Republican-led House and President Obama agreed to $80 billion in spending cuts from the Fiscal Year 2011 budget, averting a shutdown. Most of the cuts were programs that couldn't spend the funds and would have occurred anyway. In reality, only $38 billion was actually cut.

Republicans gave up an earlier proposal of $61 billion in cuts in non-defense discretionary spending, including cuts to Planned Parenthood. This also allowed Obamacare and the Dodd-Frank Bank Reform Act to remain unscathed. Their cuts would have cost 800,000 jobs. Democrats gave up on $1.7 billion in cuts to defense. 

Congress was six months late on approving the FY 2011 budget. It had until September 30 to approve the $3.7 trillion budget for Fiscal Year 2012. Instead, it risked defaulting on the U.S. debt by delaying raising the national debt ceiling in August.

1995. The government shut down twice: November 14 - November 19, 1995, and December 16, 1995 - January 6, 1996. Republican Speaker of the House Newt Gingrich won the Republican Party's 1994 Contract with America, which promised to slash funding and introduce a balanced budget amendment to the Constitution.

But no such amendment was passed, so Gingrich went after Democratic President Bill Clinton's FY 1996 budget. He demanded steep cuts in Medicare, Medicaid and other non-defense discretionary spending in return for raising the debt ceiling. To keep the U.S. from defaulting, a continuing resolution bill was passed until November 13. When no budget deal was reached. the government shut down until both sides agreed to balance the budget in seven years. 

But they couldn't agree on which budget items would be cut by the time the resolution ended. The government shut down on December 15. By January 1996, both sides negotiated an agreement that cut some spending and raised some taxes, balancing the budget over the next seven years. (Sources: "Experts Say It's 50/50 the Government Will Shut Down Next Week," The Washington Post, April 21, 2017. "The White House Seems Excited to Shut Down the Government," The New Yorker, April 21, 2017. "Slaying the Dragon of Debt," University of California, Berkeley. "Obama Prevent Cuts to Favorite Programs," Associated Press, April 11, 2011.)