A government shutdown happens when Congress fails to pass appropriations legislation before the start of a new fiscal year (or before a temporary funding extension expires), and federal agencies whose funding has lapsed must stop most operations. Shutdowns are a quirk of U.S. budget law — most other democracies have no equivalent — and have happened 10+ times since the modern shutdown mechanism took hold in 1980. Understanding why they happen and what actually shuts down helps make sense of the recurring brinksmanship.
Why a Shutdown Can Happen
The Antideficiency Act, passed in 1884 and strengthened in 1950, prohibits federal agencies from spending money or incurring obligations without congressional appropriation. The Office of Legal Counsel issued opinions in 1980 and 1981 reinforcing that this law required actual cessation of non-essential operations during funding gaps — before then, agencies had often continued running through brief gaps assuming Congress would soon act. After 1981, gaps in appropriations have required formal shutdowns.
The federal fiscal year runs October 1 to September 30. Congress is supposed to pass 12 appropriations bills before October 1. In practice, it almost never does. Instead, it passes “continuing resolutions” (CRs) that extend prior funding for short periods while negotiations continue. When a CR expires without a new one or full appropriations being enacted, the shutdown begins.
What Actually Shuts Down
Not everything stops. The federal government distinguishes between “excepted” and “non-excepted” activities:
- Continue operating during a shutdown: Activities that protect life or property (military operations, air traffic control, federal law enforcement, border security, federal prisons, hospital operations at VA facilities), and programs funded outside annual appropriations (Social Security benefits, Medicare benefits, Medicaid, food stamps for the duration the funding lasts, U.S. Postal Service, federal courts for short periods)
- Furloughed (stopped) during a shutdown: National parks (closed in most shutdowns), passport and visa processing slowdowns, EPA inspections, NIH research grants, IRS taxpayer services, federal museum operations, much of the federal workforce that doesn’t fall under “excepted”
Who Gets Paid and Who Doesn’t
Both furloughed (sent home) and excepted (working but unpaid) federal employees miss paychecks during a shutdown. Excepted employees are required to work; furloughed employees are barred from working. The Government Employee Fair Treatment Act of 2019 requires both groups to receive retroactive back pay once the shutdown ends — previously, only excepted employees were legally guaranteed back pay. Federal contractors typically do not get back pay; their lost income from the shutdown period is permanently gone.
Real-World Effects
- Federal workers’ finances — Hundreds of thousands of federal employees miss paychecks. While back pay is guaranteed, mortgages, rent, and bills don’t pause. Many workers rely on food banks, credit, or emergency loans to bridge the gap
- National parks — Typically close. Hotel cancellations, lost tourism, and damaged park facilities (when shutdowns happen without proper closure) all generate economic cost
- Government services slow — Passport processing, IRS taxpayer assistance, SEC review of corporate filings, FDA inspections of food and drugs, and a wide range of permitting and licensing activities all slow or stop
- Economic cost — The Congressional Budget Office estimated the 35-day 2018–2019 shutdown reduced U.S. GDP by approximately $11 billion, of which about $3 billion was permanently lost. The remainder was made up after operations resumed
- Confidence and credibility — Shutdowns affect international perception of U.S. governance, can spook financial markets, and have been cited by credit rating agencies as a factor in considering U.S. sovereign credit
Major Recent Shutdowns
- 1995–1996 — Two shutdowns (5 days and 21 days) over budget negotiations between President Clinton and Speaker Gingrich. Established the modern shutdown as a political weapon
- 2013 — 16-day shutdown driven by disputes over funding the Affordable Care Act
- 2018 — Brief 3-day shutdown in January and another brief one in February
- 2018–2019 — 35-day shutdown, the longest in U.S. history, driven by border wall funding disputes
Shutdowns vs. Debt Ceiling Crises
Shutdowns are sometimes confused with debt ceiling crises, but they’re different problems. A shutdown means the government can’t spend new appropriations because Congress hasn’t passed them. A debt ceiling crisis means the Treasury can’t issue new debt to pay for already-authorized spending because Congress hasn’t raised the statutory borrowing limit. A shutdown stops some operations; a debt ceiling default would mean the government couldn’t pay obligations it’s already committed to — with far broader financial market consequences.
The Bottom Line
A government shutdown happens when Congress fails to pass appropriations bills or a continuing resolution before existing funding expires. Activities that protect life or property continue; most other discretionary federal operations stop. Federal employees and contractors lose paychecks; federal employees eventually get back pay, contractors typically do not. Economic costs scale with duration; the longest shutdown (2018–2019, 35 days) cost approximately $11 billion in lost GDP. Shutdowns are a feature of U.S. budget law with few international parallels and have become a recurring political brinksmanship mechanism.