By William. G. Gale
As the partial shutdown of the federal government enters its 13th day, the stakes are rising. Shutdowns have numerous negative economic and political effects, but they can be avoided through a simple mechanism, even if the government does not enact a budget.
There are two types of federal spending. Mandatory programs – including Social Security and unemployment insurance – continue in operation until they are changed. By contrast, discretionary programs – such as infrastructure investment, the national park service, public health research, and international assistance – require policymakers to authorize their funding for a set period – typically, but not always, for a year.
But this process frequently breaks down. In most years since 2010, Congress has not even passed a budget resolution that sets overall spending and tax targets. If they cannot agree on a spending bill for the next year, the president and Congress sometimes enact a short-term “continuing resolution” (CR) to fund discretionary programs, typically at the previous year’s levels, until they can agree on new spending. If they don’t pass a spending bill or a CR, the government “shuts down,” though vital services like defense continue.
Lengthy shutdowns took place in 1995-1996, 2013, and now 2018-2019. Altogether, there have been 21 shutdowns, ranging from one day to 21 days.
While the political grandstanding continues, the economy will suffer.
Here’s how we got to the current situation. In September 2018, Congress passed and the president signed appropriations bills for the Legislative Branch, military construction, and the Departments of Defense, Education, Energy, Health and Human Services, and Veterans Affairs.
On December 19, a Republican-controlled Senate passed a CR to fund the rest of the government (albeit only through February 8). But then President Trump said that he would not sign a bill that did not include significant border wall funding, which led to the current stalemate.
The shutdown directly affects the Departments of Agriculture, Commerce, Justice, Homeland Security, Interior, State, Transportation, Treasury, and Housing and Urban Development. As a result, government services ranging from national parks and museums to the IRS and environmental and food inspection offices are experiencing reduced staffing levels, and hundreds of thousands of federal workers are on furlough. (In previous shutdowns, workers have received pay for the time lost.)
William G. Gale, The Arjay and Frances Fearing Miller Chair in Federal Economic Policy, Senior Fellow- Economic Studies- Director- Retirement Security Project. Co- Director – Urban – Brookings Tax Policy Centre.
Courtesy of Brookings