What is a government shutdown?

Before 1980, federal agencies continued operating even when they had no money.  Federal agencies assumed Congress would act quickly and were not worried about federal employees being paid. But in 1980, the sitting Attorney General found government agencies didn’t have the authority to continue operating during a gap in funding.  So, when a shutdown occurred after 1980, many people did not get paid for their work.  So, there is a risk of a government shutdown every year until congress can come up with a funding agreement.  The deadline every year is October 1, the beginning of the government’s new fiscal year.

In 1983, a law was signed to make sure that regardless of a government shutdown, Congress will continue to be paid.  

Federal agencies and programs must be funded each year and it is the responsibility of Congress to provide funding for these agencies and programs so they can do their work.

There are 12 appropriations bills that need to be signed each year and each one affects a different area of government.

A government shutdown occurs when Congress fails to do their job and approve funding for federal agencies before the annual deadline, October 1.  

If they don’t come to a resolution, many employees in government and private industry will go without a paycheck and we will take a hit to our economy.  

Your representatives in Congress will continue to get paid during the shutdown

 

How many times has a government shutdown occurred? 

Since 1980, the government shutdown 14 times.

• President Ronald Reagan oversaw eight shutdowns during his time in office, the longest of which lasted three days.
• There were three additional shutdowns between 1990 and 1995 with some lasting as many as 5 days. 
• In 1995, during the Clinton administration, the government shutdown for 21 day The reason: opposition to major spending cuts!
• There were no more government shutdowns until 2013.
• In 2013, another long shutdown occurred during the Obama administration – 16 days.  The reason: disputes over the implementation of the Affordable Care Act.
• In 2018-2019, the longest government shutdown in history occurred during the Trump administration which was 35 days.  The reason: a dispute over funding the expansion of barriers at the U.S. and Mexican border.

Government shutdowns affect everyone: government workers, government contractors, our military, businesses (large and small), citizens, non-citizens, the economy, and most importantly, YOU!  

 

Who does a government shutdown affect?

First and foremost, let’s talk about government workers.  There are approximately 4 million people, of which half are military and half civilian, who work directly for the government. 

When a government shutdown occurs, these civilian and military employees do not get paid.  As mentioned above.  There were 800,000 civilian and military employees who did not get paid for 35 days or 5 weeks during the 2018 shutdown.  Some employees are deemed essential and must work while other employees are deemed non-essential and get furloughed.  Both sets of employees do not get paid during a shutdown.

Many federal contractors (small and medium sized businesses) that work with the federal government do not get paid and in many instances are laid off.  Work is stopped and some ‘essential’ contract workers must still work.  This creates enormous recovery issues for these businesses as they lose skilled and knowledgeable employees and money during a shutdown.

Government shutdowns create fear and uncertainty in the workforce.  And, not just in DC.  There are federal employees throughout the nation.

 

What does a government shutdown do to the economy?

Federal employees, military, and federal contract employees forego pay and cut back their spending, too.  Everyone gets anxious and cuts back when they lose confidence in our government.  Investors may get jittery and stock market volatility may increase.

Government shutdowns reduce economic growth. In 2013 the shutdown, Standard & Poor’s indicated that the shutdown had “taken $24 billion out of the economy”, and “shaved at least 0.6 percent off annualized fourth-quarter 2013 GDP growth”.

In 2018-2019 only part of the government was shut down.  5 of 12 agencies were shut down for 35 days.   The Congressional Budget Office (CBO) estimated that this resulted in $3 billion in permanent lost economic growth.  At the same time, 300,000 federal employees were furloughed and 500,000 federal employees had to continue working.  All 800,000 employees were not paid during this time.

Federal contractors also had to stop work and contracts were not paid.  Small and medium-sized businesses had to lay off their employees. 

The economy gets hurt with every government shutdown and the longer it lasts, the greater the negative impact on the economy. 

 

Why should you care?  Because it affects YOU.

Government shutdowns affect everyone: civilian and military government workers, government contractors, businesses, the economy, citizens, non-citizens and, most importantly, YOU! 

Shutdowns disrupt all government services and programs.  Shutdowns disrupt many small and medium sized businesses.

These shutdowns can affect government health programs, Social Security, Medicare, SNAP benefits, Food and Drug Administration inspections, small business loans, and student loans.

Payments will be made in most instances, but other activities are disrupted.  You won’t be able to: 

• File for social security 
• Process paperwork for a passport
• Update your personal records, if your life situation changes.  File, make corrections, receive updates, etc.  
• File or update a Student Loan application
• Visit a national park, museum or other government institution. 

As shutdowns last longer, more services can be suspended or cancelled.

Remember, regardless of a government shutdown, Congress will be paid.  But, your family members, neighbors, close friends and maybe YOU may not be paid.

Think about how a government shutdown can hurt YOU!