Government Shutdown

Government Shutdown: Definition, Effects, and What to Expect

Key takeaways
* A government shutdown occurs when Congress fails to pass funding that covers the next fiscal year, forcing nonessential federal operations to pause.
* Essential public-safety functions continue, but some employees may work without pay until funding is approved.
* Many benefits (veterans’ benefits, unemployment insurance) generally continue; other services—passports, inspections, park access—may be delayed or suspended.
* Prolonged shutdowns can have measurable economic costs (e.g., the 2013 shutdown was estimated to cost about $24 billion).

What is a government shutdown?
A government shutdown happens when the federal government lacks approved appropriations or a continuing resolution to pay for operations. Agencies must stop nonessential activities until Congress enacts funding. Some offices use cash reserves to stay open temporarily, but those also run out.

What happens during a shutdown
* Reduced operations: Agencies scale back and furlough employees in positions deemed nonessential.
* Essential services continue: Functions that protect life and property stay active, though pay may be delayed or contingent on later legislation.
* Some organizations keep running: The Federal Reserve and the U.S. Postal Service continue normal operations because they don’t rely on annual appropriations.

Who remains working
Essential staff in agencies such as TSA, Customs and Border Protection, DEA, and FBI typically continue to work. Medical and public-safety personnel, air-traffic controllers, and others responsible for immediate safety also remain on duty, often without immediate pay.

Payments and benefits
* Veterans’ benefits and unemployment payments generally continue because they are funded through dedicated appropriations or advance funding mechanisms.
* Furloughed federal employees may be eligible for unemployment benefits while claims processing can be slower during a shutdown.

Public services and program impacts
Shutdowns disrupt many routine government functions, including:
* National parks and monuments (closures or limited access)
* Passport processing and new passport issuance
* USDA inspections of certain food products
* Consumer Product Safety Commission recalls and enforcement
* CDC disease surveillance and outbreak tracking
* Processing of new loans, Education and housing assistance applications, and Social Security applications (slowed or delayed)

Economic effects
Shutdowns ripple into the private sector:
* Furloughed workers reduce local consumer spending, hitting restaurants, hotels, retail, and services.
* Vendors and contractors that supply federal agencies can lose revenue.
* Financial institutions may be unable to verify tax or income records needed to process loans, delaying mortgage and business financing.
* Costs vary with duration and scale; the 2013 shutdown (16 days) was estimated to reduce GDP by roughly $24 billion.

Why shutdowns happen (budget process overview)
* Agencies submit budget requests to the White House.
* The president proposes a budget; Congress—through appropriations committees—considers and adjusts funding levels.
* Appropriations bills must be passed by both the House and Senate and signed by the president (or kept in effect via continuing resolutions).
* Political disagreements, timing, or other disputes can delay passage and trigger shutdowns for any agencies lacking funding.

Real-world example
December 22, 2018–January 25, 2019: A 35‑day partial federal shutdown (the longest in U.S. history) occurred when funding was not agreed for parts of the federal government. About 800,000 federal employees were affected—more than 420,000 worked without pay and over 380,000 were furloughed.

Brief FAQs
What happens to nonessential services?
They close or operate at reduced capacity until funding is restored.

Do federal workers get paid for shutdown periods?
Typically, pay is delayed. Congress has occasionally enacted retroactive pay after a shutdown ends.

Which programs continue?
Programs with dedicated funding (certain veterans’ benefits, Social Security checks, and some unemployment insurance) normally continue.

Who is affected by a partial shutdown?
Only the agencies and programs without approved appropriations are affected; the specific impact depends on which appropriations bills remain unfunded.

Bottom line
A government shutdown stops or reduces nonessential federal services until Congress and the president approve funding. Essential safety and benefit programs often continue, but many administrative services, inspections, and discretionary programs face delays—producing disruptions for citizens, businesses, and the broader economy.