US Government Shutdown Explainer
A quick overview of what's likely to happen over the next half week as the US government shuts down
For those of you watching the news and wondering why the US government is shutting down (and what, exactly, that means), I thought it would be useful to offer a quick explainer of what is happening, who is making the decisions to do this, and what does it mean. There are lots of good resources for learning more about this (I recommend the Congressional Research Service which has lots of interesting work on shutdowns including “Frequently Asked Questions”, “Past Government Shutdowns”, and “Causes, Processes, and Effects”. Though, to be honest, the Wikipedia entry on US government shutdowns is also pretty darn good. I’ll try to keep this pretty high level but if you want to dig in deeper, those are good places to start. Now on to the overview…
What is a government shutdown?
The US government is primarily funded through two different types of money (I’m simplifying a lot here) - mandatory spending and discretionary spending. Mandatory spending covers what is called “entitlement” spending and is not subject to annual appropriations. So long as individuals meet requirements laid out by Congress they are eligible (“entitled”) to the benefits in question, they apply and then the agencies in question distribute the money. That covers the big drivers of federal spending (Social Security, Medicare & Medicaid) as well as a bunch of other random things (various unemployment supports, some veterans health care, insurance support, etc.). All of that spending continues on until Congress directs it to do otherwise, funded by dedicated streams and existing stores of money. At some point in the next decade some of those funding streams will start to fail to cover all outlays, but that’s another crisis for another day.
Discretionary spending covers a lot of the things that people associate the Federal government with doing - the military, border control, the FBI, National Parks, etc. Since the 1970s, that spending must be appropriated annually by Congress in legislation that is signed into law by the President. Technically, in the modern era Congress is supposed to pass 12 appropriations bills before the end of the Fiscal Year on September 30th to fund the next fiscal year (in this case we are in FY 2023 and they are attempting to secure funding for FY 2024). This almost never happens, but normally Congress passes what’s called a Continuing Resolution (CR), that allows the government to continue operating at the previous year’s fiscal spending levels while they fight over appropriations through to the end of the calendar year, when their desire to enjoy the holidays leads them to compromise on funding. This isn’t always how it happens, but most years that’s the rough schedule.
However, if appropriations are not passed (either entirely or individual bills) and a CR is not agreed to, those parts of government that work with appropriated money must shut down on 1 October as they do not legally have the ability to pay for operations. That is, fundamentally, a government shutdown.
Wait, so our military will stop working on 1 October?
No. It’s worth noting that this is all the result of a legal interpretation of the primary act governing the budget process that was issued in the 1980s. The federal government obviously conducts a lot of what most people would consider “essential” services and the powers that be have rightly created an exception that those personnel deemed “essential” will continue working during a shutdown. That would typically be things like the military, the border patrol, the FAA, and others. Congressional staff may or may not fall into this bucket as well (each office makes their own determination of who is “essential” and who is not). It’s important to note that while these individuals will continue working, they will not be paid for their work while the government is shut down.
This all sounds really painful, is this really going to happen?
So there are just under 45 hours before the deadline (the Fiscal New Year as it were) but it seems increasingly likely that the US government will shut down this year for at least a few days. So far, the House has passed four appropriation bills and the Senate has passed none. The House is going to try to pass a funding resolution today, but Speaker Kevin McCarthy is intent on delivering a bill with just Republican votes and so far he has been unable to corral his caucus into agreeing to a bill. In the Senate, they’re using an FAA reauthorization bill as a vehicle to try to pass a CR for reasons of parliamentary procedure, but so far there’s a lot of foot-dragging on amendments and timing and it’s unclear if they will pass a bill before the weekend. Even if they pass a bill, Speaker McCarthy has said he has no intention Given that, it’s pretty likely the government will shut down for at least a few days, though there’s no real clear path to a solution at the moment, meaning it could run quite a bit longer.
Who are the people who are getting us into this mess?
A fair question. While much of the DC reporting has focused on the House of Representatives and the fractious House majority, there’s a fair amount of blame to go around.
Speaker Kevin McCarthy is the fulcrum for most reporting. He is the Congressional leader who seems to be under the most pressure as there are somewhere between a half dozen and a dozen Republicans in the House Freedom Caucus who will not vote for a CR and who continue to tank his attempts to pass funding bills. His tenuous, four-vote majority means is further limited by those same rebellious members viewing any attempt at working with Democrats on compromise legislation as a betrayal and threatening to tank the working of the House. There are clearly 218 votes in the House for a “clean” CR that continues funding at existing levels and avoids any policy changes, but taking that up might cost McCarthy his job.
Minority Leader Hakeem Jeffries has so far kept his caucus mostly together and let McCarthy flail about. However, while it may be politically beneficial to let McCarthy fail spectacularly, at some point, for the good of the country, it would be useful for him to try to engage to see if there is a deal to be had either with unhappy centrist Republicans or with McCarthy himself.
Over in the Senate, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell seem to be on the same page but backbench Republicans continue to slow down progress. It is Beltway conventional wisdom that, should the Senate act and pass a clean CR Speaker McCarthy would be “jammed” (and seriously, every single article and tweet discussing this will use that term) and put under further pressure. There’s no real reason for this other than perception, but weird things happen here in DC. Still, while there has been much optimistic reporting on the Senate, it’s now Friday, September 29th and while they have moved on to the bill, it has not yet passed and the timing of various parliamentary procedures remains unclear.
So far President Joe Biden has stayed out of this. His White House argues that this fight is fundamentally over an agreement that was already made (spending toplines for FY 2024 were part of the Fiscal Responsibility Act that was signed into law earlier this year) and that it’s up to the Congress to come to an agreement. At some point, particularly should McCarthy manage to get something through the House, he may need to engage but for now he’s doing his best to stay clear. Alternatively, leading Republican presidential candidate, former President Donald Trump is encouraging House Republicans to shut the government down unless Democrats concede to all of their demands.
This all sounds very difficult, are there big issues at stake?
Both yes and no. From a deficit reduction perspective, discretionary spending is just not a huge driver of long-term deficits. Rising entitlement spending and interest costs make up the bulk of government spending. Are there differences that matter? Absolutely, but in a macro perspective, the topline differences should be things that can be worked out through an agreement of a majority in both chambers.
There are trickier pieces that involve policy - Ukraine supplemental aid, border security, abortion, and more. This piece would run far too long if I took those on, but in past Congresses, the approach has been to jettison those fights for the purposes of a CR in order to avoid a shutdown and there’s no reason that couldn’t be successful again.
It’s also really unclear why a minority of the House of Representatives should be dictating to the rest of the government what gets to happen, which fundamentally is what is going on. The Congressional math will out at some point, it’s just a question of when that takes place.
So what should I expect to happen?
This has gotten a bit longer than I expected, so I’ll try to wrap up here with a quick summary of some potential scenarios for the next few days.
Stasis - Speaker McCarthy can’t get 218 votes for a Republican CR (his current concept would include deep cuts to non-defense spending in the CR, as well as a major boost to border security spending and adoption of a highly partisan border security bill the House adopted earlier this year). In the Senate, various Senate Republicans continue to throw sand in the gears and nothing gets done before Sunday or Monday. The government then shuts down first thing on Sunday. Eventually, the Senate bill moves but McCarthy refuses to consider it next week and the shutdown drags on into October with no clear endgame.
House moves - Speaker McCarthy manages to beg/borrow/steal enough votes to get 218 Republicans (or a majority if he can convince some of his recalcitrants to vote “present”) to pass the GOP CR. The Senate then takes up its bill and there are some sort of negotiations between McCarthy, Schumer, and, at some point early next week the White House. The government still shuts down, but there’s at least motion towards a resolution.
Senate moves - The Senate somehow develops an alacrity its been lacking, Republicans and moderate Dems unpick a deal on border security and it gets tacked on to the CR. The House can’t get to 218 votes despite repeated attempts and so, on Sunday morning Speaker McCarthy is “jammed” by the Senate with their CR. After much sturm and drang, House GOP moderates put enough pressure on him to allow it onto the floor (or work with Democrats to use a parliamentary procedure to get around his control of the agenda). The government is still shut down for a few days, but by the end of the week a CR has been passed and we have a whole 45 days before we get to do this again.
Brass tacks - in all of these scenarios we will experience at least a short shutdown and the possibility of a prolonged one cannot be eliminated. It’s going to be a bumpy week.
(Note, since publication this piece has been lightly edited to correct some typos.)