In much of the world, government shutdown is bad news – the kind of thing that comes from revolution, invasion or disaster. For the United States, it’s a real problem that affects real people in their daily lives. The latest shutdown has drained more than $18 billion from the economy and hurt local communities that depend on federal workers.
A government shutdown occurs when Congress fails to pass a budget or a funding bill by a deadline set by law. Each year, Congress passes 12 appropriations bills or a continuing resolution (CR) to fund agencies and programs. If a CR expires or no full-year funding bill is passed, non-defense discretionary programs must shut down unless they are deemed essential by the President and Congress.
The first impact is on federal employees, who must be furloughed or told to stay home without pay until the dispute over money is resolved. Over two million people work for the federal government, and missed paychecks can put financial strain on households. But there are also impacts in local economies, where businesses lose revenue as user fees and contracts are delayed. The Congressional Budget Office estimates that the last five-week shutdown reduced gross domestic product by about $3 billion, and some of that will never be recovered.
Most mandatory programs, including Social Security and Medicare, continue during a shutdown because they are funded by permanent appropriations that don’t need to be renewed each year. But other programs and activities — like food safety inspections and cancer research at the National Institutes of Health — are stopped by the absence of a funding bill.