Why are we facing a government shutdown?
Drawn-out battles in Congress over the current level of debt and the growing budget deficit have resulted in two situations, which could lead to a government shutdown: 1) a failure to pass funding measures for the upcoming fiscal year and 2) a limit on the amount of debt the nation may incur.
Congress is tasked with specifically allocating, or appropriating, funding for the government each year. Current funding for the federal government is set to expire on September 30th. To date, the House has passed 4 of the 12 annual appropriations bills for the upcoming fiscal year, while the Senate has passed 0. For agencies and programs that rely on discretionary funding through annual appropriations acts, Congress and the President must enact interim or full-year funding measures by October 1st if many governmental activities are to continue operating.
In addition, our nation reached its debt limit on May 19th of this year. The Treasury Department announced that our nation’s borrowing authority will be exhausted by mid-October. In the coming weeks, Congress will need to decide whether to raise the debt ceiling and, should the debt ceiling not be raised, how to manage our nation’s financial responsibilities.
What is the difference between Congress failing to pass a funding bill and the government reaching the debt limit?
The Congressional Research Service explains the distinction in the following way:
In a government shutdown situation, Congress and the President do not enact interim or full-year appropriations for an agency. In this case, the agency does not have budget authority available for obligation for things like salaries or rent. Under the Antideficiency Act, the agency may obligate some funds in certain "excepted" areas, but these obligations are highly restricted. As a consequence, the agency must shut down non-excepted activities, and the federal government may not make actual payment for excepted or non-excepted activities until budget authority is provided.
In a debt limit impasse, by contrast, the government no longer has an ability to borrow to finance its obligations. As a result, the federal government would need to rely solely on incoming revenues to finance obligations. If this occurred during a period when the federal government was running a deficit, the dollar amount of newly incurred federal obligations would exceed the dollar amount of newly incoming revenues. In such a situation, an agency may continue to obligate funds, because it has budget authority available for obligation, provided that appropriations are in place. However, the Treasury Department may not be able to liquidate all obligations that result in federal outlays, due to a shortage of cash, which may result in delays in federal payments and disruptions in government operations.
How did we get here?
Overspending and over borrowing. In January of 1995, a constitutional amendment that mandated a balanced budget passed the U.S House of Representatives. Two months later, the amendment was brought to the floor of the U.S. Senate where it failed by one vote. Since then, the federal debt has quadrupled in size, our government has run deficits of $1 trillion the last four consecutive years, and nearly 1/3 of total government spending is being paid for with borrowed funds.
How would a government shutdown impact our nation’s economic stability?
In 2011, when our nation faced a similar threat of a shutdown, Standard & Poor’s Ratings Services downgraded the credit rating of the United States. S&P said, “We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending…is less likely than we previously assumed and will remain a contentious and fitful process…In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency… The outlook on the long-term rating is negative.
As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again.”
The full faith and credit of the United States should not hang in the balance on every adjustment to the national debt limit. In order to sustain the economic stability that results from global confidence in our nation’s ability to pay our bills, I supported the Full Faith and Credit Act, H.R.807, to prevent default and require the Treasury to first use revenues to pay down public debt.
How would a government shutdown impact our nation as a whole?
At a time when we face great international and economic uncertainty, any decision to shut down the federal government must be approached with caution and with respect to responsible governing. Based on previous government shutdowns, effects could include delays in processing cases related to law enforcement and public safety, visas and passports for American citizens, services for veterans and military men and women, and furlough status for thousands of federal civilian employees, to name a few. Below are just a few examples of what resulted from past government shutdowns.
- Multiple veterans’ services were curtailed, ranging from health and welfare to finance and travel.
- Approximately 20,000-30,000 applications by foreigners for visas reportedly went unprocessed each day; 200,000 U.S. applications for passports reportedly went unprocessed; and U.S. tourist industries and airlines reportedly sustained millions of dollars in losses.
- New patients were not accepted into clinical research at the National Institutes of Health (NIH) clinical center; the Centers for Disease Control and Prevention ceased disease surveillance; and hotline calls to NIH concerning diseases were not answered.
- Delays occurred in the processing of alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms; work on more than 3,500 bankruptcy cases reportedly was suspended; cancellation of the recruitment and testing of federal law-enforcement officials reportedly occurred, including the hiring of 400 border patrol agents; and delinquent child-support cases were delayed.
- In 1995, National Parks Service turned away 9 million visitors to more than 350 parks and dozens of national monuments.
- Approximately 800,000 of 2.1 million federal employees faced potential furlough. These employees would not be permitted to work and would not receive paychecks. Though not guaranteed, historically Congress has granted back pay.
- In the event of a shutdown, the Federal Housing Administration, which guarantees many mortgages, would not be able to guarantee housing loans.
This report from the Congressional Research Service expands on various effects of a government shutdown: http://www.fas.org/sgp/crs/misc/RL34680.pdf.
How would a shutdown impact military service members and their families, including those deployed overseas?
During a lapse of funding, some Department of Defense personnel would be exempted from furloughs, including most or all uniformed military personnel, while others would not be permitted to work. However, even exempted military personnel - including active duty members deployed in war zones – who would continue to work, would not be paid until a funding bill is passed. The result would be significant delays in pay for our active duty service members and their families.
I have cosponsored the Ensuring Pay for Our Military Act, H.R. 342, to put an end to that possibility. The bill provides emergency funding to ensure that members of the Army, Navy, Air Force, Marine Corps, reserve components, National Guard, and Coast Guard will receive their pay and allowances for active duty services in full and on time. You can read more about it here.
How would a shutdown impact programs like Social Security and Medicare for senior citizens?
Seniors will continue to get their Social Security checks and have access to Medicare since agencies can still disburse funds through past funding and maintain some employees to process the payments. However, seniors could see delays in receiving their checks due to under-staffed offices. Additionally, during past government shutdowns, the Social Security Administration had to delay processing and payment for new claims and those who filed a change of address form.
This week, I introduced a bill, H.R.3161, aimed at protecting the Social Security and Medicare trust funds. This bill would ensure that money allocated to these trusts can only be used for the purpose they were intended, and would also avert the possibility of the Treasury department delaying payment of Social Security or Medicare to our seniors. Under the bill, money must be deposited into the trust funds without delay, and the money cannot be used to pay the debt.
Which solutions to address overspending do you support?
As Congress continues contentious debate over our nation’s course of action, I’m prepared to work in a bipartisan fashion with any Member of Congress who wants to put America on a path to less spending, less borrowing, and increased predictability and certainty for businesses and families. To that end, I have introduced and supported the following solutions:
Championed the Balanced Budget Amendment, H.J.Res.1. Constitutionally require that Congress cannot spend more than it receives in revenues.
Cosponsored the Tax Code Termination Act, H.R.352. Abolish and recreate the tax code so it is simple and fair.
Introduced the Congressional Accountability Pay Act, H.R.284. Hold Members of Congress accountable for spending by tying Members’ salaries directly to spending – the more they spend, the less they make.
To learn more about the implications of a government shutdown, please read:
“What to Shutdown. What to Protect”: Congressman Forbes’ solutions to a government shutdown
Office of Personnel Management (OPM): The Potential Impact of a Lapse In Appropriations on Federal Employees
Congressional Research Service (CRS): Shutdown of the Federal Government: Causes, Processes, and Effects
Congressional Research Service (CRS): Reaching the Debt Limit: Background and Potential Effects on Government Operations
NOTE: This basic FAQ sheet provides information and answers based on potential and past action taken by the federal government in the event of a shutdown. There is no certainty (unless otherwise stated) how various federal government agencies will respond in the event a shutdown occurs.