A government shutdown is a temporary halt to most federal activities while Congress and the President reevaluate current funding and negotiate new legislation. The length of a shutdown depends on lawmakers’ ability to come to an agreement on full-year spending or, failing that, pass a stopgap Continuing Resolution (CR).
Most activities funded by mandatory appropriations—like Social Security and Medicare payments to senior citizens and people with disabilities—do not stop during a funding gap. Other essential services, such as border protection, in-hospital medical care, air traffic control, and law enforcement also remain, as do programs funded by user fees like food safety inspections.
But a reversal of budgetary funds affects employees, who are either furloughed or required to work without pay until the impasse ends. More than two million Americans in all 50 states work for the federal government, and missed paychecks have a ripple effect on local economies. The recurring threat of a shutdown further erodes Americans’ trust in the institutions that govern them.
Moreover, the last shutdown halted major Small Business Administration loan programs, which typically dispense nearly $200 million per day to small and midsize businesses; this stalled thousands of job creations, as well as investment plans. Likewise, the reversal of funding to housing and tax credit offices slowed mortgage approvals and delayed the release of home loans for low-income homeowners. Shutdowns stifle economic growth and distract from efforts to put the United States on a sustainable fiscal path.
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