Every year, Congress must pass, and the President must sign, budget legislation for the next fiscal year, consisting of 12 appropriations bills, one for each Appropriations subcommittee (Agriculture, Commerce, Defense, etc.). The U.S. government has been partially shut down for 17 days, as of the writing of this article, due to Congress’s failure to pass any of the 12 appropriations bills required for FY 2026. Without these bills or a continuing resolution, non-essential federal functions halt, while essential services and mandatory programs continue.
Since Congress introduced the modern budget process in 1976, there have been 20 “funding gaps,” including the 2018-2019 shutdown and the one in January 2018, when funds were not appropriated for at least one day. Since 1981, ten funding gaps of three days or fewer have occurred, mostly over a weekend when government operations were only minimally affected. There have now been four “true” shutdowns where operations were affected for more than one business day. The first two happened in the winter of 1995-1996, when President Bill Clinton and the Republican Congress were unable to agree on spending levels, causing the government to shut down twice, for a total of 26 days. The third was in 2013, when a House and Senate standoff over funding for the Affordable Care Act (ACA) resulted in a 16-day shutdown. The fourth shutdown in December 2018 and January 2019 – technically only a partial shutdown because five of the 12 appropriations had previously been enacted – centered on a dispute over border wall funding and was the longest-lasting shutdown at 35 days.
Shutdowns are costly. Federal agencies incur expenses preparing contingency plans, lose revenue from fees, and face contractor premiums to account for the uncertainty of not being paid. The Congressional Budget Office (CBO) estimated that the 2018-2019 shutdown reduced Gross Domestic Product (GDP) by a total of $11 billion, including $3 billion that will never be recovered. Private businesses also suffer from delays in permits, loans, and certifications. A 2019 Senate report found that the three government shutdowns in 2013, 2018, and 2019 wasted nearly $4 billion of taxpayer dollars.
Government shutdowns and U.S. defaults may often be confused, but they’re not the same. Unlike shutdowns, a government default—triggered by breaching the debt ceiling—would jeopardize all federal payments, including debt interest and mandatory spending. While shutdowns are disruptive, defaults pose far greater economic risks. For more information on the debt ceiling and what the impacts from a government default could look like please see:
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