Now that the specter of a government shutdown is (once again) upon us, it’s probably a good idea to review what that actually means. I’ll do it question and answer style, hopefully in a way that seems natural.
What the heck is a “shutdown”?
The actual term is “funding gap” or “lapse in appropriations.” According to Article I, section 9 of the Constitution, no money can be drawn from the Treasury, except under appropriation made by law. That is, to say, the government can only spend money that it has been authorized to spend by law. And laws must be passed by Congress. So if the current appropriations expire and no new ones have been passed by Congress, then no money can be drawn from the Treasury. And that means, in the broadest sense, the government can’t pay for anything — salaries, supplies, etc. Which means, more or less, that the government has to cease operations, or shut down. As Matt Fuller reminded everyone yesterday, “shutdown” is a noun, don’t use it as a verb.
What do you mean “expire”?
Whenever Congress appropriates money, they indicate what period of time the money can be used. The vast majority of appropriations are annual, meaning they are for the period of one fiscal year. Some appropriations, such as money for construction projects, might be appropriated as multi-year. And some money appropriated by Congress is “no-year” money, meaning it can be spent at any time in the future, so long as it is used for its lawful purpose.
Annual appropriations are almost always provided by Congress for a period that runs from October 1 to September 30 of the following year. This is know as the fiscal year. Fiscal years are designated by the calendar year through which the appropriations provide for. So October 1, 2017 was the first day of Fiscal Year 2018, or FY2018.
Because Congress has not passed annual appropriations for FY2018, there may be a shutdown.
Wait, it’s January. Why are we dealing with this now?
Because Congress has been providing temporary FY2018 appropriations since October 1. There is another way to avoid a shutdown besides passing annual appropriations. And that is to pass what is called a continuing resolution (or CR), which is just a fancy term for a law that says, in effect, “money can be continued to be spent for a certain period of time while we work to get the annual appropriations bills passed.” Such a law can be written to cover any amount of time Congress desires. Indeed, a CR is just an appropriations bill of a different form.
CRs generally provide agencies with funding at the same rate they were receiving it in the previous year, in an across-the-board fashion. Sometimes an across-the-board rate reduction is included, or so-called anomalies that adjust individual accounts. But a CR, in principle and practice, is a very short law that works at an aggregate level and doesn’t consider details or changes in agency programs.
Congress has passed three such CRs this fiscal year. The first one provided funding from October 1 through December 8. The second one provided funding through December 22. And the third one provided funding through January 19. It’s the expiration of the third one—at midnight tonight—that creates the possibility of a lapse in appropriations.
Note that Congress isn’t even considering passing actual FY2018 appropriations today; they are just considering another CR that would fund the government through February 16, with the hope that the appropriations bills could be completed by then.
So you could, in theory, have a CR that prevents an October 1 shutdown and goes through November 13, at which point a shutdown could start that lasts until a CR is passed on November 19, but then starts again on December 15 when that CR expires and goes until January 6 when full-year a appropriations are finally approved. Indeed, this is exactly what happened in FY1996.
So when there is a shutdown, the whole government just stops operating?
Not exactly. Under the Constitution, no money can be drawn from from the Treasury. That is, no outlays of actual money to creditors. But the Constitution doesn’t prohibit the government from incurring obligations; the government is theoretically still free to enter into contracts, hire and employ labor, etc. They just can’t pay off these obligations. Kinda like if you had a credit card, but no ability to pay it at the end of the month because your checking account was frozen.
But my friend is a federal employee, and he’s not going to be allowed to go to work during a shutdown.
That’s right, because while the Constitution only prohibits disbursement, there’s a federal law (the Anti-Deficiency Act) that prohibits the obligation of federal money in the absence of an appropriation, with criminal penalties for agency heads who violate it. In effect, the ADA freezes the credit card, whereas the Constitution freezes the checking account. So if your friend’s agency had him come to work, it would be in violation of the Anti-Deficiency Act, because the agency would be obligating money without an appropriation, but it would not be in violation of the Constitution, because your friend’s salary would not be disbursed from the Treasury.
I don’t get this obligation / disbursement business. Explain.
When Congress appropriates money to an agency, it gives it to them as budget authority. That simply gives the agency an amount on a piece of paper, which is the amount of money that can legally obligate for lawful purposes. Say Congress provide $100 million in budget authority to an agency. It’s not like Treasury goes and dumps $100 million in cash or gold off at the agency. All the money is at Treasury.
So when the agency spends money, it doesn’t literally hand over cash to its employees or creditors, it simply enters into an obligation to pay them (be it salaries for employees or funds for capital purchases). The agency then notifies Treasury, and Treasury ultimately transfers the funds to the creditor. I think the credit card / checking account analogy, while not actually perfect, is the best way to think about it. Congress gives each agency an amount on a credit card, which they are allowed to spend. But it’s all linked to one checking account, which is controlled by Treasury. The Constitution shuts off use of the checking account when no appropriation exists funding it. The Anti-Deficiency Act shuts off the credit card.
But now we’re back to the question: does the whole government just stop operating?
Nope. The Anti-Deficiency Act includes an exception for the “safety of human life or the protection of property.” Subsequent opinions of the Attorney General (found in appendices here), opinions of the DOJ Office of Legal Counsel, and guidance of GAO / Comptroller General have clarified what does and does not fall under this exception. In past shutdowns, OMB opinions have considered the following types of things to fall under the exception: military and national security, public safety such as air traffic control, care of patients in hospitals and prisoners in prisons (and wildlife at the national zoo), things necessary to protect federal property and continue the functions of the Treasury, and disaster relief, among other things. Under common sense interpretations, the heat can also be left on at federal buildings.
Don’t let all these exceptions distort the bottom line: if no appropriations bills have been enacted, the vast majority of federal agencies will largely shut down, and sizable portion of the federal civilian workforce will be furloughed. You can see the percentages here.
Has this always been the case?
No. Prior to the Attorney General opinions in 1980 and 1981 (known as the Civiletti decisions), most agencies didn’t stop operating at all when there was a funding gap; they just liberally interpreted the ADA and decided Congress didn’t intend for them to cease operating. The 1980 and 1981 opinions took a much stricter view of the ADA; that’s really when the modern shutdowns began.
So some federal employees keep working and some do not?
Right. Those who must continue to go to work are called “excepted” (sometimes referred to as “essential.”) All others (“non-excepted” or “non-essential”) are furloughed.
Of course, this only applies if there is a lapse of appropriations; if a federal agency has a non-appropriated source of funding—such as a revenue stream they are, under law, allowed to draw money from—they can use that funding to avoid the need to shut down.
So the excepted employees still get paid?
Not during the shutdown. Remember, the exception only allows the government to obligate the money (i.e. put it on the credit card) without violating the Anti-deficiency Act. Until an appropriation is passed by law, the Constitution prohibits disbursement of the money by the Treasury. So yes, the soldiers will continue to work and continue to earn money, but they will not receive a check until an appropriation is passed by law. In effect, the government legally owes them money, but can’t pay them.
And the non-excepted employees will not get paid?
Yes and no. The government will not be incurring an obligation for the non-excepted employees, so they do not legally owe them anything. But in past shutdowns, Congress has typically passed legislation retroactively paying non-excepted federal employees for the period that they were furloughed.
What about transfer payments like Social Security?
Social Security is funded through a permanent appropriation, meaning that the benefits themselves are not affected by a shutdown. However, employees at the SSA could theoretically be non-excepted. In past shutdowns, OMB opinions have considered SSA employees required to process recipient benefits as excepted, and all checks have been sent out.
I thought there were usually 12 appropriations bills in Congress. What if half of them have passed?
You’d have a partial shutdown. The Constitution doesn’t require or concern itself with how Congress divides up its appropriations bills. If the State Department appropriations for FY2018 have been passed into law, then the shutdown doesn’t affect them whatsoever. This is not an uncommon situation; during the second shutdown in FY1996, some of the bills had been passed already. During the FY2014 shutdown in October 2013, some individual departments were funded and thus the shutdown ended for them.
Does the legislative branch operate during a shutdown?
If the Legislative Branch Appropriations Act is not passed, then the legislative branch is subject to the Anti-Deficiency Act and, of course, the Constitution. Under the 1980 and 1981 opinions of the Attorney General, and subsequent interpretations by GAO, there is an ADA exemption for employees involved in the performance of Constitutional duties of the president and Congress. This makes sense: it would be ridiculous to say the bill reading clerk in the House or the sergeant-at-arms in the Senate could not work when the reason they would be working would be to support the ending the shutdown and providing the appropriations.
Members of Congress salaries’ are provided for by a permanent appropriation, so they never experience a funding lapse.
In the FY2014 shutdown, Congress left the decision of whether Hill staffers were necessary to the constitutional functioning of Congress to individual employing authority, which is most cases were the individual Members (in their offices) or committee chairs (for committee staff). Support services, such as the cafeterias, were not open. The Committee of House Administration provided detailed guidance on the matter in FY2014.
What about the Courts?
In general, the federal courts are subject to the Anti-Deficiency Act and obviously the Constitution. On a practical level, however, the courts have not had to deal with shutdowns because they have a large stream of non-appropriated funds: the filing fees paid by litigants and others accessing the court system. These fees provide enough of their annual budget such that even in the absence of an appropriations, the courts can go about two weeks without any disruption in activites. In FY2014, the courts operated more or less normally during the shutdown. If a prolonged shutdown occurred, court staff would ultimately have to be furloughed, which could result in postponement of litigation and also raise constitutional questions about due process and the speed of trials in criminal matters. The courts are obviously also affected by how a shutdown impacts the Department of Justice.
Federal judges are in an interesting situation in regard to a shutdown. Article III of the Constitution provides that judges shall “receive, for their Services, a Compensation, which shall not be diminished during their Continuance in Office.” This potentially creates a paradox in the constitution: treasury cannot constitutional disburse money, but the judges—in theory—must be paid. This has never been tested; because of the non-appropriated funds, no shutdown has ever affected the federal courts such that a payday for judges occurred under a lapse of judicial appropriations. It is actually pretty funny to imagine a federal judge bringing suit under the Article III and having the case being heard by … a federal judge. One obvious statutory fix for this would be to create a permanent appropriations for federal judge salaries. They are mandatory money anyway—constitutionally mandatory, that is—so it’s not like you’d be reducing any congressional power-of-the-purse authority.
How often have there been shutdowns?
There have been 16 lapses in appropriations of a day or longer since FY1977. The last three were two in FY1996, that lasted 5 and 21 days, respectively, and one in FY2014 that lasted 16 days. It’s not clear how many actual shutdowns there have been.
Wait, there’s a difference between a lapse in appropriations and a shutdown?
Yes, a pretty dramatic one.
Now you’re just fucking with us.
No, this important. A lapse in appropriations occurs as soon as Congress has not provided budget authority and Treasury cannot constitutionally disburse funds. But prior to the Civiletti opinions in 1980 and 1981, agencies generally continued to operate as normal during periods of expired appropriations. And even after the Civiletti opinions, many of the short lapses in appropriations did not result in agencies shutting down; the combination of the lapses occurring on weekends and the expectation that they would be resolved shortly led many agencies to take no action. It’s actually pretty hard to tell form the historical record what happened in most of the short funding lapses in the 1980s; some agencies began earnestly shutting down, others did nothing, some did something in between.
The only actual widescale shutdowns in the post-Civiletti era are two FY1996 shutdowns (5 days and 21 days) and the FY2014 shutdown (16 days).
Ok, so what does an agency do to actually “shut down”?
OMB provides clear guidance on the procedures for this in Circular No. A-11 and other public and non-public documents provided to agencies. Agencies are required to maintain contingency plans for funding gaps including decisions about what activities are exempt from the ADA and what employees will be furloughed or designated as exempted; OMB provides guidance for both short (less than 5 days) and longer lapses in appropriations. Once a lapse has occurred, agencies are not allowed to perform activities that would violate the ADA but must perform activities related to the orderly shut down of operations, including the formal furloughing of employees and the securing of federal records.
For many agencies, these orderly shutdown activities don’t occur until Monday if the lapse occurred after close of business on Friday.
Where can I learn more?
As always, my recommendation is to go the most recent CRS report on the topic (I used to be a co-author of it.) It has all the citations and links you could ever dream of to lead you to the primary source material you need to keep yourself busy for a whole weekend reading about this stuff.
