Government Shutdown. How We Got Here. What it Means

-Karen Michelle

The main topic of conversation these days is the current government shutdown. But we had questions. And we thought you might as well, so we decided to dig a little deeper for some answers.

What exactly is a government shutdown?

Well, really, in order to understand  a shutdown, you have to know about two things, The Antideficiency Act and funding gaps.:

Where does the precedent for a shutdown come from?

Honestly, it start with the The Constitution,

Article I, Section 9, Clause 7 of the Constitution states, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Federal employees and contractors cannot be paid if appropriations have not been enacted in the first place.

Nevertheless, it would appear to be possible under the Constitution for the government to make contracts or other obligations even if it lacks funds to pay for these commitments.

Several provisions of law—which commonly are referred to as the Antideficiency Act—generally prevent this from happening, however.

The act, which evolved over time and is located in Title 31 of the U.S. Code, prohibits federal officials from obligating funds before an appropriations measure has been enacted, except as authorized by law.

Antideficiency Act

So this Act that determines funding responsibility and can ultimately lead to funding gaps,which in turn can result in Government shutdowns. It inconveniences our lives so we hate it, right? But should we? Where did the Act come from?

Well, it goes way back.

So we all know that according to the Constitution, Congress is supposed to have the power of the purse. In other words, the Executive branch isn’t allowed to make a decision on it’s own to spend money. It’s a classic example of checks and balances and one of the beautiful aspects of Constitutional framework. But, basically from the birth of our nation, the executive branch has tried to find ways around it. Congressional complaints regarding executive fiscal overreach date as far back as 1816 and 1819. Who were those accountability accusations leveled at? Presidents Madison and Monroe.

The most effective tactic the executive found for getting around Congressional appropriation was through procuring and committing to contracts without having the money from Congress. Once the Executive did that, they effectively backed Congress into a corner where they often felt they had to fulfill the Executive’s obligation. This tactic was known as causing a “coercive deficiency”. Historically (and really still today) the most effective way of utilizing a coercive deficiency was military spending.

So, To take back its control of the spending power , the Congress passed laws just after the Civil War that made such actions illegal. The main one is the Antideficiency Act, which prohibits Executive Branch from obligating or spending money before it is given to them by the Congress. It also prohibits these officials from taking money given to them for one purpose and using it for another. There are civil and criminal penalties for violating the law, as well as extensive auditing and reporting requirements.

Not such a bad thing, right?

The Act was made official in 1884, was amended and expanded significantly in 1905, 1906, and 1933 and revamped in 1950. The present version on the books was enacted in 1982.

The current statute prohibits:

Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law.

Involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law.

Accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property.

Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations.

The fiscal principles underlying the Antideficiency Act are really quite simple. Government officials may not make payments or commit the United States to make payments at some future time for goods or services unless there is enough money in the “bank” to cover the cost in full. The “bank,” of course, is the available appropriation.  

So, now that we have a little more understanding of the Antideficiency Act, let’s try to get a strong grasp on funding gaps.

Funding Gaps

The Antideficiency Act generally bars the obligation of funds in the absence of appropriations,  So the space during the fiscal year when appropriations for a particular project or activity are not enacted into law, either in the form of a regular appropriations act or a continuing resolution, also known as a CR, is called a funding gap.

Although funding gaps may occur at the start of the fiscal year, they may also occur any time a CR expires and another CR is not enacted immediately. Multiple funding gaps can occur within a fiscal year. *Budget vs CR

So that begs the question, what is the government’s fiscal year? Well, the government defines the fiscal year in terms of the budget from October 1 of the prior year to September 30 of the current one. For example, The 2019 budget would be from October 1, 2018 until September 30, 2019.

Why does the federal fiscal year begin on October 1? Because that allows newly-elected officials to participate in the budget process for their first year in office.

When a funding gap occurs, federal agencies are generally required to begin a shutdown of the affected projects and activities, which includes the prompt furlough of non-excepted personnel. The general practice of the federal government after the shutdown has ended has been to retroactively pay furloughed employees for the time they missed, as well as employees who were required to come to work.

Although a shutdown may be the result of a funding gap, the two events should be distinguished because a funding gap may result in a total shutdown of all affected projects or activities in some instances but not others.

For example, when funding gaps are of a short duration, Several have only been a day,  agencies don’t have enough time to complete a shutdown of affected projects and activities before funding is restored. In addition, the Office of Management and Budget has noted that if a resolution is imminent, then the shutdown can be postponed. Basically, if the shutdown is going to be like a day or something, its just not worth the trouble.  

So, know we know how the government ends up at a shutdown and why, so let’s see what history tells us about them.

What is the history of Government Shutdowns?

The record of government shutdowns go back all the way to 1790 where there was a “shut down”due to a Revolutionary bond issue. But of course a government shutdown meant something very different then than it does now. Nonetheless, all of history is a part of the roadmap to where we are now.

Papers from the Congressional Research Service shows that although there have been  a plethora of shutdowns, only six in the past 40 years have lasted more than ten days.

Two occurred during the Clinton administration, including the longest shutdown until now.. The federal government shut down for a total of 21 days.. The shutdown ended with an agreement on a seven year budget plan.

The third was during the Obama administration. A stalemate between the House and Senate resulted in a 16-day shutdown. The issue in that instance was a disagreement between Congress and the president on the Affordable Care Act, more commonly known as “Obamacare.”

At midnight on Saturday, the shutdown entered its 22nd day, which makes it the longest gap in American government funding ever.

That beats the previous record, under President Bill Clinton in 1995, of 21 days.

In total, there have been 21 gaps in government funding since 1976, though the level of shutdown has varied. The current federal shutdown is a partial one, as many agencies were already funded through this fiscal year, which ends in September.

Before we break down the current shutdown, let’s look at the past shutdowns and what was left behind

Past Shutdown Impacts

-Although most Shutdowns have been under Republican Presidents who have cited overspending as a reason for their veto or stalemate, ironically, Government shutdowns end in MORE spending.

Data obtained from the Bureau of Economic Analysis confirm that during a shutdown, government consumption declines, then rises sharply in subsequent periods, and remains at those levels long after funding is fully restored.

Government expenditures increased sharply during the 2007-2009 recession but began to stabilize in 2010. Government expenditures remained at relatively low levels in 2010-13 but rose sharply in 2014-17. The government shutdown of 2013 reversed the decreasing trend in expenditures.

Historical data show that Congress often allocates additional funding to ease the government’s transition following a closure. Also, economic projections from the Congressional Budget Office now estimate the national deficit will be 100 percent of the gross domestic product by 2028. In other words, our nation’s debt will be equal to production. You don’t need to be a financial whiz to see that this prediction is not great for the country.

We are going to go over the effects of the two longest shutdowns before the current one. Keep in mind, the current shutdown is considered a partial one so comparison may not be equal.

1996-97 Effects:

The CDC stopped tracking diseases and their hotline was not staffed, public safety issues were affected even down to delayed child support case processing. 368 National Parks and monuments were closed with a loss of 2 million visitors and the revenue that could have accompanied them. Visas and Passports applications by foreigners reportedly went unprocessed each day; U.S. applications for passports reportedly went unprocessed; and U.S. tourist industries and airlines reportedly sustained millions of dollars in losses. Many Veterans services were affected, including health services which can not always handle a delay.

2013-14

Halt to many permits and licenses, including 200 applications for energy resources.Suspension of IRS income verifications, a stop to federal loans and disrupted tourism to National Parks, disrupted environmental protections and international trade relations, suspension of social security cards and a shutting down of e-verify systems.  

So, all of that was before but what are we looking at now?

The current situation

This shutdown is considered a partial one because there are some government agencies that are funded through the fiscal year. Other agencies have budgets due to expire at various times within the year. Here are some of the current impacts.

Employment Overview

Under the shutdown, funding has lapsed for nine of the 15 federal departments—Justice, State, Treasury, Homeland Security, Agriculture, Commerce, Interior, Housing and Urban Development and Transportation. About 420,000 federal employees deemed essential are working without pay, while another 380,000 have been placed on unpaid leave, or furlough.

It’s not just DC being affected, many cities are being hit pretty hard.Many major local employers are shut down. In Huntsville, Ala., the National Aeronautics and Space Administration and the U.S. Army are the two largest employers, While the Army continues to pay all its staff, 95% of NASA’s employees are currently on furlough or unpaid leave.(Space Force)   In Chicago, the Chicago Federal Executive Board is the largest employer with nearly 50,000 employees affected by the shutdown. The Treasury Department is a major employer in both the Philadelphia and Kansas City metro regions. A large percentage of their employees are furloughed.

It’s not just cities that are paying the price, Many rural communities are also bearing the burden of the shutdown..According to Moody’s Analytics, Several rural states are among those with the highest percentage of their workforces employed by federal agencies that have shut down.These include Montana, Alaska, New Mexico, Wyoming and South Dakota. The Department of the Interior and Agriculture Department, both subject to the shutdown, are major employers in those states.

Health:

The Food and Drug Administration will continue to monitor and respond to outbreaks of food poisoning and the flu, as well as food and medical product recalls. It will also keep screening imported food and medical products. And the agency says it will address public health issues that pose an imminent threat.

Still, about 41% of the FDA is off the job due to the shutdown, and some employees caution that response time to emergencies could be slower. The FDA can call back furloughed employees in an emergency, but they’d only stay as long as needed to address that situation.

Travel:

While agencies like the Transportation Security Administration and the Federal Aviation Administration are understaffed because of the shutdown, but experts say there’s no reason to believe safety is compromised.

TSA spokespeople say that Security at airport checkpoints across the country is just as effective as ever, and average wait times are within TSA standards. But as the shutdown drags on, passengers could experience longer security lines or flight delays, and workers could quit over greater workloads and no pay.

Meantime, investigations into significant vehicle, plane and rail incidents are on hold as National Transportation Safety Board workers also are furloughed.

Security

Most of the military is funded and the VA is funded until the end of the fiscal year, but the funding on the Department of Homeland Security has lapsed.

According to a Homeland Security Advisory, The law enforcement functions of DHS and its related components will remain largely unaffected by the shutdown, including the operation of the Border Patrol, Immigrations and Customs Enforcement, the U.S. Coast Guard, Transportation and Security Administration, U.S. Citizenship and Immigration Services and the Federal Emergency Management Agency.

However,the shutdown nearly freezes the DHS Science & Technology Directorate, which remains in operation with a skeleton crew of 23 federal employees. But that doesn’t mean that cybersecurity will go unguarded throughout the shutdown. The recently founded Cybersecurity and Infrastructure Security Agency, which currently has 3,531 employees, will keep more than 2,000 on board during the appropriations lapse – but will not be getting paid.

Weather

Although critical weather information is still being updated on weather.gov. NOAA and other federally funded atmospheric weather research sites have high amounts of furloughed employees.Much research is being halted and NOAA hurricane modeling is not being updated.

IRS

The Trump administration confirmed this week that the IRS will be processing returns.  It’s a departure from the Internal Revenue Service’s policy not to pay tax refunds while the government is closed.

Social Programs/Tribal care

Food stamps are funded through February. The Department of Agriculture says it’s working with states to issue February benefits earlier than usual, by January 20.

The Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, is also funded through February. Child nutrition programs, including school breakfasts, lunches and after-school meals, are funded through March.

About 1.9 million Native Americans and Alaska Natives receive funding from the Bureau of Indian Affairs, which is operated by the Department of the Interior, one of the agencies hit by the shutdown.

For one tribe of Chippewa Indians in Michigan, the cost amounts to $100,000 each day the government is shut down.. The tribe is spending its own money in the meantime. Cherokee Nation Principal Chief Bill John Bakery reported that the Cherokee Nation was currently using federal funds it received just prior to the government shutdown began and had a plan to use tribal dollars if the shutdown continued.Bakery stated that certain federal programs were still working, but “We do have growing concerns,  for these federally funded programs if Congress and the President do not reach an agreement soon,” and, he added, the government has a responsibility and obligation to the tribes.

Public housing could be affected on local levels when it comes to the offices. The housing itself will be funded, but some of the office staff could be furloughed and they may not be able to maintain the usual operation level. Federal housing assistance payments will be dispersed but funding requiring HUD staff will not be processed until after the shutdown is over. Payments for section 8 project based contracts will continue and homeless assistance grants will continue along with Home Investment Programs.

National Parks/zoos

Most are closed and those that aren’t are not being cleaned. Local residents are working together to try to maintain the parks that are still open.

Immigration

Many immigration courts are closed due to the shutdown, adding to an already overwhelming backlog of immigration cases.The Executive Office for Immigration Review says that cases of detained immigrants will proceed as scheduled, and cases of immigrants who aren’t detained will be reset for after the government reopens, with thousands of cases rescheduled so far.

Justice/Courts

It is hard to pinpoint what areas of Justice will be affected because definitive information is hard to get, however the FBI Association released a recent petition stating ““On Friday, January 11, 2019, FBI Agents will not be paid due to the partial government shutdown, but we will continue our work protecting our nation,” “We urge our elected representatives to fund the Department of Justice (‘DOJ’) and the FBI because financial security is a matter of national security.”

The courts will remain in effect but may be at limited employee capacity.

Data Retrieval:

Census Bureau: ceased most operations, other than planning for the 2020 count. That means, among other things, no November data on new home sales (which were supposed to come out Dec. 27), construction spending (Jan. 3), manufacturers’ shipments, inventories and orders (Jan. 7) and international trade (Jan. 8).

Bureau of Economic Analysis also has ceased operations. That could affect the bureau’s first estimates of fourth-quarter and full-year 2018 gross domestic product, which are supposed to be released on Jan. 30.

Bureau of Labor Statistics is fully operational, as it is part of the Labor Department (which was funded back in September). However,plans for the January jobs report, data for which are supposed to be gathered next week, are still uncertain: The BLS conducts the payroll survey of employers itself, but the Current Population Survey (which generates the data used to calculate the unemployment rate) is a joint effort with the Census Bureau.

Agriculture Department

The main statistical offices, the National Agricultural Statistics Service and the Economic Research Service, are both closed. That means farmers will not have current data on global supply and demand for farm products, crop and livestock production estimates, and other agricultural economics matters

However, the Agricultural Marketing Service is continuing to provide market-price data for meat, grain, dairy products and other commodities.

Education

Many research grants have been halted and it is still uncertain how higher education research resources will be affected.

These are just some of the effects of the current partial shutdown.

Our observations:

While researching the effects of the shutdown there were several things that stood out to me. First, the effects of this shutdown are far reaching and could be pretty devastating. Second, there is a lot of misreporting on it to fuel narratives from both sides and last, so many of us are affected by the shutdown because the government is so inflated. So many things have become essential in our society and the lobbying voices have gotten so loud, it’s hard to know where we can even really make efficient cuts. We are all complaining, but we all benefit from this leviathan we created. It’s hard to  know what to do now.

I don’t know why we are surprised.  We elected an outsider who ran on a platform of burning things down and making them fantastic. This is what the country chose.  
We need to demand better.  Washington plays chicken to see who flinches first.  Makes for great political theater. It’s not so funny when you are a TSA agent wondering if you are going to be able to make the house payment this month.  

When you look at both the macro and micro effects of a government shutdown and the and the historical mixed bag of negotiator effectiveness, it really begs the question, is this fight worth it?

Sources:

https://www.thoughtco.com/government-shutdown-history-3368274

https://fas.org/sgp/crs/misc/RS20348.pdf

https://www.gao.gov/legal/appropriations-law-decisions/resources

https://www.americanactionforum.org/research/antideficiency-act-primer/

https://www.cnn.com/specials/politics/government-shutdown-2019

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