The latest government shutdown was the 12th since 1981—but it won’t be the last. So says Linda Bilmes, Daniel Patrick Moynihan Senior Lecturer in Public Policy, a budget expert and former assistant secretary and chief financial officer of the United States Commerce Department. Bilmes explains why shutdowns happen, how the government decides who is furloughed and who keeps working, and how costly (in terms of money, time, and morale) they are. The author of a forthcoming book on budgeting, Bilmes also diagnoses the reasons behind the dysfunction and hints at the possible solutions available to policymakers.
Q: What does it mean when the government shuts down?
The Constitution gives Congress the “power of the purse” which means that the federal government cannot spend money unless Congress enacts legislation to pay for it. A shutdown is triggered when Congress fails to pass legislation for government agencies to operate. Most government services are frozen except those designated as “essential” for national security or other reasons. “Essential” operations include air traffic control, civilian weather forecasting, active military operations, and hundreds of core government services.
Q: How is it decided which functions shut down and when?
Each agency has to designate which employees are deemed “essential.” The actual decision about what constitutes “essential” is somewhat arbitrary, depending on how each agency approaches the issue. Researchers at the Centers for Disease Control and the National Institutes of Health may be suspended during shutdowns whereas postal deliveries are not. In some shutdowns about 40 percent of the government workforce—about 850,000 civil servants—are placed on an unpaid furlough. In previous shutdowns, these individuals were paid retroactively once the government resumed full operations.
The active duty military is not furloughed, and most military operations are not affected. However, some civilian Department of Defense employees will be affected, as well as thousands of workers at veterans’ facilities and contractors performing work such as equipment and facilities maintenance and support.
Congress and the White House generally continue to function but with reduced staffing. Like the rest of the federal government, Congress is required to designate which employees are “essential.” The White House announced that 659 of its employees were considered essential, while 1,056 members of the Executive Office of the President would be furloughed. However, the furloughed White House staff will be expected to report to duty on Monday, January 22, using a loophole that permits them to work for up to four hours on "shutdown activities" like setting out-of-office messages and explaining how to conduct functions to employees who are not being furloughed.
Q: How long could a shutdown last? What would be the medium- to long-term consequences for the country?
There have been 12 government shutdowns since 1981, which varied in length. The longest one took place from December 1995 to January 1996 under President Clinton, and lasted for 21 days. This came on the heels of another shutdown in November 1995 that lasted seven days. The most recent shutdown occurred in 2013, under President Obama, and continued for 16 days.
These shutdowns result in a great deal of inconvenience for the public, as many government offices are closed or on reduced service. Shutdowns are also a terrible waste of time and money. Many government agencies, and the state and local programs that depend on federal transfers, will be forced to make wasteful, last-minute spending decisions because they are unsure what will happen next year, or even next month. Costs include paying higher prices than necessary to hire contractors because the government may cancel contracts, and delayed routine maintenance for roads, buildings, forests, and equipment, leading to higher long-term costs.
Additionally, these shutdowns hurt morale and absorb a huge amount of time for government employees. Senior officials in each federal agency must devote considerable time to deciding how to manage their programs without active operations. When the government re-opens, these agencies need to catch up on backlogs of work and to repair damage that may have occurred. A report by analysts at S&P Global estimates that the shutdown costs the United States roughly $6.5 billion per week.
Q: What can we learn from previous government shutdowns to inform our thinking about how this one will play out?
Previous government shutdowns have been a game of chicken that continued until one side swerved. For example, in 2013 the Republican-led House of Representatives shut down the government in opposition to President Obama’s health care law, but eventually the President prevailed.
I would argue that shutting down the entire government is a symptom that our government budgeting system is profoundly broken. Congress has not fully enacted the federal “budget” since 1974. Since then, there have been only four occasions (1977, 1989, 1995 and 1997) in which Congress has ratified all 12 of the bills that comprise the budget on time. Instead, the government has been funded using stopgap measures such as “continuing resolutions” that simply fund government programs at the same level as the previous year.
The root of these problems can be traced to the budget reforms of 1974, when Congress passed the sweeping Congressional Budget and Impoundment Act, the first fundamental reform of the budgetary process since 1921. It enhanced the role of the Congress in several ways, above all by establishing House and Senate budget committees that were supposed to determine the size of the total budget pie and how to divide it among functional areas. These budget committees have not been able to enforce budget discipline. Combined with rising mandatory spending on entitlements and increased political partisanship, the result has been an exhausting series of “fiscal cliffs,” shutdowns, sequestration, continuing resolutions, and debt ceiling brinkmanship—leading to uncertainty about when and if any particular piece of legislative funding will be enacted.
The overall effect of this budgetary dysfunction is to undermine public confidence in government. My forthcoming book, “Budgeting for Better Performance” (Brookings), coauthored with Scott Gould, addresses these issues and proposes a number of reforms to the system that would restore common sense to the budgeting system. These include restructuring the membership of the budget committees, synchronizing the federal, state, and local annual budget calendars, providing budget training to most senior federal employees, and improving visibility across mandatory and discretionary expenditures in the budget.