What is a government shutdown and why do they happen?

House speaker Mike Johnson confirms breakthrough deal to fund Department of Homeland Security, finally paving passage for final spending bills six months into fiscal year

Congressional leaders passed their first tranche of departmental spending bills in early March, funding about 30 per cent of the US government.

They now find themselves working against a sharp deadline to send through a second, larger package of bills to keep the government open until the 2024 fiscal year ends on 30 September, just weeks before the presidential election.

As it stands, federal funding is set to expire in the early hours of Saturday 23 March for the departments of Homeland Security (DHS), State, Defence, Labour and Health and Human Services.

However, it now appears that the House of Representatives has reached a tentative deal to bankroll the DHS, an agreement that would enable it to pass a sticking point and allow negotiators to process the remaining five funding bills just in time to avert another partial government shutdown.

House speaker Mike Johnson confirmed the positive development on Tuesday morning, stating: “An agreement has been reached for DHS appropriations, which will allow completion of the FY24 appropriations process.

“House and Senate committees have begun drafting bill text to be prepared for release and consideration by the full House and Senate as soon as possible.”

President Joe Biden in turn commended the negotiators, saying in a statement: “We have come to an agreement with Congressional leaders on a path forward for the remaining full-year funding bills.

“The House and Senate are now working to finalise a package that can quickly be brought to the floor, and I will sign it immediately.”

The bill to fund the DHS, which is responsible for securing and managing America’s borders, has proven particularly tricky to resolve as the question of illegal immigration at the US’s southern border with Mexico has become a central issue this presidential election year.

Here’s a look at some of the key questions surrounding government shutdowns, a recurrent threat looming over Congress whenever the parties of the left and right cannot find common ground on how to bankroll the great offices of state.

What is a government shutdown?

Under the Antideficiency Act, which was passed in 1884 and amended in 1950, US government departments and federal agencies cannot spend or commit money without the approval of Congress.

Its authority was reinforced in 1980 when Jimmy Carter’s attorney general Benjamin Civiletti ruled that its word was gospel and that no funding agreement meant no spending, leaving no further room for interpretation.

The House and Senate therefore need to assess the budget requests submitted by individual departments and agencies and agree on the 12 appropriation bills that apportion a full year’s worth of funding to those offices before a given deadline, with the spending packages having to pass through both chambers before they can reach the Resolute desk to be signed off by President Biden.

If Congress passes the appropriation bills, the clock is reset for another year and everyone can rest easily. If it cannot, those departments and agencies affected must cease all non-essential functions until a deal is in place.

If all of the dozen bills are caught up in partisan squabbling, a complete government shutdown takes place.

But if some can be agreed to, leaving only a few offices required to close their doors, a partial shutdown is the result.

What happens if the government has to shut down?

During federal shutdowns, government employees are told not to report for work and placed on furlough – although, since 2019, they are now paid retroactively when the impasse comes to an end, rather than forced to lose out on wages altogether.

The state of play does not apply to those whose jobs are considered essential for public safety, such as law enforcement officers, soldiers, air traffic controllers, medical personnel, power grid technicians or those responsible for administering social security, Medicare and Medicaid payments.

In 1981, Mr Civiletti ruled that a president should be free to go about his or her constitutional duties even if a shutdown is ongoing, an argument that has since been extended to court employees, members of Congress and aides who support them in their essential activities.

The bureaucratic consequences of such an outage can be considerable, however, particularly if the shutdown lasts for a significant length of time, with applications for passports, driving licences, student loans and tax refunds going unprocessed, food assistance programmes paused, inspections neglected and national parks closed.

But the state is prepared for just such an eventuality and the White House Office of Management and Budget posts detailed contingency plans for agencies to follow in the event of a shutdown and a 51-page question-and-answer guide to protocol, micromanaging the situation and stipulating which buildings must turn off their lights and computers.

How common are they in Washington?

While shutdowns can theoretically happen in any country that has a federal system of government rather than a parliamentary one, they typically only occur in dramatic cases of revolution, invasion or other disaster and remain a peculiarly American problem.

This is because it is only really in Washington that the two chambers of Congress can be controlled by political parties other than that of the president, intended as a safeguard against authoritarianism.

There have been at least 10 shutdowns in DC in the last 40 years, although only four of those were of any real length.

Bill Clinton’s bitter battles with a GOP-dominated House and Senate in 1995 and 1996 yielded two, meaning 26 days were lost in total as a result of feuding.

Barack Obama suffered another in 2013 when a stand-off over his Affordable Care Act resulted in a 16-day outage.

Then another erupted under Donald Trump from 21 December 2018 to 25 January 2019 over funding his (still far from complete) wall at the southern border, a 35-day partial shutdown in which five of the 12 appropriation bills were passed, allowing some agencies to remain open.

As for how significant all of this is for the US economy, according to one Goldman Sachs estimate a shutdown typically eats into America’s gross domestic product by 0.2 per cent for each week it lasts.

In the case of the Trump-era shutdown, the Congressional Budget Office calculated that it cost the economy 0.1 per cent growth in the fourth quarter of 2018 (or around $3bn) and 0.2 per cent growth in the first quarter of 2019 (or $8bn).