Explaining the Longest-Ever U.S. Government Shutdown
(Bloomberg) -- The impasse over President Donald Trump’s campaign promise to build a wall along the U.S.-Mexico border has now produced the longest U.S. government shutdown ever. Though some departments are operating, and others are staffed by "essential" employees, the effects of the shutdown are being felt well beyond Washington, with neither Trump nor opposition Democrats showing any signs of backing down.
1. Why is there a government shutdown?
The U.S. government runs on 12 appropriations bills passed each year by Congress and signed by the president. In fiscal years like this one, when all 12 bills aren’t adopted by the Oct. 1 start of the fiscal year (only five were completed on time), Congress and the president keep the machinery of government humming by passing short-term extensions. They followed that process this time, but then Trump demanded that any further extension include $5.7 billion for his border wall.
2. How much of the government is closed?
Nine federal departments and agencies such as the Federal Aviation Administration, Environmental Protection Agency and Securities and Exchange Commission have been closed since Dec. 22, when their funding ran out. Other pieces of the government, notably the Defense Department, are funded because Congress and Trump had managed to reach agreement on their 2019 appropriations. Still others, like the U.S. Postal Service and U.S. Federal Reserve, have funding streams separate from what Congress provides. In closed departments and agencies, only employees deemed "essential" report to work, and they won’t be paid until the shutdown is over. Other employees are officially on unpaid furloughs.
3. Who is essential?
Generally speaking, government workers in law enforcement and public safety continue to work -- so air traffic control, medical care of veterans and federal criminal investigations are moving forward during the shutdown. But defining "essential" is more art than science, with individual departments -- and the political appointees who run them -- having a say over who comes to work and who stays home.
4. What’s been the impact so far?
The Food and Drug Administration isn’t doing some routine food safety inspections and might run out of funds to review new drugs. The SEC can’t approve initial public offerings. Some reports on the U.S. economy aren’t being produced. Airlines can’t get permission to expand fleets. Some fishing boats in Alaska are stuck in dock, in need of federal permits and inspections. U.S. airport screeners, working without pay because they’re declared essential, are calling in sick in larger-than-normal numbers. Trash is piling up in national parks, which are open but unstaffed. About 800,000 federal employees had to make do without a paycheck. The Agriculture Department has found funds to provide food stamp assistance through February but would run out after that. Home closings were delayed until the Trump administration restarted an Internal Revenue Service program that verifies borrowers’ incomes.
5. Will federal employees eventually get paid?
Yes. Congress and Trump agreed on legislation that guarantees back pay when the government reopens. That’s been the case in previous shutdowns as well.
6. What’s the impact on the U.S. economy?
Kevin Hassett, chairman of the White House Council of Economic Advisers, initially said the shutdown would cut U.S. economic output by about 0.1 percent every two weeks. He’s since upped that to 0.13 percent every week, including lost work from contractors and lost spending and investing by federal employees who are not getting paid. But since workers will eventually be paid, some of the short-term hurt will be made up in the longer term. Yelena Shulyatyeva of Bloomberg Economics foresees a 0.3 percentage-point drag on first-quarter GDP "if the government reopens in the next few weeks."
7. How can a government shutdown be allowed to happen?
Until 1981, gaps in U.S. government funding didn’t result in shutdowns; agencies operated mostly as normal, and their expenses were covered retroactively once a deal was reached. Benjamin Civiletti, attorney general under President Jimmy Carter, put an end to that. With legal opinions issued in 1980 and 1981, he established that government work generally must cease until Congress agrees to pay for it. His rulings paved the way for stricter enforcement of a 19th-century law known as the Antideficiency Act, which, in theory at least, authorizes fines or prison terms to federal employees who dare work for free during a shutdown. In this, the U.S. democracy stands apart from most other western democracies, which don’t allow for government shutdowns.
8. How might this shutdown end?
Trump could give in and agree to fund the government without progress on his wall, or congressional Democrats could give in and pledge money for the project. There’s room for compromise between the $1.6 billion Democrats previously offered for border security and the $5.7 billion Trump wants specifically for a wall; plus, Trump seems willing to expand his definition of an acceptable "wall." Trump could try to sweeten the deal for Democrats, perhaps by offering legal protections for the young, undocumented immigrants known as "Dreamers." Then there’s Trump’s talk of declaring a national emergency under which he could shift military construction funds to build the border wall, removing the issue from budget talks. That would be an extraordinary use of a presidential prerogative usually reserved for prosecuting a war or restricting trade and transactions with a foreign adversary, and would likely draw legal challenges.
9. How many times has the U.S. government shut down?
There have been 13 shutdowns since 1981, ranging from one to 21 days, including a three-day one last January. (Before 1981, agencies operated mostly as normal during funding gaps, their expenses covered retroactively once a deal was reached.) The longest shutdown until now, 21 days in December 1995 and January 1996, was a famous budget impasse that pitted President Bill Clinton, a Democrat, and the Republican House speaker, Newt Gingrich. Shutdowns over spending disagreements are different (and less grave) than what would happen if the U.S. breached its debt ceiling and defaulted on some of its obligations. That’s never happened.
The Reference Shelf
- How the shutdown is affecting the reporting of economic data.
- The Committee for a Responsible Federal Budget tracks the budget through its Appropriations Watch.
- A 2015 report by the Democratic staff of the Joint Economic Committee of Congress examined the economic costs of shutdowns.
- A Congressional Research Service report on economic effects of the 2013 shutdown.
- How previous presidents have used the power to declare national emergencies.
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