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. There’s a lot of information out there that presents government shutdowns in very precise legal terms, but it can be a slog to read it. I’m going to try and do it more conversationally here, such that it’s easier to understand. Of course, this means I’ll be talking generally and not in precise language. I’ll try to provide links to official documents when available — obviously check with those primary sources before making any real decision.
Here we’ll cover the mechanics of a shutdown, maybe tomorrow I’ll do a follow-up post on the politics. Today 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.” According to Article I, section 9 of the Constitution, no money can be drawn from the Treasury, except under appropriation made by law. 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 shutdown.
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 earmarked 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.
When do the current annual appropriations expire?
October 1, the end of Fiscal Year 2011.
So when there is a shutdown, the whole government just stops operating?
Not exactly. Under the Constitution, no money can be disbursed from the Treasury. 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 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. It’s not like Congress directs the Treasury to go dump X amount of gold off at the agency. 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. All the money is kept at Treasury. 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 the checking account when no appropriation exists. The Anti-Deficiency Act shuts off the credit card.
But now we’re back to 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 that regular agency operations do 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 shut down.
So some federal employees keep working and some do not?
Right. Those who must continue to go to work are called “excepted” or “essential.” All others (“non-excepted” or “non-essential” are furloughed).
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 often 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 recipient 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 FY2012 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.
Second shutdown? How could that happen?
Because there is another way to avoid a shutdown besides passing all the appropriations bills. 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. For instance, the CR under consideration right now would fund the government until November 18, with the hope that the appropriations bills could be completed by then. So you could, in theory, have a shutdown that starts on October 1, lasts until a CR is passed on October 5, but then starts again on November 15 (or whenever), when the CR expires. This is what happened in FY1996.
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. In the first FY1996 shutdown, various interpretations and rulings held that congressional employees necessary to the legislative process were excepted, with the decision of their necessity left to individual employing authority, which is most cases were the Members themselves. Support services, such as the cafeterias, were not open.
How often have there been shutdowns?
There have been 17 shutdowns since FY1977. The last two were in FY1996, and lasted 5 and 21 days, respectively. Many of the other shutdowns lasted only 1 to 3 days.
What causes shutdowns?
Politics, my friend, politics. Maybe we’ll get into that tomorrow…