Government Shutdown - GovBudget.com

FAQs on Government Shutdown

Why do the departments and agencies that lack funding have to shut down? The Anti-Deficiency Act of 1870 (31 U.S.C. §1341 et seq.) makes it illegal for any government official to make payments or enter into contracts in excess of congressional appropriations.
What happens when a department or agency shuts down? In general, Federal departments and agencies lacking appropriations are required by law to shut down; only “excepted activities” relating to the “safety of human life or protection of property” may continue. Each agency develops its own shutdown plan following guidance released by the White House Office of Management and Budget (OMB). For details on specific department and agency shutdown plans, follow this link to the OMB website. Shutdown – The Legal Framework
What happens to federal employees? During a shutdown, employees are furloughed until appropriations are enacted. However, certain employees are deemed “excepted” from furlough if they have functions relating to the “safety of human life or protection of property.” Excepted employees continue to work, but are not paid until appropriations are enacted. When appropriations become available, excepted employees must receive back-pay; and Congress has customarily also granted back pay to furloughed employees, but it is not guaranteed.
What happens to federal contractors? In general, departments and agencies cannot pay contractors during a shutdown; however, contracts that are funded by multiyear appropriations may continue; and contracts for services that cross fiscal years (“severable services”) may continue. Background | Impact on Contractors
What was the longest shutdown? December 22, 2018 through January 25, 2019. A partial government shutdown began Saturday morning, Dec. 22, 2018 due to an impasse over whether to include $5.8 billion for a US-Mexico border wall in a stopgap funding measure. The shutdown included 9 out of 15 Federal Departments and more than two dozen independent agencies. OMB shutdown instructions to agencies The affected departments and agencies were required to shut-down and furlough their employees, although “excepted employees” (i.e., those deemed to have responsibilities related to protection of life or property) continue to work without pay. OMB link to shutdown plans Six (6) departments were generally unaffected by the shutdown because their FY’19 appropriations were already been enacted: Defense, Education, Energy, HHS (except for Indian Health Service and FDA which are funded in two of the unfinished bills), Labor, and Veterans Affairs. On January 25, 2019, the President signed a short-term CR (H.J.Res 28) through 2/15/19 ending the shutdown.
The longest shutdown prior to 2019 was 21 days in 1995-96.
Do shutdowns save money? No. OMB estimated that the 2013 shutdown resulted in: $2 billion in lost worker productivity and the federal government had to pay millions of dollars in interest on late payments to contractors.
How is a shutdown different from a Treasury default? In a shutdown, the government temporarily stops paying employees and contractors who perform government services due to a lapse in appropriations when a new fiscal year begins or funding authority expires. By contrast, a Treasury “default” would occur if the Federal debt ceiling was reached and Treasury lacked authority to borrow funds to fulfill the legal obligations of the United States to: (1) U.S. bond holders; (2) beneficiaries of Social Security, Veterans’, and other benefits: (3) State and local governments; and (4) Federal contractors. While a government shutdown can be highly disruptive and damaging for a period of time, a government default would have disastrous and lasting economic effects for the United States and the broader global economy. See our webpage on the Debt Ceiling.
Nonpartisan Background from CRS: “Shutdown of the Federal Government – Causes, Processes, and Effects (Dec 10, 2018) | Past Government Shutdowns: Key Resources

Resources:

Department of Justice OLC Opinion from AAG Walter Dellinger (1995):

The Antideficiency Act permits the White House Office to employ personnel during an appropriations lapse for functions that are excepted from the Act’s general prohibition: functions relating to emergencies involving an imminent threat to the safety of human life or protection of property; other functions as to which express statutory authority to incur obligations in advance of appropriations has been granted; those functions for which such authority arises by necessary implication; and certain functions necessary to the discharge of the President’s constitutional duties and powers. Such personnel may not be paid, however, until appropriations are enacted.
The President may use his authority under 3 U.S.C. § 105 to create and fill nonsalaried positions in the White House Office during an appropriations lapse, but nonsalaried employees cannot receive an obligation of payment for the services they perform in that capacity.
White House Office employees appointed under 3 U.S.C. § 105 may waive their compensation, and if they do so, their services may be accepted during an appropriations lapse.

GAO (1995): Government Shutdown – Funding Lapse Furlough Information

1981 Opinion from Attorney General Civiletti: Authority for the Continuance of Government Functions During a Temporary Lapse in Appropriations

Statutory authority for an agency to incur obligations in advance of appropriations need not be express, but may be implied from the specific duties that have been imposed upon, or of authorities that have been invested in, the agency.
The “authorized by law” exception in the Antideficiency Act exempts from that Act’s general prohibition not only those obligations for which there is statutory authority, but also those obligations necessarily incident to initiatives undertaken within the President’s constitutional powers.
A government agency may employ personal services in advance of appropriations only when there is a reasonable and articulable connection between the function to be performed and the safety of human life or the protection of property, and when there is some reasonable likelihood that either or both would be compromised in some degree by delay in the performance of the function in question. (emphasis added)

1980 Opinion from Attorney General Civiletti: Applicability of the Antideficiency Act Upon a Lapse in an Agency’s Appropriation

If, after the expiration of an agency’s appropriation, Congress has not enacted an appropriation for the immediately subsequent period, the agency may obligate no further funds except as necessary to bring about the orderly termination of its functions, and the obligation or expenditure of funds for any purpose not otherwise authorized by law would be a violation of the Antideficiency Act.
The manifest purpose of the Antideficiency Act is to insure that Congress will determine for what purpose the government’s money is to be spent and how much for each purpose.
Because no statute generally permits federal agencies to incur obligations without appropriations for the pay of employees, agencies are not, in general, authorized to employ the services of their employees upon a lapse in appropriations.
Historical Background