Looming U.S Government Shutdown 2023 on October 1st: Here is what you need to know

Published on 22 September 2023 at 04:12

U.S Government Shutdown 2023 on October 1st

As the clock ticks toward October 1, 2023, the United States finds itself teetering on the brink of a government shutdown. The potential for this looming crisis stems from the fact that Congress is unlikely to pass the essential 12 appropriations bills required to fund various government operations before the commencement of the new fiscal year.

Come midnight on Saturday, September 30, government funding is set to expire, ushering in the new fiscal year on October 1. This pivotal deadline, often colloquially referred to as "September 30 at midnight," holds the key to whether or not the federal government will face a shutdown. However, the full ramifications of such an event may not become apparent until the workweek begins on Monday.

In this blog post, we delve into the reasons behind the probable government shutdown on October 1, the impact it could have on federal employees and essential services, and the role of continuing resolutions (CRs) in averting or prolonging such a crisis. Additionally, we explore the historical context of government shutdowns in the United States, shedding light on the dynamics of this complex issue.

Why There Will Likely Be a Government Shutdown on October 1st?

In June 2023, the U.S. Congress passed the Fiscal Responsibility Act with the support of Republican leaders in both the House of Representatives and the Senate, ultimately receiving President Biden's signature. This legislation had two primary objectives:

  1. Removal of the Debt Ceiling: The Fiscal Responsibility Act eliminated the limit on the amount of money the federal government could borrow, commonly referred to as the "debt ceiling."
  2. Setting Spending Limits: It set specific limits on government spending for fiscal years 2024 and 2025. Given that fiscal years begin on October 1, fiscal year 2024 commenced on October 1, 2023.

The core idea behind these spending limits was to determine the allocation of funds across various government programs. Typically, Congress passes 12 separate bills to distribute funds to different parts of the government, with the total sum aligning with the spending limits specified in the Fiscal Responsibility Act.

While the Senate, one part of Congress, adhered to these spending limits and passed all 12 spending bills with bipartisan support, the House of Representatives took a different stance. House Republicans, dissatisfied with the agreement reached by Speaker Kevin McCarthy with the White House, advocated for reduced spending compared to what the Fiscal Responsibility Act mandated. This discord between the two chambers of Congress added a layer of complexity to the situation.

Furthermore, the House bills included contentious provisions addressing issues like abortion, contraception, tobacco regulation, and healthcare for transgender individuals. These provisions faced considerable controversy and were unlikely to gain approval in the Senate.

When the House and Senate pass different bills with varying spending amounts, the next step is to establish a conference committee tasked with reaching a compromise between the two chambers' bills. However, the limited time available for Congress to resolve these differences—especially given that the fiscal year ends on September 30—intensifies the challenge of finding common ground and reaching an agreement

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What will be Government Shutdown Impact on Federal Employees?

Furloughed Employees

  • During a government shutdown, many federal employees receive directives not to report to work.
  • Thanks to a 2019 law, these furloughed employees are entitled to receive backpay once the shutdown concludes.
  • Federal employees responsible for essential services such as air traffic control and law enforcement are required to continue working but do not receive their regular pay until the shutdown is resolved.
  • It's important to note that these circumstances primarily affect approximately 25% of federal spending, subject to annual congressional approval.

Benefits and Essential Services

  • Essential government services related to public safety, national security, and critical functions remain operational during a shutdown. This includes entities like border protection, federal law enforcement agencies, and air traffic control.
  • Benefits such as Social Security and Medicare continue to be disbursed as they are authorized by laws that do not necessitate annual approval. However, the extent of services offered by Social Security benefit offices may be limited during a shutdown.
  • The Treasury Department continues to meet its obligations by paying interest on U.S. Treasury debt in a timely manner.

Shutdown Consequences

  • Government shutdowns can introduce disruptions, leading to delays in the processing of applications for passports, small business loans, and government benefits.
  • National parks can also be impacted, with visitor centers and restrooms closed, interruptions in trash collection and facility maintenance, and severe staff shortages.
  • Fewer food safety inspections and various other inconveniences may arise, affecting the overall quality of government services.

Contingency Plans

  • Federal agencies maintain detailed contingency plans to navigate government shutdowns, outlining what will continue and what will not.
  • These plans encompass specific guidelines, including prohibitions against non-essential employees volunteering to work without pay, instructions to turn off lights and unnecessary electronic devices to conserve resources, and strategies to manage reserves or fees to sustain operations.

Courts and Congress

  • In a government shutdown scenario, federal courts initially rely on collected fees and may delay certain activities. If these funds are depleted, courts prioritize tasks essential to their constitutional functions.
  • Members of Congress and judges, along with their essential support staff, are permitted to continue working during a shutdown. However, congressional staff members may experience a delay in receiving their pay, though retroactive compensation is guaranteed.
  • An opinion from 1981 enables the President, judges, and members of Congress to exercise their constitutional responsibilities during a shutdown, ensuring the continuity of essential government functions.

What Will Be the Resolution of the Government Shutdown in 2023?

In the face of the impending government shutdown on October 1, 2023, a potential solution looms on the horizon—the continuing resolution (CR). A CR represents a temporary spending bill often utilized by Congress when regular appropriations bills have not been passed to fund the government for an entire fiscal year.

Key Aspects of Continuing Resolutions:

  1. Temporary Funding: CRs serve as a short-term remedy to provide financial resources for government agencies and programs in cases where the standard budgeting process encounters delays or remains incomplete. They become necessary when Congress struggles to reach a consensus on the annual budget.
  2. Maintaining Previous Funding Levels: Typically, continuing resolutions extend funding at the previous fiscal year's appropriations level. This means that government agencies continue to receive the same funding as in the prior fiscal year until new budget legislation is enacted.
  3. Frequency of Use: Continuing resolutions are not uncommon in U.S. government operations. The Government Accountability Office (GAO) records 47 instances of CRs issued between fiscal years 2010 and 2022. The duration of these temporary measures can vary, ranging from as brief as one day to nearly six months.
  4. Challenges for Government Agencies: While CRs prevent government shutdowns, they pose challenges for government agencies. Agencies must prepare for the potential of a shutdown since the passage of a CR is not guaranteed. Moreover, CRs can disrupt agencies' hiring plans and hinder long-term planning due to uncertain funding.

Significance of the Fiscal Responsibility Act:

The Fiscal Responsibility Act carries a notable provision designed to discourage Congress from relying extensively on continuing resolutions beyond the conclusion of December 2023. If a continuing resolution remains in effect on January 1, 2024, the spending limits established by the Fiscal Responsibility Act will undergo automatic revision. This revision is likely to result in a substantial reduction in defense spending, serving as an incentive for Congress to prioritize passing a comprehensive budget rather than depending on temporary funding measures like CRs.

In essence, the Fiscal Responsibility Act's provision introduces financial consequences to encourage timely budget approval and discourage prolonged reliance on continuing resolutions.

What are Reasons for Government Shutdowns in History?

Government shutdowns in the United States occur when Congress and the President fail to reach an agreement on funding government operations. These disruptions typically arise from political disagreements and can be triggered by various factors, including:

  1. Budgetary Disputes: Disagreements over the federal budget, encompassing spending levels, allocations for specific programs or agencies, and funding for policy priorities, are a primary catalyst for government shutdowns.
  2. Policy Differences: Strong policy disagreements on issues like healthcare, immigration, defense spending, or other key areas can lead to gridlock and hinder the passage of funding bills.
  3. Debt Ceiling: While not a traditional government shutdown, debates surrounding the debt ceiling can result in similar disruptions. Failure to increase or suspend the debt ceiling can lead to a partial government shutdown as available funds dwindle.
  4. Political Posturing: Occasionally, politicians may employ the threat of a government shutdown as a negotiation tactic to gain leverage on their policy positions.
  5. Lack of Compromise: In a highly polarized political climate, finding common ground and reaching a compromise on funding bills can be challenging for opposing parties.
  6. Unresolved Legislative Issues: The failure to pass essential spending bills may be linked to broader legislative concerns or ideological conflicts.
  7. Emergency or Unforeseen Circumstances: Natural disasters, pandemics, or other unforeseen emergencies can pose funding challenges when Congress and the President cannot agree on resource allocation.
  8. Procedural Issues: Delays or disagreements in the legislative process, such as difficulties passing a continuing resolution or appropriations bills, can contribute to funding gaps.

It's important to note that government shutdowns primarily affect discretionary spending, encompassing various government programs but excluding entitlement programs like Social Security and Medicare, which continue to function without a budget. Essential services related to national security, public safety, and health are also typically exempted from shutdowns.

U.S. Government Shutdown History:

The United States has witnessed a total of 21 government shutdowns in its history, spanning from October 1976 to January 2020. Among these, two of the longest shutdowns endured for 35 days each, occurring from December 22, 2018, to January 25, 2019, and from December 22, 2019, to January 25, 2020. These shutdowns resulted from diverse political disagreements and failures to pass necessary appropriations bills or continuing resolutions to fund government operations.

As the clock continues to tick toward October 1, 2023, the precarious balance between political negotiations and the looming shutdown casts a shadow of uncertainty over the nation. Whether Congress can navigate this turbulent terrain and avert a government shutdown remains a pressing question, with far-reaching implications for federal employees, essential services, and the broader economy.

Stay tuned for further developments as this critical issue unfolds, ultimately revealing the fate of the U.S. government's fiscal future.

Disclaimer: This blog post provides an informative overview of the potential government shutdown in 2023 and its associated dynamics. The situation is subject to change as events unfold, and readers are encouraged to follow the latest news and official statements for the most up-to-date information.

Header Photo by Trev Adams

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