A government shutdown occurs when the president and Congress fail to agree on a budget. Funding gaps lasting more than a few days lead to furloughs of non-essential personnel and the halting of agency activities until appropriations are restored. While a government shutdown impacts the national economy, it can have particular repercussions for communities that are home to large numbers of federal workers and private businesses that rely on federal contracting activity. The last five-week shutdown from 2018 into 2019 delayed approximately $18 billion in compensation and purchases of goods and services. It also reduced real gross domestic product by $3 billion.
During a shutdown, the majority of federal employees are either furloughed or required to work without pay until the funding crisis is resolved. In addition, a lapse in appropriations could delay the disbursement of federal student loans and Pell Grants. The issuance of new Social Security cards and Medicare benefits would stop as well as call centers and other service operations. Food inspections and environmental oversight at the EPA and FDA could halt until funding resumes.
There are exceptions to this rule, and agencies develop their own shutdown plans based on the needs of their organization. Generally, agencies prioritize essential activities like maintaining public safety and law enforcement, paying debts and providing income support to vulnerable populations. During a shutdown, user fees and charges are collected but not reimbursed until the government reopens. Other programs that are constitutionally protected, such as Medicare and Social Security, remain unaffected by a funding lapse because they receive their appropriations outside the annual funding process.
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