Federal government shutdown 101: What to expect, and possible resolutions

For the 22nd time in our nation’s history, the federal government will likely enter a “shutdown” just after midnight on September 30, 2023. If the shutdown occurs, government employees and contractors will be furloughed, and normal operations at most federal agencies will cease or be curtailed significantly.
 
Past government shutdowns have lasted as little as 1 day to as long as 34 days. 

In this alert, we provide a primer on federal government shutdowns and what to expect moving forward.
 
Some basic numbers

• FY 23 Discretionary levels: $1.7 trillion
• FY 24 Budget Cap deal: $1.59 trillion 
• House FY 24 proposed levels: $1.49 trillion
• Senate FY 24 proposed levels: $1.59 trillion (plus $23 in additional “side deal” emergency spending for defense and non-defense spending)
• White House emergency supplemental request: The White House has also requested roughly $44 billion in additional “emergency spending” for disaster relief, Ukraine defense and other efforts, and other accounts. Notably, proposed funding for Ukraine would only last through the end of the calendar year, and the White House intends to request additional funding for 2024.
• National Debt: $33.10 trillion (according to the Treasury Department)
• FY 23 Projected Deficit: $1.5 trillion (according to latest CBO estimates)

Federal employees and contractors affected:

• 2 million military personnel
• 2 million civilian workers
• 19,000 contractors, employing as many as 19 million people

Why does the government “shut down”?
 
Technically, the Antideficiency Act of 1982 prohibits the obligation or expenditure of federal funds before an appropriations bill is signed into law. Since there will not be an appropriations bill signed into law to pay for salaries and expenses (eg, healthcare) and general government operations, most non-essential personnel will be furloughed, and agency activities will be reduced. “Essential personnel” will be able to provide limited services, but they will not be paid until a funding bill is passed and signed into law.
 
Absent an appropriations bill or continuing resolution passing both the House and the Senate and being signed into law by President Joe Biden, most federal operations will be significantly curtailed.
 
Why is this happening?
 
Neither the Senate nor the House has yet passed a continuing resolution or the 12 annual appropriations bills to fund the government’s operations for FY 2024, and, in order to avert a shutdown, both chambers must pass a bill that is later signed by President Biden. 
 
Senate 
 
The Senate has been working in a largely bipartisan manner on appropriations so far this year. Chair Patty Murray (D-WA) and Vice Chair Susan Collins (R-ME) have successfully reported out all 12 annual appropriations bills out of the Appropriations Committee – the first time that has occurred in five years. None of these bills, however, have been taken up by the full Senate. Additionally, the Senate’s agreement to spend more than the budget cap deal allows, and its desire to add funding for Ukraine’s may affect the likelihood of resolution with the House.
 
Senate Majority Leader Chuck Schumer (D-NY) is working to pass a continuing resolution, but likely not before the September 30 midnight deadline. Leader Schumer and Republican Leader Mitch McConnell (R-KY) worked together on a 6-week “clean” continuing resolution and took the first procedural step on Tuesday night with a vote of 77-19. This continuing resolution would extend through November 17, less than a week before Thanksgiving. 
 
But, given procedural hurdles, and possible objection from some Senators to expedite the process due to funding for Ukraine being included and disaster relief not being sufficient, the bill is unlikely to pass the Senate before the shutdown deadline and must be reconciled with the House before being sent to President Biden for his signature.  
 
House
 
House Speaker Kevin McCarthy (R-CA) is currently aiming to rally support for passage of individual or minibus appropriations bills (two or three of the annual appropriations bills lumped together), but at the House’s lower spending levels, and made progress Thursday night by passing 3 of the 12 appropriations bills. However, partisan obstacles remain.
 
Speaker McCarthy hopes to pass a short-term continuing resolution on Friday, September 29, but several Republican members have stated outright opposition to such a bill. 
 
When will the shutdown occur?
 
On October 1, 2023 at 12:01 am, federal agencies will no longer have the authority to act on their mission. They will furlough non-essential personnel and minimize functions until a new appropriations bill passes and is signed into law.
 
What gets shut down or curtailed?
 
Most every operation of the federal government relies on the annual appropriations bills to provide funding and authority for actions. During previous shutdowns, voters and constituents have paid close attention to the following affected areas:
 
Federal parks and trash collection: Often called the “Washington Monument effect,” the first visible effect of a shutdown has often been the closure of national parks and federally funded museums, such as the Smithsonian museums, and the accumulation of waste in public parks. 
 
Passports: Passport operations have been dramatically curtailed as personnel are furloughed.
 
Firearm permits: The Bureau of Alcohol, Tobacco and Firearms have significantly slowed down or halted approval and review of new gun permits.
 
FDA medical product regulation: Food and Drug Administration (FDA) product regulation has slowed. The agency has already announced that, if another shutdown occurs, furloughs for roughly 19 percent of its staff will take place. This may slow down some routine manufacturing facility inspections, but FDA can continue to operate and carry out activities funded with the resources from user fee programs and the carryover balances within each program, which include human and animal drugs, biosimilar biological products, medical devices, and tobacco products. Additionally, FDA activities that address public health safety and imminent threats will continue – this includes responding to public health emergencies and other public health issues, such as drug shortages, outbreaks related to infectious diseases, or foodborne illness. 
 
Food safety: FDA is responsible for guaranteeing the safety of roughly 80 percent of the US food supply. In previous shutdowns, FDA has limited its “essential” services to active foodborne outbreaks, but limited its proactive inspections.
 
The USDA will likely continue their meat and poultry inspections due to the complex nature of their funding of appropriations and industry fees, so not all food will be affected.
 
Government workers: Much of the federal government’s two-million-strong workforce may be deemed “non-essential” and furloughed during a shutdown. But, under the Antideficiency Act, these workers will be paid when operations resume. This means that paychecks will not arrive on time, but workers will eventually receive full pay for their time not at work.
 
Military personnel: Military personnel are largely required to continue work, but paychecks are halted until the government reopens. (It is also important to note that all military personnel will receive backpay when the government reopens.) Readiness efforts and training programs are curtailed, degrading the readiness of the troops. Some estimate that at least 70 percent of active-duty military live paycheck to paycheck.
 
Government contractors: Government contractors, on the other hand, do not automatically receive backpay for a furlough during a shutdown. Past efforts to provide backpay to furloughed contractors have been unsuccessful because of the complex nature of their employment and the financial cost to the government.
 
What entities will remain open?
 
Social Security: Checks will still be cut for Social Security recipients, but, because roughly 15 percent of Social Security staff are funded through annual appropriations, responses may be slower.
 
Post office: The US Postal Service does not receive appropriations, so mail will still be delivered. 
 
Courts: At least for the immediate future, most courts can continue to operate using fees they have collected from court filings, among others. 
 
Special counsels: Special counsels are funded through permanent appropriations, so their activities and the cases will continue unimpeded by a shutdown of any length.
 
How can a shutdown be resolved?
 
House passes Senate’s continuing resolution: If the House were to pass a continuing resolution already passed by the Senate, a shutdown could be quickly avoided. A bipartisan vote in the House Rules Committee would be required to bring a bill to the floor. 
 
Senate passes House’s continuing resolution: Alternatively, if the House passes its own continuing resolution, the Senate could then pass that. This may be unlikely, however, due to possible lower funding levels and the partisan border security bill being included.

As it stands neither chamber is working on a product the other chamber’s leadership is willing to support.
 
Negotiations between House and Senate begin: Nothing prevents the House and Senate from negotiating on a larger package to fund the entire government, even in a shutdown. McCarthy, Schumer, McConnell, and Jeffries could engage in bipartisan discussions to reach agreement on top-line funding and any major parameters and then give  marching orders to the appropriators . 
  
Negotiations on a continuing resolution: If the House were to prove successful in passing their own version of a continuing resolution, the four leaders would need to engage in bipartisan discussions on how to resolve differences between the House and the Senate. Ukraine funding and border security are hot-button issues, and the anticipated lower level of funding for a House-passed bill could create tension.
 
House discharge petition: House rules allow 218 members of the House of Representatives to sign a petition to discharge a bill from committee and send it to the floor for a vote. For more information on the relevant rules and procedures, please see this Congressional Research Service report.  
  
Many questions remain on the feasibility of this method:

• Would at least five House Republicans work with House Democrats to pass a Senate continuing resolution?
• Would the House Parliamentarian require a Senate-passed continuing resolution to sit in the Appropriations Committee for 30 days as original text, or could a previous legislative vehicle be amended with the Senate’s bill?

For more information, please contact the author or your usual DLA Piper contact.