Explaining Government Shutdowns

Explaining Government Shutdowns

This column originally appeared in the Williston Observer on March 10, 2011.

The federal government operates on a fiscal year of October 1 to September 30. What this means is that spending for 2011 started back in October. Or, rather, it should have.

Prior to 1976, the fiscal year began in July, which means that a new Congress had just over six months to negotiate and pass a new budget. In 1976, the fiscal year start was shifted to October, to give the Congress an extra three months to figure out the budget.

This brief lesson in the government's fiscal year is intended to help explain how the government came to the brink of shutdown last week, and why it is again at the brink next week.

The last Congress was unable to come to an agreement on the 2011 fiscal year (FY11) budget. Instead, from October through December, 2010, it passed continuing resolutions to duplicate the FY10 budget; in December the Congress did the same, pushing the funding out to March 4, 2011.

Since budget negotiations were at an impasse, and already at least three months late, Democrats were happy to have it done. Republicans, fully aware that they would be taking the reins of power in the House in January, 2011, were happy to know that in just a few months, the budget would be in their hands (the House, by way of explanation, is where all spending bills must originate, so the House has the first crack at them).

But March 4 loomed, and even with Republicans in control of the House (or perhaps especially because they were in control of the House), the two houses of Congress were unable to come to an agreement on a budget. Without one in place, a government shutdown was the only alternative.

There have only been a few government shutdowns in our history, all since 1981. Most were short. In 1981, a budget impasse between President Reagan and Congress lasted just a few hours - federal workers were sent home at lunchtime and came back to work the next morning.

The most severe shutdowns happened in 1995 and 1996. The shutdowns were the result of another impasse between branches of government, with the Republican-controlled Congress on one side and Democratic President Bill Clinton on the other. The shutdowns kept non-essential government workers at home; estimates released by the White House said that in real dollars, the 1995 shutdown cost $800 million - half because government employees, though home, were still paid; and the other half in taxes that went uncollected because IRS agents and investigators were unable to force collection.

Perhaps the bigger cost came in the form of inconvenience to Americans - federal parks were closed; hot-lines at the CDCP went unanswered; new Medicare and Social Security applications went unprocessed; toxic waste cleanup was halted; passport and visa applications were delayed; government-backed loans were delayed; and veterans' health care and services were delayed. Many pundits see the 1995 and 1996 shutdowns as one of the reasons that Clinton won reelection in the 1996 election.

Shutting down the government today would have the same sorts of effects on Americans. The most essential services, including the military, the TSA, those who process and issue Social Security checks, law enforcement personnel, health care personnel, and prison staff, would continue to work.

The rest? Furlough. As in 1995 and 1996, employees are not laid off, not fired, and don't go unpaid. They just don't go to work. In fact, there is a federal law that can be used to prosecute any furloughed employee for doing their job anyway, with up to $5000 in fines and two years' imprisonment.

The newest extension of the budget is good for only two weeks, meaning that as March 18 approaches, we again have a shutdown looming. Democrats are ready to deal, but Republicans, and especially the Tea Party wing, are looking to make waves.

If you're suddenly worried about FY12, you're right to worry. Every day that Congress wastes on the current fiscal year is one less to negotiate for the coming fiscal year. Though it may not be ideal, the Congress should extend the FY10 budget through the rest of FY11, and start work as soon as possible on the next fiscal year, which begins in less than seven months.