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Primer for a Potential Government Shutdown

When Congress returns from the August recess, there will be four legislative weeks remaining in the fiscal year. The current status of the dozen appropriations bills in each chamber is as follows:

House of Representatives: Ten bills have been reported out of the full Appropriations Committee (markups have yet to be announced for the remaining two). Two bills – Military Construction/Veterans Affairs and Agriculture/FDA – were originally scheduled for consideration on the House floor this week, but at least one has been tabled.

Senate: Eight bills have been reported out of the full Appropriations Committee (with the remaining 4 being marked up today). No announcements have been made regarding floor consideration.

This means that in order to fund the federal government for the upcoming fiscal year, Congress effectively has 16 days to come up with an agreement on spending levels and pass legislation. Generally speaking, there are three possible outcomes:

Unlikely: Both chambers pass all 12 of their respective bills – which would require two more markups, ten more House Rules Committee hearings, and 12 successful floor votes in each chamber – and leadership negotiates an agreement to address differences in spending levels, resulting in a clean slate of appropriations for Fiscal Year 2024;

Feasible but problematic: Congress is able to pass either a handful or none of the appropriations bills and resorts to a continuing resolution (CR) or omnibus package to extend funding for several months; or

Feasible: Congress is unable to come to any kind of funding agreement and appropriations lapse, resulting in a government shutdown until an agreement is reached.

The probability of the third outcome occurring is looking more likely with each passing day. Logistically, the amount of work necessary to pass all appropriations bills through regular order is an extremely tall order. And the separate task of hashing out the disparities in funding levels between the House and Senate bills, which would still be necessary should Congress look to a CR as a solution, may prove even more difficult. It should also be noted that due to a provision in the Fiscal Responsibility Act, a mandatory 1% cut to all discretionary spending will take effect in the event that all 12 appropriations bills are not passed.

Further, some House Republicans are openly discussing the prospect of forcing a shutdown. Earlier this week, one conservative member was quoted as saying: “We should not fear a government shutdown.”

So, what happens if the government does shut down in October? The exact effects of a shutdown can vary depending on the length of the shutdown and the specific agencies affected. However, some of the most common effects include furlough of federal employees, closure of national parks and monuments, suspension of passport services, delayed Social Security and Medicare payments, reduced government contracts and grants, and disruption of air traffic control. The ensuing economic impact of a shutdown can be significant. The Congressional Budget Office (CBO) estimated that the 2018-2019 shutdown, which lasted 35 days, reduced GDP by approximately $11 billion.

Congressional appropriators will have their hands full when they return to the Capitol in early September. Hopefully House and Senate leadership are able to strike some kind of compromise on funding levels in order to avoid a government shutdown. But even if a shutdown is averted, at least some cuts to federal spending are looking increasingly likely.


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