The Politics and Policy of a Government Shutdown

Despite everyone urgently positioning to “win” the government shutdown, allowing funding to lapse is both bad policy and bad politics.  As we once again look over the funding cliff with just a week until the September 30th deadline, the risk of a government shutdown seems much higher than the annual back-and-forth between both parties.  Here are five factors to consider when analyzing the potential for a shutdown:  

Political Risk:  For either political party, a government shutdown comes with significant political risk.  Even when one party is stuck with the “blame,” both parties feel the pressure of constituents facing the impact of federal programs stalling.  

Policy Agenda Delays:  When there is a government shutdown, the entire policymaking infrastructure stalls.  The long list of congressional priorities - from the National Defense Authorization Act to the Farm Bill (and several others in between) - gets sidelined and, depending on how long the shutdown lasts, may just be punted until next year.  

Difficult Path Out of a Shutdown:  Maybe the most complex consequence of a government shutdown is the difficult path out of the shutdown.  Once Congress crosses that line, it’s very hard to find a way out.  Generally, both sides dig in, and funding a path forward with mutual benefit becomes hard while in a shutdown. 

Economic Impacts:  A shutdown not only impacts government programs, it also can have a significant impact on the economy.  Government services contribute to GDP, and when they are effectively “turned off,” they can negatively impact the economy and create more uncertainty in the markets and among consumers.  

Dangerous Precedent:   Shutdowns are threatened every year; they have become part of the annual funding debate to force policymakers to the table, but they are generally avoided.  When shutdowns do happen, they become easier to accept going forward and run the risk of becoming a norm in Congress.  

Let’s all hope a government shutdown is avoided, but the dynamics this year are more intense than in recent years. Historic partisanship, the looming 2026 election, frustration among policymakers, and defined positions on both sides of the political aisle leave little room for flexibility. This policy and political moment will play out several times before the end of the year - next week’s deadline is only the first of potentially three before the new year.