What gets shut down when US govt stops spending: All you need to know

By Gregory Korte

 

Federal government shutdowns can be disruptive, with thousands of workers furloughed and most of them not getting paid on time. Taxpayers won’t get calls returned, there may be longer lines at airports during one of the busiest travel weeks of the year and many national parks will close.  

And yet many of the routine functions of government — things like national defense, benefit checks and mail delivery — continue as usual.  

 

The uniquely American phenomenon of the partial government shutdown — a symptom of divided government, a dysfunctional budget process and a constitutional system that requires the House, Senate and president to agree on a spending plan — affects every federal agency differently.   

 

In principle, a law dating back to the 19th century prohibits federal agencies from spending money “exceeding an amount available in an appropriation” from Congress. Because Congress usually only appropriates money year-to-year, that means there’s a threat of a shutdown every Oct. 1, when the new fiscal year begins. This year, as in many recent years, Congress passed a short-term extension into December.  

 

But there are exceptions. Government agencies responsible for health, safety and protection of property can continue, which includes military personnel, homeland security and food inspections. 

 

The president must continue to carry out his constitutional responsibilities. So much of the White House Office, the Office of the Pardon Attorney and the US Trade Representative will remain open. 

 

And a number of federal entities — including the Federal Reserve and the Consumer Financial Protection Bureau — aren’t funded by annual appropriations from Congress and can continue running off their own funding sources. 

 

Good news for those looking to travel by train or send a last-minute package for the holidays: Amtrak and the US Postal Service are also among those entities that will continue operations during the shutdown. 

 

The Office of Management and Budget requires every executive agency to submit a contingency plan in the event of a shutdown — technically known as a “lapse in appropriation.” Here are some highlights:

 

Federal Employees 

About four in 10 federal employees will be furloughed and barred from doing any work under a law that prohibits agencies from accepting volunteer labor. Essential employees will work without pay.

 

High-ranking federal officials confirmed by the Senate are always exempt from furlough.  

 

Before the 35-day shutdown that began in December 2018, Congress passed a law codifying the practice of retroactively paying federal workers — both furloughed and essential workers — after the shutdown ends. But paychecks would be suspended in the meantime, often resulting in higher rates of absenteeism.

 

And constitutional officers — like the president, members of Congress and judges — must be paid under the Constitution.

 

Travel 

The Federal Aviation Administration and Transportation Security Administration provide essential safety functions and would continue. But travelers could still face delays: Air traffic controllers and TSA officers would be without pay, which has led to higher rates of no-shows during past shutdowns. 

 

US consulates and passport offices will operate as long as they can on their fees. 

 

Parks & Museums 

Most national parks would likely be shuttered, turning away visitors and crippling businesses in the $800 billion outdoor recreation economy. Easily accessible sites would generally remain so but without customary staffing and resources, potentially resulting in uncleaned toilets and increased litter. 

 

Museums including the Smithsonian and National Gallery of Art could close in a protracted shutdown.

 

Cemeteries, monuments and visitor centers worldwide housed under the American Battle Monuments Commission would also shutter.

 

InaugurationThe inauguration of a new president is mandated under the Constitution, and would go on even if the lapse in spending lasts to the Jan. 20 event. Congress has already appropriated $3.7 million for inaugural ceremonies, and all of the heightened security around them would be also be exempted from a shutdown. Inaugural balls and other festivities are privately funded through the Trump-Vance Inaugural Committee, which has already gotten pledges of million-dollar donations from corporate sponsors like Amazon.com Inc. and Meta Platforms Inc., and personal support from Citadel Securities’ Ken Griffin and OpenAI’s Sam Altman.

 

Health & Social Security 

Medicare benefits would continue, as would new and continuing Social Security checks. But some administrative actions — things like benefit verifications, corrections to earnings records and replacement cards — would be delayed. 

 

The National Institutes of Health’s hospital in Bethesda, Maryland, would remain open to care for current patients, and research activities would continue where shutting them down would disrupt ongoing clinical trials.  

 

Safety-net food assistance programs would continue.

 

Medical care at veterans hospitals and clinics would go on, as would suicide prevention programs, medical and prosthetic research and burial benefits. 

 

But other benefits for veterans could be delayed, including those for education, job training and loans.

 

National Defense 

Uniformed personnel are exempt from furloughs and would continue to report for duty without pay. Most civilian Defense Department employees would be furloughed.

 

The Pentagon could continue many contracting activities to support service members under a Civil War-era law called the Feed and Forage Act. Burials and tours at Arlington National Cemetery would continue.

 

Spy agencies give scant details on how they would be impacted, but the Director of National Intelligence has provided guidance to employees that they’re not automatically exempt from the shutdown.

 

Labor Department 

Among the Department of Labor agencies that would completely shutter is the Bureau of Labor Statistics. If the shutdown continues through Inauguration Day, it could delay monthly reports like the employment and job openings surveys, inflation indexes and import reports. Data-dependent policymakers and investors would have to look to third parties to fill in the blanks on the health of the economy.

 

Health and safety-related functions, like workplace inspections by the Occupational Safety and Health Administration, would continue. Many benefits programs would also be uninterrupted because they have permanent appropriations, including black lung benefits and coronavirus relief.  

 

Treasury Department 

The Treasury Department broadly outlined that work would continue for those supporting the White House on market and economic updates, policy work and other items required to fulfill the president’s constitutional authorities. 

 

Many research and regulatory agencies are funded through user fees and would continue. Those include the Office of Financial Research, the Office of Recovery Programs and the Financial Stability Oversight Council.

 

Processing of cases in front of the Committee on Foreign Investment in the United States would cease. That could leave the fate of US Steel in limbo, if the recommendation on whether to block its sale to Nippon Steel isn’t on President Joe Biden’s desk by then.

 

Internal Revenue Service 

The IRS would stop picking up the phone and answering the 46,000 calls it receives on average daily, while most tax administration functions stop.

 

The Treasury would keep working to implement tax credits created or expanded under the Inflation Reduction Act. A shutdown doesn’t postpone tax withholding or deadlines for any estimated tax payments due. 

 

Regulatory Agencies  

The Federal Trade Commission would stop “the vast bulk of its competition and consumer protection investigations.”

 

The Securities and Exchange Commission wouldn’t review or approve registrations from investment advisers, broker-dealers, transfer agents, rating organizations, investment companies and municipal advisers.

 

The Commodity Futures Trading Commission relies on a 1995 legal opinion that its market-supervision functions are essential to prevent “massive dislocations of and losses to the private economy, as well as disruptions of many aspects of society and of private activity generally, producing incalculable amounts of suffering and loss.”

 

The Consumer Product Safety Commission could still issue recalls where there is “an imminent threat to the safety of human life,” but more routine monitoring would cease. 

 

Federal Emergency Management Agency 

Most emergency relief workers would stay on the job. But disaster relief checks are already imperiled and could be delayed even further. The agency projects a $39 billion hole for the Disaster Relief Fund in 2025 without more funding. 

 

Energy & Environment 

The Department of the Interior may issue some permits for offshore oil and gas drilling, but they could depend on factors like safety and the government’s property interest in the well.

 

The Environmental Protection Agency can continue some Inflation Reduction Act-funded programs and activities with other funding sources, like cleanup at Superfund sites.

 

The Energy Information Administration, which publishes snapshots of US oil inventories and fuel demand, would continue to collect and publish data on schedule, at least initially.

 

The National Nuclear Security Administration would focus on maintaining and safeguarding nuclear weapon and deployed naval reactors.

 

The Nuclear Regulatory Commission would stop licensing, certification and permitting and inspection activities, along with emergency preparedness exercises.

 

Housing 

Mortgage programs administered by the Federal Housing Administration and Ginnie Mae will continue. Many Housing and Urban Development block grants have already been obligated to states and won’t be disrupted. 

 

Subsidized housing including public housing and Section 8 housing choice vouchers don’t rely on annual spending bills but are at risk of running out of funds.

 

“Nearly all” fair housing work would stop, according to the contingency plan.

 

Small Business 

The availability of loans would depend on how they’re funded. Many disaster and Covid-19 relief programs would continue, while more traditional loan applications would be delayed. Programs supporting veteran-owned businesses, exports and mentorship would also cease.

 

Federal Courts 

Most judicial functions can continue during a brief shutdown, using money from filing fees and other sources. 

 

Federal Reserve 

Federal Reserve activity would be unaffected, meaning the central bank could still lower interest rates, regulate banks and conduct economic research.

 

Congress 

While Congress’s authority to fund itself would also run out, it also has to function to be able to end the shutdown. The 27th Amendment to the Constitution says members of Congress can’t change their rate of pay during during their terms, so they’ll still get paid. And they need staff to help draft bills. 

 

But other agencies that fall under Congress — like the Library of Congress and the US Botanical Gardens — will close to visitors. 

 

Biden’s Last Acts 

A shutdown could complicate work on an array of final policy decisions and regulations by the outgoing administration during Biden’s final weeks in office, including efforts to ink contracts and get Inflation Reduction Act spending out the door.