How U.S. Government Shutdowns Work—and Why

The Law Behind the Lockout

The United States is one of the only democracies in the world where a failure to pass a budget can force the government to close its doors. The mechanism traces back to the Antideficiency Act, first enacted after the Civil War in 1870 and substantially updated in 1950. The law prohibits federal agencies from spending or obligating money without a congressional appropriation. It draws its authority from Article I, Section 9 of the Constitution: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."

Each year, Congress must pass 12 annual appropriations bills to fund different parts of the federal government. When lawmakers fail to enact these bills—or a temporary stopgap known as a continuing resolution—before the deadline, agencies covered by the missing legislation must halt non-essential operations. That halt is a government shutdown.

Who Works and Who Stays Home

During a shutdown, federal employees fall into two categories. Excepted (essential) employees—including active-duty military personnel, air traffic controllers, law enforcement officers, and hospital staff at federal facilities—must continue working, but they receive no paychecks until the shutdown ends. Non-excepted employees are furloughed entirely: they cannot legally perform any work.

A law signed in 2019, the Government Employee Fair Treatment Act, now guarantees that all affected federal workers receive back pay once funding is restored. Before that legislation, back pay was not automatic and required a separate act of Congress each time.

What Keeps Running—and What Stops

Mandatory spending programs such as Social Security, Medicare, and Treasury debt payments continue because they are funded outside the annual appropriations process. Constitutional duties, including the courts and Congress itself, also keep operating.

Discretionary services, however, take a hit. Passport processing slows dramatically. The National Institutes of Health stops admitting new patients and freezes grant reviews. Small Business Administration loans stall. IRS processing backlogs pile up, potentially delaying billions of dollars in tax refunds. TSA staffing at airports can drop sharply, lengthening security lines nationwide.

The Economic Price Tag

Shutdowns are expensive—and they rarely save money. The Congressional Budget Office estimated that the 35-day shutdown of 2018–2019 reduced GDP by roughly $11 billion, of which $3 billion was permanently lost. Back pay to furloughed employees wipes out any savings from suspended operations, meaning taxpayers effectively pay workers for time they were legally barred from working.

The ripple effects extend well beyond Washington. Federal contractors—who are not guaranteed back pay—lose income outright. Local businesses near federal facilities see revenue plummet. And delayed government services slow economic activity in sectors from housing to small business lending.

A Brief History of Shutdowns

Since the modern budget process began in 1976, there have been roughly 20 funding gaps, though many lasted only a weekend with minimal disruption. The major shutdowns include:

• 1995–1996 — 26 days, triggered by a budget standoff between President Clinton and a Republican Congress
• 2013 — 16 days, over disputes about the Affordable Care Act
• 2018–2019 — 35 days, over border wall funding
• 2025 — 43 days, the longest in U.S. history

The pattern reveals that shutdowns have become longer and more frequent as partisan polarization deepens. What was once a rare budgetary hiccup has evolved into a recurring political weapon.

Why Only America?

Most parliamentary democracies avoid this problem entirely. In countries like the United Kingdom, Canada, and Germany, if a government cannot pass a budget, the previous year's funding typically continues automatically—or the failure triggers new elections. The United States stands nearly alone in combining a rigid separation of powers with a legal framework that forces agencies to shut down when politicians disagree.

Proposals to reform the system—such as automatic continuing resolutions that would keep the government open at prior funding levels—have been introduced repeatedly in Congress but have never passed. Critics argue that the threat of a shutdown gives lawmakers leverage in negotiations; supporters of reform counter that holding government services hostage harms millions of Americans who depend on them.