Greetings from January 29th! Ten days ago, the government briefly shut itself down for three days. Ten days from now, on February 8th, it may happen again. Hooray!
Well, not hooray, actually. Government shutdowns are pretty terrible. Government programs we all know and love grind to a halt until they have the funds to operate, and everyone shares out memes blaming the opposing political party for the whole mess. But while everyone discusses the political “hows” of government shutdowns – as in, how could we ever let something like this happen?? – very little time is spent on the actual-factual mechanics of it all. We hear ad nauseum about the congressional bickering that can land us in a shutdown, but very little about what specifically in our founding documents and legal code allow the government to just fail to operate. I had a general sense of what might trigger such a ridiculous thing as the government shuttering its doors, but I definitely didn’t know it well enough to explain it, so in the interest of fulfilling my role as your friendly neighborhood government nerd, I decided to look it up. Unfortunately, it’s not nearly as exciting as it seems like it should be, but here’s what I learned.
Who gets to spend money?
As always, it helps to start with the basics. The way the United States government is set up, the Legislative branch is in charge of deciding how much money to spend and what to spend it on, and the Executive branch is in charge of actually spending that money. This separation of powers comes directly from the Constitution itself – Article I, Section 8 grants Congress the power to raise money (“The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States…”) and Article I, Section 9 gives it final say over how that money is spent (“No money shall be drawn from the treasury, but in consequence of appropriations made by law…”). These two together clauses are the general basis for Congress’ famed “power of the purse,” and, on the flip side, the idea that no other branch of government can legally authorize new expenditures.
Now, nobody likes being told they are not allowed to spend money, and way back in the early(er) days of the United States, the executive branch and its various agencies tried to push these limitations to their breaking point. Using a tactic that law processor Timothy Westmoreland called “creating a ‘coercive deficiency,’” executive agencies (most often the military) would make contracts requiring the spending of funds that had not actually be authorized by Congress, depending on Congress to feel bad and allocate the funds so the executive branch would not wind up in breach of contract. Needless to say, Congress was not a huge fan of this practice, so in 1870, it passed the Antideficiency Act to prevent these practices. Although the law has been amendment multiple times since then, the version still on the books today prohibits the following spending practices:
- Outspending a legally appropriated budget.
- Making any contracts that require the government to spend money, unless the funds for that contract have been specifically appropriated by Congress.
- Accepting voluntary work in lieu of Congressionally-authorized paid work, or hiring people to work without already having the specifically appropriated funds to pay them, unless not doing so would endanger human life or property.
- Entering into deals that require the future spending of money that Congress hasn’t already appropriated, or that exceed the maximum amount allowed under agency rules.
In other words, the Antideficiency Act means that the executive branch is both constitutionally and statutorily prohibited from spending or planning to spend money that has not been specifically allocated by Congress for that purpose. Also forbidden are outspending a Congressionally-approved agency budget, and accepting voluntary (or “voluntary”) work from federal employees whose salaries come out of Congressionally-appropriated agency money. Taken all together, this means that if Congress fails to specifically appropriate the money needed to do things like pay federal employees to do their jobs, and/or the president fails to sign it into law, normal day-to-day government operations become illegal under the Antideficiency Act… and according to the Government Accountability Office, the agency in charge of overseeing these things, “federal employees who violate the Antideficiency Act… may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both.”
Think of it like this: Have you ever worked for an organization where you are occasionally handed the company credit card and told to use it only on, say, $100 of corporate lunch food? Somewhere in your organization’s budget, there are exactly one hundred dollars set aside for that lunch. If you take the card and spend $200 on lunch, you are outspending the budget. If you were authorized to spend $100 on lunch in 2017, but no lunch budget has been set for 2018 and you spend the $100 anyway on the first workday of the new year, you are racking up credit card debt that your company may not want or be able to pay back. If you ask your favorite team of corporate lunch elves (who are used to being paid $500 for their services) to volunteer their time in 2018 to help you make some fancy sandwiches for that not-specifically-authorized lunch, you may be acting against corporate policy even if the lunch elves are perfectly willing to do so, because what happens if they claim to feel coerced, or expect to be paid back or receive special treatment in the future? If your organization is the federal government (and you cannot successfully make the case that buying the lunch somehow involved the safety of human life or the protection of property), you are now guilty of violating the Antideficiency Act in all of the above situations.
Funding the government
So, to recap, the government needs money to remain open and that money needs to be appropriated by Congress before it can be spent to keep the government open, so surely Congress wouldn’t do something dumb like not fund the government, right?
But also, it’s not quite as simple as funded completely vs. not funded at all. Broadly speaking, there are three categories of government funding – mandatory spending, net interest payments, and discretionary funding – and only one of them is affected by government shutdowns. Unfortunately for me, these three categories tend to be defined in relation to one another (i.e. “mandatory spending is all government spending that does not include discretionary spending or net interest payments”), and but I’ll do my best trying to break them down.
Mandatory spending is all government spending that does not include discretionary spending or net interest payments. Mandatory spending, also known as direct spending, is the money spent on programs that are funded through authorizing legislation, rather than through appropriation bills. To break that down a bit more without the legalistic mumbo-jumbo, this type of spending covers any agency or program that included a permanent (or at least, multi-year) appropriation in the (“authorizing”) legislation that Congress passed to bring it into existence. For these agencies and programs – which include most entitlement programs (social security, Medicare, etc) and things like unemployment insurance, SNAP (Supplemental Nutrition Assistance Program, aka food stamps), and the salaries of the President and members of Congress – funding automatically renews at the start of each fiscal year without any further Congressional action. Because of this, none of these programs are affected by a shutdown, which is why people still receive their social security benefits (and Congress can still go to work) during such a period. Using figures grabbed from a handy-dandy Congressional Budget Office infographic, in FY2016, mandatory spending made up 62.5% of the total federal budget – by far the biggest share of the three types.
Now, as we all know, the government often wants to spend more money than it has at any given time, so it has to borrow money to pay for everything. The next kind of spending, net interest, is the money the government spends on interest to its debt holders. The larger the fabled national debt gets and the longer it lasts, the more the government needs to spend on interest payments. Since this is money that needs to be paid out regardless of how much the government is taking in at any given time, it often contributes to increases in the national deficit as well. Because debt (and therefore interest on that debt) accrues without an extra help from Congress, the amount of net interest owed each year is not affected by a government shutdown either. In FY2016, net interest made up 6.3% of the federal budget.
(Note: The national debt is not the same thing national deficit, and contrary to what you might think from listening to how people talk about them, the two terms cannot be used interchangeable. The deficit is how much more money we are spending than taking in. The debt is how much money we owe to our debt holders for the loans we’ve taken out to make up for the deficit. When the national debt increases, we owe more interest to the debt holders. If we cannot pay it immediately, the fact that we now owe more money means the national deficit has increased as well. The two are related, but not the same thing. This bonus definition brought to you by the fact that the debt/deficit thing keeps tripping me up, and it helps to write it out so I remember it.)
Anything not covered by the previous two categories is considered discretionary spending. Unlike the other two, agencies and programs whose funding falls into this group have the legal authority to spend money if and only if Congress grants them permission to do so by passing an appropriations bill by the start of the fiscal year. Although it makes up a relatively small percentage of the total federal budget (in FY2016, discretionary spending made up only 31.2% total federal spending), it accounts for federal grants, big parts of the defense budget, foreign aid, education programs, contracted services, equipment purchases, and other things like the National Park Service and various transportation programs. When Congress fails to pass an appropriations bill (or when the president fails to sign it into law), these programs are prohibited by the Antideficiency Act from spending any money at all. Since almost all federal salaries and wages are considered “discretionary spending,” federal employees are prohibited from working by the Antideficiency Act as well, thus leading to – you guessed it – a shutdown of any and all of these agencies and programs.
NOT funding the government
So while it’s not the entire government that needs to be funded each year, all those federal employees, defense contractors, and foreign aid recipients still want to get paid. Every year, before the fiscal year ends on September 30th, Congress takes up the issue of passing a budget and ultimately follows one of three paths.
Option One, is, obviously, to fund the government by passing a new budget bill that takes into account changes to the financial makeup of the country in the last year, the legislative priorities of both Congress and the executive branch, and the preferences of both major parties such that it can get a majority vote in the House and a 60-vote majority in the Senate. This is how the system is supposed to work and, increasingly often, doesn’t.
Option Two is to “kick the can down the road” and pass a continuing resolution (CR), which funds the government at current levels (or levels adjusted slightly according to a formula based on current levels) for a set period of time until Congress can come up with a new, longer-term budget. This happens when Congress cannot agree on changes to the budget, but can agree on not wanting to allow funding to lapse. While CRs can be (and have been) passed to cover an entire fiscal year, they are more typically used to fund the government on a short term basis while Congress continues negotiations to come up with something better. It’s basically Congress passing a bill to give itself an extension on its homework – it still needs to turn in the homework eventually, but with the extension, it won’t be penalized too harshly for turning in the homework late.
Option Three is to do neither, and fail to pass a funding bill at all. From a legislative procedural perspective, this is fairly unremarkable – Congress votes on and fails to pass bills all the time. If a bill doesn’t get a simple majority of votes in the House, it will fail to pass. If a bill doesn’t get the 60 votes in the Senate needed to end debate on a bill, it will never be officially voted on and therefore never become a law. Because – surprise surprise – various factions in Congress disagree on things quite frequently, this happens all the time.
What makes appropriations bills remarkable is that if they don’t get passed before the end of the fiscal year (or by the date that funding is set to run out), everything that falls under “discretionary spending” is required to just… stop. Which looks really bad for all involved, and is really bad for everyone who was expecting to go to work and get a paycheck. So appropriations bills are a bit more do-or-die than most legislative actions, which means they are ripe for holding hostage in exchange for legislative concessions that one or more groups of lawmakers are reluctant to approve.
Ain’t No Party Like a Shutdown Party
So here’s what’s going on now:
Last August, Hurricane Harvey hit Houston, right in the middle of Republican efforts to pass some sort of tax reform, and right around the time that the government was about to hit its debt ceiling. Acting with mostly bipartisan support, Congress passed H.R.601, which authorized the expenditure of $15.25 billion in aid for areas hit for Hurricane Harvey (which the Democrats wanted), raised the debt ceiling (which the Democrats also wanted, as opposed to Republicans, who are typically more concerned with the amount of debt the government is in), and funded the government through December 8, 2017 via continuing resolution (which the Republicans wanted, to give themselves more time to work on taxes and figure out how to work around the Democrats’ demands on immigration).
(Note: the debt ceiling is the maximum amount of debt the federal government is legally allowed to take on at any given time. As per a law first passed in 1939 and amended many times since then, the government can only go into so much debt to cover the federal deficit before we are no longer allowed to borrow more money, and the Treasury automatically begins a series of processes called, I kid you not, “extraordinary measures” to finance the government. If these methods are exhausted and we have not decreased the debt or raised the debt ceiling, the American government defaults on its debt, and untold global financial horrors occur. Since nobody wants that to happen, and the debt ceiling itself is an artificial limit that Congress imposes on itself, Congress tends to raise the debt ceiling, rather than risk a default. However, like the appropriations bill process, raising the debt ceiling only happens when Congress passes a bill and the President signs it into law, so, like the appropriations process, it is at risk of being held up by political infighting and partisan disagreements.)
Then, on December 7th, Congress passed another continuing resolution, H.J.Res.123, which funded the government through December 22nd, 2017. On December 20th, the Republicans passed their tax bill, and on December 22nd, Congress passed a third continuing resolution (H.R.1370) with a vote mostly along party lines, to fund the government through January 19, 2018. This bill also made spending cuts to avoid hitting or exceeding the debt limit, which seemed problematically likely due to the decreases in government income resulting from the tax bill.
And that’s where things get interesting. January 19th, 2018, which looked awfully far away before Christmas of 2017, started to seem much closer from this side of the new year. Lawmakers and federal agencies were sick and tired of the repeated continuing resolutions, and after three of them, Democrats were ready to draw a line in the sand on the Deferred Action for Childhood Arrivals program (DACA), which protects undocumented immigrants brought to the US as children from deportation, and which is set to expire on March 8th, 2018. On January 19th, after multiple rounds of negotiation (which ultimately failed when the president changed his mind multiple times on whether or not to support a DACA fix), the Senate took a vote on a fourth CR passed by the House the day before. Without the support of most (but not all) of the Democratic caucus, plus a few Republican holdouts also hoping for DACA legislation, the measure failed, and the government – or at least, the parts of the government that rely on discretionary funding – closed for business.
Now, it is worth noting two things. The first is that the Congressional Research Service (the group of nerds in charge of explaining how the government work to the people who work in government, aka my heroes) draws a distinction between a full-on “shutdown” and what they (and others) term a “funding gap.” A funding gap is just what it sounds like – a break in funding for the federal government that occurs when, for whatever reason, Congress fails to allocate money for discretionarily funded entities, who are then required to cease all work and close themselves down. However, most agencies cannot just stop immediately, as the process of shutting down in and of itself takes time. Therefore, if Congress fails to pass an appropriations bill by 11:59pm on the night that federal funding runs out but does pass an appropriations bill by 2am the next day (or even by 2pm two days later, if those days are Saturday and Sunday and don’t span any standard weekday work hours), there may be a funding gap, but no meaningful shutdown due to the fact that everything was funded before the shutdown procedures could be implemented. That’s not what happened this time around, but it still seems worth mentioning.
The second thing is this: before 1980, protracted funding gaps did not general lead to the kinds of shutdowns we know and love today. While there were definitely a few funding gaps here and there, many federal agencies “continued to operate during periods of funding gaps while minimizing all nonessential operations and obligations, believing that Congress did not intend that agencies close down while the appropriations measures were being passed.” Following the whopping six funding gaps that occurred between 1977 and 1980, then-Attorney General Benjamin Civiletti took issue with this practice, citing the Antideficiency Act and its largely-ignored criminal penalties on those who violated its prohibitions on unauthorized federal spending. To that end, he issued a series of opinions stating that the only way for heads of federal agencies to avoid violating the Antideficiency Act was to completely suspend all operations until an appropriations bill was enacted… unless, of course, there was “some reasonable and articulable connection between the function to be performed and the safety of human life or the protection of property” and “some reasonable likelihood that the safety of human life or the protection of property would be compromised, in some degree, by delay in the performance of the function in question.” Although this all may seem incidental, I bring it up to underscore that the modern government shutdown is a relatively new phenomenon, which occured when someone actually took the time to read a law that had been on the books for decades, and, for better or for worse, to hold the government to its own rules.
Which brings us to the relatively brief shutdown on the 19th. It lasted for three days, and ended when Senate Democrats accepted a deal based on a gentleman’s agreement between Majority Leader Mitch McConnell and Minority Leader Chuck Schumer to bring a DACA vote to the floor by February 8th, in exchange for passing a CR to fund the government up to that time. This bill – H.R.195 – also included language funding the Children’s Health Insurance Program (CHIP) for six years, an addition that received bipartisan support, and which featured in smear campaigns by both the Republicans and Democrats as they tried to blame the #TrumpShutdown, #GOPShutdown, or #SchumerShutdown on the other side.
So here we are. The government is funded, if temporarily, and we still don’t have a real budget for FY2018. But with all eyes on February 8th, it remains to be seen – is history doomed to repeat itself? Will there be another funding gap, leading to another shutdown, and the political bickering and mudslinging it entails? For better or for worse, we’ll find out soon.