What is a Government Shutdown and Why Does It Happen? - FinanceTody

What is a Government Shutdown and Why Does It Happen? - FinanceTody

A government shutdown is a situation in which the US federal government partially or completely ceases operations due to a lack of funding. This can happen when Congress fails to pass a budget or when the president refuses to sign a budget into law.

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How It Happens

The US federal government is funded by annual appropriations bills, which must be passed by Congress and signed into law by the president. If Congress fails to pass all of the appropriations bills before the start of a new fiscal year (October 1), the government will shut down.

A government shutdown can also occur if the president refuses to sign an appropriations bill into law. This can happen if the president does not agree with the terms of the bill.

Types of Shutdowns

There are two types of government shutdowns: partial shutdowns and full shutdowns.

A partial shutdown occurs when only some agencies or programs are closed. This can happen when Congress passes only some of the appropriations bills.

A full shutdown occurs when all non-essential government agencies and programs are closed. This is very rare, but it has happened a few times in US history.

History of Government Shutdowns in the US

The first government shutdown in the US occurred in 1976. Since then, there have been 22 more shutdowns. The longest shutdown lasted for 35 days in 2018-2019.

Impact of Government Shutdowns

Government shutdowns can have a significant impact on the economy and public services.

Economy: Government shutdowns can lead to a decrease in economic activity. This is because many businesses rely on government contracts and services. Government shutdowns can also lead to job losses and a decrease in consumer spending.

Public Services: Government shutdowns can also lead to a decrease in the quality of public services. This is because many essential government services are closed during a shutdown. This can include things like national parks, museums, and passport processing.

Conclusion

Government shutdowns are a serious problem. They can have a significant impact on the economy and public services. It is important to understand how government shutdowns happen and why they are so damaging.