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4 Important Facts About Government Shutdowns

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Understanding the Implications of a Government Shutdown

As the nation's capital is engrossed in intense negotiations over federal government funding, the looming threat of a government shutdown is dominating the headlines. However, for the majority of Americans residing outside the political hub, the real-life implications of such a shutdown may not be entirely clear. This article aims to shed light on the mechanics of government shutdowns and the ways in which they are exacerbated by Washington politics.

Continuation of Essential Federal Activities

Despite a potential funding lapse, federal activities and employees deemed "essential" will continue to receive funding from the national treasury. These essential activities encompass national security, border patrol, law enforcement, disaster response, and more. Furthermore, certain benefits such as Social Security, along with some agencies like the Postal Service, have funding sources independent of the annual spending process. Therefore, a shutdown lasting less than two weeks would have minimal impact, as federal employees would still receive their paychecks on time. However, longer shutdowns usually involve providing back pay to bureaucrats and congressional staffers. Consequently, the real-world effect of a shutdown is often less severe than the doomsday rhetoric that typically characterizes press coverage of the issue.

Fiscal Year and the Budget Process

The federal government's fiscal year begins on October 1 and ends on September 30. If Congress fails to pass the annual set of spending bills, known as appropriations, by the end of September, the government's spending ability becomes limited due to legal safeguards against executive agencies spending without legislative approval.

Theoretical versus Actual Budget Process

In theory, the annual budget process is straightforward. By early February, the president delivers a budget proposal to Congress, providing information and recommendations on all federal activities. By mid-April, Congress produces a budget resolution to establish spending guidelines. Over the late spring and summer, appropriations committees draft 12 pieces of legislation to provide spending allowances for federal agencies. By September 30, Congress passes the spending bills. However, this process rarely goes as planned. In fact, Congress hasn't completed the process on time since 1997.

Political Divisions and Government Growth

Political divisions over the appropriate size and scope of the federal government often result in protracted negotiations over both overall spending levels and individual authorizations. This frequently pushes the process well past the September 30 deadline. Even when one party controls both Congress and the White House, the unchecked growth of the federal government complicates the spending process. Legislators must negotiate over core priorities, such as national defense, and special-interest handouts, such as maple syrup subsidies.

The "Washington Monument Syndrome"

A classic example of political maneuvering is the "Washington Monument Syndrome," where a government will make a spending cut or funding lapse as painful as possible by closing down low-cost, highly symbolic things. The Obama administration implemented this strategy in 2013 by blocking access to open-air public facilities, such as the World War II Memorial, even though keeping such areas closed and guarded was more expensive than normal operations.

Reducing Federal Responsibilities

While many things the federal government manages are important and necessary, some of these responsibilities, such as the air-traffic control system and infrastructure programs, could and should be devolved to state and local governments, civil society, and private entities. Reducing the extensive list of federal responsibilities would make the country less vulnerable to congressional dysfunction and could potentially result in budgetary savings. With the national debt at $33.1 trillion, largely due to rampant waste and fraud, unloading federal liabilities is long overdue.

Proposed Spending Bills and Budget Resolutions

House Republicans have proposed spending bills and a budget resolution that would move things in the right direction. There is ongoing debate within the GOP caucus over whether to make the legislation even stronger. After a destructive spending spree that has pushed the country towards bankruptcy and hyperinflation, this is a debate worth having.

Conclusion: Implications of a Potential Government Shutdown for New Businesses

The possibility of a government shutdown, as tension escalates over federal funding negotiations, could have serious implications for new businesses. While the rhetoric around such shutdowns often paints a picture of doom, it's important to understand the realities and potential impacts. For new businesses, a government shutdown could disrupt certain services and operations, particularly those that rely on federal agencies and funding. However, essential services like national security, border patrol, and law enforcement continue to operate, and many benefits and agencies are independent of the annual spending process. However, the uncertainty surrounding a potential shutdown can create a challenging business environment. It can affect market confidence, disrupt supply chains, and potentially delay critical government services. Moreover, the underlying issues that lead to such shutdowns, such as unchecked government growth and partisan disagreements over spending priorities, highlight the need for fiscal responsibility and efficient government operations. In conclusion, while a government shutdown may not lead to the apocalyptic scenarios often depicted in the media, it does underscore the importance of fiscal responsibility and efficient government operations. For new businesses, it serves as a reminder of the need for strategic planning and adaptability in the face of potential disruptions and uncertainties.
Story First Published at: https://www.dailysignal.com/2023/09/30/4-key-things-you-need-to-know-about-government-shutdowns/
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