Potential Effects of a Federal Government Shutdown
Report
CBO assesses the possible effects of a government shutdown on the pay of federal employees and describes possible effects on the economy, business activity, procurements and contracts, and the operation of national parks and monuments.
CBO was asked to assess the possible effects of a lapse in discretionary appropriations (often called a government shutdown) on the pay of federal employees, including members of the Armed Forces, as well as Members of Congress. CBO also was asked to describe possible effects on the economy, business activity, procurements and contracts, and the operation of national parks and monuments. Some questions focused on the daily cost to the government for providing back pay to furloughed workers, for delayed procurements, and for contracts that may lapse during a shutdown.
The Antideficiency Act generally prevents federal agencies and employees from obligating or expending federal funds in advance of or in excess of an appropriation and from accepting voluntary services. Specifically, that law requires most federal employees to stop working during a lapse in appropriations unless they are considered "excepted" and thus are required to perform specific tasks other than the regular functions of government.
The effects of a shutdown depend on its duration and on an Administration's decisions about how to proceed. An Administration is required, for example, to determine which executive branch employees are excepted and which to furlough.
In this instance, the Administration has indicated that it might subject some employees, who might otherwise be furloughed, to a reduction in force. The Administration also could decide to use mandatory funding provided in the 2025 reconciliation act or other sources of mandatory funding to continue activities financed by those direct appropriations at various agencies, including the Department of Defense (DoD), the Department of the Treasury, the Department of Homeland Security, and the Office of Management and Budget (OMB). In general, a longer lapse will have larger effects than a shorter one will.
The analysis in this letter is based largely on work CBO published in 2019 after the five-week partial shutdown from December 22, 2018, until January 25, 2019.
