Episode 16: Consequences of Government Shutdowns

The first U.S. government shutdown took place on May 1, 1980, and lasted just one day. Since then, shutdowns have grown longer, costlier, and increasingly disruptive, draining billions from the economy. How did they become a fixture of American politics, and what can history reveal about the looming standoff? New America’s Mark Schmitt shares his insight.

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Transcript

Shannon Lynch: The first U.S. Government shutdown happened on May 1, 1980. It lasted just one day. Since then, shutdowns have become longer, more costly, and more disruptive, draining billions from the U.S. economy. So how did shutdowns become such a recurring feature of American politics? Why do they happen? And what can history teach us about the latest one on the horizon?

Welcome to Democracy Deciphered, where we unpack the history, headlines, and hopes of American democracy. I’m your host, Shannon Lynch. Today, I’m joined by New America’s Mark Schmitt to explore the history of government shutdowns.

Mark Schmitt is the director of the Political Reform Program at New America, which develops new approaches to democratic governance. A longtime writer on politics and public policy, he has held leadership roles at the American Prospect, the Roosevelt Institute, and the Open Society Foundation. He also served as policy director to Senator Bill Bradley and advised his 2000 presidential campaign. Schmitt’s analysis has appeared in major outlets, including the New York Times, Time, and the Financial Times.

Mark, thanks so much for joining me.

Mark Schmitt: Thanks, Shannon, glad to be here.

Shannon Lynch: So starting us off here, what exactly is a government shutdown?

Mark Schmitt: Well, a government shutdown is when Congress hasn’t passed and sent to the president to sign all or most of the appropriations bills that basically funds the general operations of the government, is all it amounts to. In theory, there’s supposed to be 12 appropriations subcommittees. Each of them is supposed to produce a bill, like, for the Labor Department and Health and Human Services, for example. And they’re supposed to produce all the 12 bills, get them passed through both houses. Get them sent to the president and signed. If that doesn’t happen, then those agencies aren’t authorized to spend money under something called the Anti-Deficiency Act. And that part of the government has to basically pause, except for some essential employees, until there’s some agreement. Now, the way you get to that agreement is you don’t have to pass all the 12 bills. All the work you haven’t done gets jammed into something called a continuing resolution. They could sometimes say, just keep spending the way you were, or it can include a lot of other changes that would be similar to what would be in the regular appropriations bill.

Shannon Lynch: Before we get into the present day, of course, there have been several government shutdowns, unfortunately, over the years. What was really the first instance of this in our history?

Mark Schmitt: Well, the first big one, there were a few little ones, I think maybe like in the Reagan administration. The first big one was the winter of 95-96, which I remember very well because I was working on the Hill and there was also a massive snowstorm. And I just moved into a new apartment with my now wife. She was off on a recording trip, so we were locked in completely. I mean, literally everything was shut down from the weather to the government shutdown. There were two shutdowns then and they lasted, one lasted 21 days. And that was when Newt Gingrich had been elected Speaker of the House in 1994, first midterm of the Clinton administration. It was really seen as a total rejection of the Clinton administration and of Democrats. And Newt Gingrich was kind of strutting around like he was the new boss, and he was going to force Clinton to accept all these Republican priorities. And he kind of quickly, he got ahead of himself in his incredible arrogance. Not before the government shut down for a very, very long period of time during that winter. And then there have been others since then. I think the longest since that was in 2014 in the Obama administration.

Shannon Lynch: Could you talk a little bit about that one and also maybe some of the other notable shutdowns that have happened since then?

Mark Schmitt: Yeah, I think there’s probably the most notable ones. They, especially 2014, unlike today, was really caught up in a whole thing about trying to cut the deficit. Deficit, deficit, deficit. So everybody wanted to end the shutdown with some kind of arrangement. A lot of these shutdowns end with not just a deal on the discretionary spending, but some kind agreement on like, create a commission about the deficit or create a process that would automatically cut spending if Congress didn’t do the following things. There was a lot of that in the background of previous shutdowns that we don’t really quite have right now, even though the deficit is enormous by comparison. It’s just not playing the same political role that it did in those past shutdowns. But they’re basically partisan power conflicts that can get resolved because different parties, everybody has spending that they want. So everybody. In theory, in the past had an interest in getting these things.

Shannon Lynch: Yeah. What folks do we see are most affected, usually when these shutdowns do happen? Like the everyday folks in Washington or beyond, what types of people see these effects on their daily lives?

Mark Schmitt: Yeah, that’s a great question. I mean, there’s a lot of, one thing about the shutdowns is that basic government spending that’s called entitlement spending or non-discretionary spending does continue. So people do get their social security checks and people do their Medicaid rolls on, Medicare rolls on. So a lot this sort of basic services that people are counting on the federal government for continue. And then a lot other services that run through states, for example, people don’t feel them in two weeks. And then the state can kind of catch up. So there’s often not an immediate effect. And I think the administration is kind of counting on that kind of delay, but there are things that catch up with you quickly, like national parks, some national parks close right away, for example. Some stay open with the skeletal staff. It a lot depends on who’s defined as an essential worker and who’s not defined as an essential worker. And that sometimes varies a bit. I’d say in general, there’s definitely broad economic effect of pulling federal spending out for a while, but a lot of the specific effects don’t get felt right away. And federal employees, a lot federal employees are furloughed, go unpaid. Usually when the deal is made to end the shutdown, they get their back pay. But obviously, if you need to pay your mortgage, it can put people in a very tough position.

Shannon Lynch: Okay, so then, I mean, you touched on this really briefly, but what are some of the mechanics of how we get ourselves out of these shutdowns? You said sometimes there’s like a commission that is assigned. What does this usually look like? Are these just like closed-door conversations? What’s actually happening behind the scenes to end a government shutdown?

Mark Schmitt: Well, there’s closed door conversations. They’ve already done a lot of the basic negotiation about what should be in the appropriations bill has probably already happened. It may not have happened with the administration. I think that’s one of the things that’s a little different here. You know, it’s happened between Republicans and Democrats on the Hill, probably in a pretty standard way with some things kind of unresolved. And really, I think the biggest thing that happens is not sort of mechanics. It is who begins to feel like they’re really taking the political hit or the blame for the shutdown. So at a certain point, I feel like it’s kind of inevitable. Democrats will try to push a shutdown. At a certain, point sort of nervous Democrats are gonna go to leadership and say, this is killing me. This is killing. I’m out there. We’re getting blamed for it. Even though I think this is pretty clearly, it doesn’t matter who’s actually to blame for it, but it kind of ends when people realize there’s political consequences in a way that there aren’t for other things. And that’s what happened in 95-96, Republicans started to say. And it ultimately really hurt Gingrich because Republicans started to say, where are you taking us, man? You know, you’re really hurting your own party here. And that kind of helped Clinton, you know, begin to get back a little bit of control of the presidency.

Shannon Lynch: So, moving into our current situation. So what’s going on? We’re on the brink of a government shutdown right now as we speak. Why is this happening right now? And how is it different from some shutdowns that we’ve seen in the past?

Mark Schmitt: It’s happening now, for one thing, it is the only point of leverage that Democrats have in Congress right now. Is that power to basically block the appropriations bills because the appropriation bills can be filibustered. They need 60 votes in the Senate. So that’s the only point. They didn’t have that power on the so-called Big Beautiful Bill because that’s what was called a reconciliation bill. It was a special process that means it doesn’t require any Democratic votes. And so, Democrats want to use the moment to at least get, extract something from the administration. And there’s something might not even be within those appropriations bills. One thing that’s a high priority is to continue the expanded subsidies under the Affordable Care Act, which were scheduled in the other bill to expire. If they don’t continue those, a lot of people whose health coverage is coming through the Affordable Care Act they’re gonna see, you know, doubling or more of their healthcare premiums. So that’s a really important policy priority that's at stake in the current shutdown. And then the other thing is for Democrats to try to get the administration to agree to some kind of checks on its power and particularly its power to just cut other federal spending. And that’s actually a big reason why it has a lot to do with why this is different. It’s not just about dollars right now, it’s about a lot. It’s about that sort of basic balance.

Shannon Lynch: You had mentioned briefly right before we started recording that some of the actions of the administration during the shutdown could be a little different than what has happened in the past. Could you speak to that a little bit as well?

Mark Schmitt: Yeah, there are two things that I think are at play. One is the director of the Office of Management Budget, Russell Vought, has basically been strutting around saying that he’s goin to use, if there’s a shutdown, he’ll use it to basically lay off massive numbers of federal employees. And there’s nothing legal about that. But I think what it comes down to is he, well I know what it what it come down to is he’s going to say, well in a shutdown we designate some federal employees as essential. Let’s say, for example, the people who need to just process the social security checks are essential. We classify some people as essential and some employees as non-essential and we furlough them. If they’re non-essential, what do we need it for? Fine. And that’s both not legal and like a misreading of what it means. You know, you could be away from your job for five days, and the world wouldn’t fall apart. It doesn’t mean you’re not doing a really important job that also Congress has authorized the funds for you to do. But by fudging that term essential, non-essential and using it as an excuse for massive federal layoffs, he’s kind of raising the stakes at least for Democrats to go, wait a minute, do we even want, do we want to even go near there? And I think that’s probably a mistake.

The other piece that’s super important, actually there are three pieces. Piece two, that’s really important. Is that Vought has claimed the power to basically withhold spending. This is a fight that happened in the Watergate era when President Nixon wanted to impound funds that Congress had appropriated. Passed a law as part of the Budget Act that says the power of spending is with Congress. It’s in the Constitution. The president can’t just withhold or impound was the term they used at the time. Can’t just take away federal spending. And Congress at the time created a process called rescission for the president to propose cuts to funding that had already been appropriated and for Congress to approve it. And it’s actually a party line vote. It’s actually an expedited vote. It’s a privileged motion so there’s no filibuster there either. It’s a process that mostly doesn’t get used because mostly the spending’s been negotiated already with the White House and everybody’s kind of agreed to it. But the Trump administration has used some of it and then Vought is going further by arguing that they can use like basically just to withhold the spending until the end of the year and then it goes away which he calls a pocket rescission. It’s a trick to avoid spending the money Congress has already appropriated. So they might reach a deal and it’s like with a fingers crossed. Like when you’re a kid, they could reach a deal on spending. Let’s say they want to spend 10 billion dollars on low-income homes. Energy assistance, a super important program in parts of the country and the administration might, they could reach the deal, sign the deal and the administration might say, yeah, we’re actually not gonna spend that money because we’re gonna do a pocket rescission or whatever. And the Supreme Court just last week, just Friday, basically agreed to let the administration do exactly that with some foreign aid spending. So that’s thing one that’s different which is I think the fingers crossed behind the back.

Number two is a lot of the spending that the administration really does want, they managed to jam through in the One Big Beautiful Bill in the reconciliation package. So all the spending for ICE, which normally that’s discretionary spending, that’s appropriated. You wouldn’t be able to get that in a, you would have to go through this negotiated process that involves Democrats to get it. They already got that. So the administration doesn’t have much spending that they want particularly. Individual members of Congress do, but the administration is kind of like, you can let the rest of the government go, we got ICE, we got what we want. That’s a really dangerous, totally different situation. So it just doesn’t, it just changes the dynamics of how you get out of a shutdown.

Shannon Lynch: So, for everyone at home watching this shutdown unfolding very closely, what are some things, some indicators that you think people should be looking out for in terms of actions you might anticipate seeing or language that they might be using on either side of the aisle during this contentious time?

Mark Schmitt: Well, I think anything you see, like the things Vought says or Democrats trying to work out their message, a lot of it is, there’s kind of another conversation going on behind the scenes that you won’t see that much of. But obviously you wanna see whether the rhetoric ramps up or ramps down a little bit. You wanna see how much Trump meddles in it with his own social media statements and so forth. I mean, I think he is playing the game of trying to blame Democrats, but he’s also such a bragger that he’s being pretty blatantly clear that he would like to have a shutdown that just, go ahead blame Democrats. I think you wanna see there’s a very complicated dynamic among Democrats and between elected Democrats and particularly, Hakeem Jeffries and Chuck Schumer's leadership and the kind of external activists, where the external activists are like, you gotta do this and stick with it. And because they backed off from a shutdown earlier in the year, there’s a very strong demand for Democratic leadership to be tougher this time, but they can only be as tough as, I mean, sometimes I think I seem like I’m too soft on this, but they can only be as tough as their caucus is willing to be. And it wouldn’t take too many Democrats, Democrats who call themselves moderate, Democrats who are in districts the Trump won, Democrats in districts where Trump came close, who want to say, I just don’t want to get myself out there on this. Same way that the Republicans did with Gingrich. You know, they just don’t wanna be involved in it and that they signal that they are willing to vote for some kind of a Republican-led deal, which would probably be worse than a bipartisan deal. So obviously if you start to see that kind of Democratic weakening, which you know, you’re not gonna see it in headlines, you’re gonna see in Politico or something, then you might see movement and it’s not going to be good.

Shannon Lynch: Well, we’ll all be watching this very closely over the next couple of days and weeks, perhaps. So Mark, thank you so much for coming on and giving this kind of rough and dirty guide.

Mark Schmitt: Thanks for arranging it.

Trent Cokley: This was a New America Production. Our executive producer and host is Shannon Lynch. Our producers are Joe Wilkes, David Lanham, Jodi Narde, Joel Rienstra, and Trenton Cokley. Social media by Maika Moulite. Visuals by Alex Briñas. Media outreach by Heidi Lewis. Please rate, review, and subscribe to Democracy Deciphered wherever you like to listen.