US Federal Government Shutdown

US Federal Government Shutdown

Why in News?

Recently, the United States federal government has shut down after leaders in Congress failed to reach an agreement on the spending bill. This decision has triggered a pause in many government operations and a large section of workers are left unpaid.

What is the U.S. Government Shutdown?

• About: A government shutdown in the U.S. happens when Congress does not approve funding bills or temporary measures that allow federal agencies to continue functioning. Every year, the government needs an approved budget to pay employees and run programs. If lawmakers cannot agree on appropriation bills or continuing resolutions, the flow of funds stops. As a result, agencies that do not receive funds are forced to halt operations.

• When this happens, the government separates workers into two categories. Essential employees such as defense staff, law enforcement, and health workers continue to serve. Non-essential employees are asked to take unpaid leave until the budget issue is resolved. Although these employees later receive back pay.

• Historical Background: The concept of shutdowns became significant after the 1970s, when changes in budget laws formalized funding procedures. The first major shutdown occurred in 1980 under President Jimmy Carter. 

• • • In 1995 and 1996, two major shutdowns happened during President Bill Clinton’s term, caused by disputes over public spending priorities.

• One of the longest shutdowns in American history occurred from December 2018 to January 2019, lasting 35 days during President Donald Trump’s administration. The conflict centered on border wall funding, and it affected nearly 800,000 federal workers. 

• In total, more than 20 shutdowns have occurred since 1976, though many lasted only a few days. 

Why the U.S. Government Faced a Shutdown in 2025?

• Every year, the U.S. government must pass a spending bill before the fiscal year begins on October 1. This bill allocates money for defense, healthcare, education, and other public services. In 2025, the bill was presented in the Senate but failed to gain the required votes.
• On the night of September 30, 2025, the Senate voted on the funding bill. 55 senators supported it while 45 opposed it. The U.S. system requires at least 60 votes for the bill to move forward. The lack of cross-party support blocked the process, leading directly to a shutdown.
• The Senate has 100 members, including 53 Republicans, 47 Democrats, and 2 Independents. The Republican Party, led by President Donald Trump, needed support from Democratic senators to cross the 60-vote mark. Democrats refused to support the bill, which created a deadlock.
• One of the biggest points of disagreement was the healthcare subsidy program. Democrats wanted to expand subsidies for citizens under healthcare programs that had roots in the Affordable Care Act. They argued that families needed stronger financial support to afford medical coverage.
• Republicans resisted these changes. They claimed that more spending on healthcare would cut into other important areas like defense and infrastructure. 
• Because neither side shifted its position, the healthcare issue became the center of the shutdown.

Impact of the 2025 U.S. Government Shutdown

• Federal Workers: Around 750,000 federal employees may be furloughed if the shutdown continues. Non-essential staff in agencies like the FDA, NIH, and CDC could be sent home without pay. Some workers may even face permanent layoffs, adding to the earlier reduction of 300,000 federal jobs earlier in 2025. These furloughs could disrupt many government services and delay ongoing projects.

• Essential Workers: Essential employees, including military personnel, air traffic controllers, and public safety workers, will continue their duties but may work without immediate salary. Hospitals, border security, and emergency services may operate under tight constraints. Troops may continue missions, but unpaid work could lower morale and affect operational efficiency.

• Public Services: Many non-essential federal services, including national parks, museums, and administrative offices, could close or reduce operations. Citizens may experience delays in visa processing, permits, and public health programs. Scientific research at institutions such as the NIH may slow down, impacting ongoing studies and grants.

• Economic Consequences: The shutdown may halt government spending, affecting salaries, contracts, and public projects. Experts predict that the U.S. economy could face significant losses if the shutdown continues for weeks. For example, the 2019 shutdown cost the economy approximately $25 billion. Businesses connected to federal operations could face slow revenue, and local economies may see reduced spending.

How Does Shutdown End Effectively?

• A government shutdown in the United States ends only when Congress passes a new appropriations bill and the President signs it into law. The President alone cannot stop the shutdown. Both the House of Representatives and the Senate must agree on the funding plan. Usually, this requires negotiations between the Republican and Democratic parties, which can take time. 
• After the shutdown ends, federal agencies gradually return to normal operations. Essential services such as security, border control, and emergency healthcare continue throughout the shutdown. Non-essential services that were paused start functioning again. Agencies follow recovery plans to prioritize pending work and restore normal service levels.
• Employees who were on furlough, meaning temporary unpaid leave, receive retroactive pay for the shutdown period. This rule became mandatory after a law passed in 2019, ensuring workers are not financially penalized for delays caused by political deadlock. 

Shutdown-Like Situations in India

• India does not have a system exactly like the U.S. federal government shutdown, but similar situations can occur when budget approvals are delayed or funds are not released.
• The Indian government must pass the annual Union Budget before the fiscal year begins on April 1. If Parliament delays approval, the government may use vote-on-account provisions to continue limited spending. This allows essential services to run, while non-critical projects may be paused.
• The Contingency Fund of India, established under the Contingency Fund of India Act, 1950, allows the government to spend money for urgent needs when Parliament has not passed the budget. The President authorizes withdrawals, and funds can cover emergencies like natural disasters, public health crises, or security operations. This fund has been used multiple times, for example, during the COVID-19 pandemic in 2020 to finance immediate relief efforts.