Federal agencies close when appropriations lapse, an outcome most comparable democracies do not experience. The mechanism is an old spending statute combined with a budget calendar that frequently slips.
Spending requires an appropriation
Under the Constitution money may be drawn from the Treasury only through appropriations made by law. An agency without a current appropriation has no authority to spend.
The Antideficiency Act, enacted in the nineteenth century, makes it unlawful for officials to obligate funds in advance of or exceeding an appropriation.
The statute was aimed at agencies that spent freely and then presented Congress with a bill, forcing after-the-fact approval. It removed that option by attaching personal liability.
A strict reading turned lapses into closures
For decades a funding gap was treated as an administrative inconvenience, with agencies continuing operations on the assumption money would arrive.
Legal opinions issued by the executive branch later concluded the act required agencies to cease non-excepted activities during a lapse.
That interpretation converted a paperwork delay into a shutdown, and it has governed the response to funding gaps ever since.
Not everything stops
Activities involving the safety of human life or the protection of property continue, along with functions funded by sources other than annual appropriations.
Programs financed by permanent or mandatory spending keep operating because their authority does not expire with the annual bills.
Agencies maintain contingency plans specifying which employees are excepted, which is why some services continue visibly while others halt entirely.
Military personnel, air traffic controllers and federal law enforcement generally keep working without pay during a lapse. Their exception rests on the safety-of-life standard rather than on any judgment about importance.
The calendar makes lapses likely
The fiscal year begins on the first of October, and full-year appropriations bills are frequently not enacted by then.
Congress bridges the gap with continuing resolutions extending prior funding levels. A shutdown occurs when even that stopgap cannot pass.
Because the deadline is fixed and consequences are visible, appropriations bills become a point of leverage for policy disputes unrelated to the spending itself.
The annual bills are also rarely passed one at a time anymore. They are bundled into large packages, which raises the stakes of a single disagreement to the whole government.
The costs are real but diffuse
Federal employees who work during a lapse are paid retroactively under law, but contractors and businesses serving federal facilities generally are not.
Agencies incur expenses shutting down and restarting operations, and delayed permits, inspections and reviews accumulate backlogs that persist afterward.
Proposals for automatic continuing resolutions that would prevent lapses have been introduced repeatedly, and none has changed the underlying statute.