The Government Won't Shut Down

Shutdowns don't meaningfully reduce the size or cost of government, but they also aren't the end of the world.

Asked last week about the possibility that the federal government could shut down, Pentagon press secretary Sabrina Singh described it as "the worst thing that could happen."

Coming from a flack for the part of the government that is supposed to plan for what to do in the event of a nuclear war, that description seems just a little hyperbolic.

Well, there's some good news for Singh: The federal government won't shut down after all.

At least not until November 15.

With the scheduled shutdown just hours away, Speaker Kevin McCarthy (R–Calif.) pushed a 45-day continuing resolution through the House of Representatives on Saturday afternoon despite the opposition of 90 fellow Republicans (and one Democrat). The Senate passed the same bill in an 88-9 vote on Saturday night, and President Joe Biden has indicated he will sign it.

The continuing resolution keeps overall spending levels at 2023 levels, though it does not resolve the impasse over whether Congress will continue supplying military and humanitarian aid to Ukraine. That funding was left out of the final bill, but House Democrats released a statement Saturday saying they expected McCarthy to hold an up-or-down vote soon on a separate bill to fund the Ukrainian efforts.

In remarks to the media after the House vote, McCarthy criticized the group of Republicans who had blocked various attempts to pass spending bills.

"If you have members in your conference who won't let you vote for appropriations bills…and will not vote for a stop-gap measure so the only option is to shut down and not pay our troops—I don't want to be a part of that team," McCarthy said.

Others were less diplomatic. "We're tired of fucking around with these whack jobs," Rep. Don Bacon (R–Neb.) told Politico. 

While governing 45 days at a time is pretty silly, the last-minute passage of the short-term continuing resolution was probably the least stupid way for this drama to end—for now.

It prevents the theatrics of a shutdown from distracting from the actual issue: the cost of the federal budget and the unsustainability of the government's borrowing. But it's also a short enough time period that it can keep those issues front and center in Washington.

For various reasons, a shutdown was not a particularly attractive option for meaningfully reducing the size or cost of government. As Reason's Liz Wolfe explained earlier this week, most of the government would actually have continued operating even without a budget bill or continuing resolution.

And we know from history that shutdowns don't really save money. After the record 35-day shutdown that ended in January 2019, the Congressional Budget Office found that about $18 billion in federal spending was delayed—less than half of one percent of the $4.4 trillion spent that year. The actual savings were even less, since half of that total was the result of not paying federal employees for five weeks, which means they were immediately wiped out when the government reopened and those workers got their back pay.

The Republican holdouts were hoping to use the threat of a shutdown to force some reductions in discretionary spending. But there was little indication from any side that the threat of a shutdown was going to address the entitlement costs that are driving the growing federal budget deficit.

"This crisis was the fault of House Republican leadership, who stalled on bringing up a passable package until today, forcing a last-minute scramble just hours before a potential shutdown. Such recklessness is no way to govern," Steve Ellis, president of Taxpayer for Common Sense, a fiscal conservative nonprofit, said in a statement. "The question now is whether legislators can put aside their differences to pass comprehensive spending bills in a timely manner."

If the government had shut down on Sunday morning, it wouldn't have been the dramatically disruptive event that so many in the media and bureaucracy wanted to portray it as. But it wouldn't have been a step toward solving America's fiscal problems  either. What happens between now and November will be crucial.