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What Happens if the Federal Government Shuts Down?

Joe Wallace

At press time, the House and Senate have been unable to agree on a federal budget for Fiscal Year 2026, leading the nation to the brink of another potential government shutdown. A full or partial government shutdown happens when Congress and the President fail to pass the necessary appropriations bills to fund federal government operations.

The U.S. government’s fiscal year ends on September 30, and if new funding legislation is not enacted by this deadline, a shutdown will be initiated.  What happens once that process has been set into motion? We examine the key points below.

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What Happens if the Federal Government Shuts Down?

The federal budget process is complex. It begins with the President submitting a budget proposal to Congress in early February. Congress then develops its own budget resolution to set federal spending for the new fiscal year.

House and Senate appropriations committees draft 12 separate appropriations bills to fund different sectors of the government. For the government to remain open, all 12 of these bills must be passed by Congress and signed by the President by the end of September.

If this deadline is not met, Congress can pass a Continuing Resolution (CR), which provides temporary funding for government agencies, usually at the same level as the previous fiscal year.

A CR prevents a shutdown and gives lawmakers more time to negotiate a final spending agreement. These resolutions are not standardized or identical from year to year, they are negotiated on a case-by-case basis.

In recent years, deep divisions between the two major political parties have made it difficult to pass appropriations bills on time. These divisions often revolve around disagreements over spending levels, culture war issues, and “riders” attached to the bills that have little or nothing to do with funding the federal government.

Government Shutdown in FY 2026?

In September 2025, the potential for a government shutdown was a real concern. The current political landscape at press time included a divided government, with different parties controlling the White House and one or both houses of Congress.

This typically sets the stage for a difficult budget negotiation process. The same issues that have led to shutdowns in the past, such as disagreements over spending on defense, border security, and social programs, are likely to be at the forefront of any current budget debate.

The use of a CR to temporarily fund the government is a likely scenario, but even that can be a point of contention. A government shutdown is a disruptive and costly event. It harms federal employees, disrupts public services, and can have a negative effect on the economy.

Mechanics of a Government Shutdown

When a government shutdown begins, federal agencies are required to cease all non-essential operations. This distinction between essential and non-essential services is a critical aspect of a shutdown.

Essential services (sometimes known as “excepted” activities) are operations related to national security, public safety, and the protection of life and property. These operations continue, but may experience disruptions. Federal employees whose roles are deemed essential are required to work without pay until the shutdown ends.

On the other hand, non-essential employees are furloughed, meaning they are unable to work and do not receive pay. Furloughed employees may be eligible for unemployment benefits, depending on state laws, but there is no guarantee that they will receive back pay after the shutdown is resolved.

Congress has typically approved retroactive pay in the past, but there are no guarantees. Military personnel on active duty are considered essential, and some may be required to report for duty without pay until the issue is resolved.

The process of shutting down and reopening government agencies is a significant undertaking. The Office of Management and Budget requires federal agencies to have shutdown plans in place. These plans outline the steps to be taken for an orderly shutdown of operations, including notifying employees of their status.

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Effects on the Public

A government shutdown has a wide-ranging impact on the American public. Many services that people rely on are either suspended or significantly curtailed. For example, during past shutdowns, the National Park Service has had to close many parks and suspend services like trash collection and road maintenance, leading to unsanitary and unsafe conditions.

Other public services affected include the following:

• The Food and Drug Administration may suspend routine food inspections, increasing the risk of foodborne illnesses.
• The National Institutes of Health may be forced to delay new clinical trials, potentially affecting patients who are awaiting new treatments.
• Immigration courts often cancel hearings, adding to an already extensive backlog.
• The Federal Housing Administration may stop insuring new mortgages.
• The Department of Housing and Urban Development could halt the processing of some new loans.
• The Small Business Administration may stop processing new business loans.
• The Environmental Protection Agency could stop inspecting most hazardous waste sites and drinking water facilities.

Programs with funding independent of annual appropriations, such as Social Security and Medicare, continue to operate. The U.S. Postal Service also continues its operations because it is self-funded. However, even these services can experience disruptions, such as delays in processing applications and responding to inquiries.

How a Government Shutdown Affects the Military

The military is not immune to the effects of a government shutdown. While active-duty service members continue to work, they may not receive pay until the shutdown ends. This can cause significant financial stress for military families. In addition to the lack of pay, a shutdown can also affect on-base services. For example, on-base non-acute healthcare may be suspended, and childcare services may be limited.

Civilian employees are typically furloughed during a shutdown, with only those in excepted roles continuing to work without pay.

This can affect a wide range of support functions that are crucial for military readiness. For example, maintenance and administrative tasks may be delayed, which can have a ripple effect on military operations.

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How a Government Shutdown Affects the Department of Veterans Affairs

According to VA.gov, the following services are negatively affected by a potential federal government shutdown:

• VA will not provide Veteran career counseling
• VA will not provide transition assistance program activities.
• The GI Bill Hotline will be closed.
• VA benefits regional offices will be closed.
• VA will cease public affairs and outreach to Veterans.
• VA will not permanently place headstones or maintain the grounds at VA national cemeteries.
• VA will not process applications for pre-need burials.
• VA will not print new presidential memorial certificates.

The Department of Veterans Affairs also claims the following services are NOT affected by a shutdown: