Government Shutdown

DEFINITION of 'Government Shutdown'

The closure of non-essential offices of the government due to lack of approval on the government programs budget for the upcoming fiscal year. Approval is reached if Congress passes all of the spending bills regarding the federal budget. If an agreement is not achieved, a government shutdown will close many federally run operations, and halt work for federal employees unless they are considered essential. Some organizations still stay open by running on cash reserves, but once these run out, if a solution is not found, they will also close. The shutdown stays in effect until a compromise is reached and a budget bill is passed.

BREAKING DOWN 'Government Shutdown'

Government shutdowns have happened in the past and could affect any government processing functions such as passport applications, law enforcement recruitment and testing, or Social Security card applications. Any office which does not receive funding from Congress would continue. For example the Federal Reserve would continue operating, and the Post Office, being owned but not operated by the federal government, would also continue to run. Essential employees which typically continue working might include security, such as police and firefighters, intelligence agencies and soldiers.

RELATED TERMS
  1. Federal Budget

    The federal budget is an itemized plan for the annual public ...
  2. Federal Debt

    The total amount of money that the United States federal government ...
  3. Shutdown Point

    A point of operations where a firm is indifferent between continuing ...
  4. Balanced Budget

    A situation in financial planning or the budgeting process where ...
  5. Budget

    An estimation of the revenue and expenses over a specified future ...
  6. Annual Budget

    Any budget that is prepared for a 12-month period. An annual ...
Related Articles
  1. Markets

    What are Government Securities?

    Government securities are debt instruments that governments issue to raise capital.
  2. Markets

    A Look At National Debt And Government Bonds

    Learn the functions of the U.S. Treasury, and find out how and why it issues debt.
  3. Markets

    Breaking Down The U.S. Budget Deficit

    Find out why this particular piece of national financing gets so much attention from the media and investors.
  4. Markets

    Explaining Limited Government

    Limited government is a political viewpoint that favors few, if any, government controls on individuals and the economy.
  5. Markets

    Fiscal Deficit

    A shortfall that occurs when government spending exceeds government revenues, or taxes.
  6. Markets

    The Federal Reserve: What Is The Fed?

    The Federal Reserve was created by the U.S. Congress in 1913. Before that, the U.S. lacked any formal organization for studying and implementing monetary policy. Consequently markets were often ...
  7. Personal Finance

    How Budgeting Works For Companies

    Learn how to break down and understand a corporate budget.
  8. Managing Wealth

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
  9. Markets

    The Current State of the U.S. Debt

    Discover the current state of U.S. national debt, whether it's increasing or decreasing, and what is projected for the next 10 years.
  10. Retirement

    Is The U.S. Government Too Big To Fail?

    Some think that the U.S. government is too big to fail, but one must only look at historical examples to know that it's not true.
RELATED FAQS
  1. What are the pros and cons of a business temporarily closing once a shutdown point ...

    Learn about the differences between a shutdown point and going out of business, why it might make sense to shut down, and ... Read Answer >>
  2. Can state and local governments in the US run fiscal deficits?

    Discover why most state and local governments do not – or cannot – run fiscal deficits in the same manner as the U.S. federal ... Read Answer >>
  3. What factors go into determining a business's shutdown point?

    Find out what a shutdown point is and what determines whether a business has reached their shutdown point, including multiproduct ... Read Answer >>
  4. How does a nation's national debt affect the budget process?

    See how the national debt has traditionally impacted, or purported to impact, the budgeting process for the U.S. federal ... Read Answer >>
  5. How do open market operations affect the money supply of an economy?

    Understand how open market operation affect the supply of money in the economy and learn the specific ways the Federal Reserve ... Read Answer >>
  6. What are the pros and cons of operating on a balanced-budget?

    Take a brief look at some of the major arguments for and against balanced budgets for the U.S. government, the largest debtor ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center