Government Shutdown

AAA

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.

INVESTOPEDIA EXPLAINS '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. Budget Deficit

    A status of financial health in which expenditures exceed revenue. ...
  2. Budget Surplus

    A situation in which income exceeds expenditures. The term "budget ...
  3. Congress

    The legislative branch of the United States government. It is ...
  4. Treasury Budget

    Data released by the U.S. Treasury on a monthly basis that accounts ...
  5. Fiscal Deficit

    When a government's total expenditures exceed the revenue that ...
  6. Social Security Administration ...

    A U.S. government agency created in 1935 by President Franklin ...
Related Articles
  1. Insurance

    The Government And Risk: A Love-Hate Relationship

    Though the U.S. government can help its citizens by subsidizing risky loans, the costs always come back to the taxpayers.
  2. Insurance

    Top 6 U.S. Government Financial Bailouts

    U.S. bailouts date all the way back to 1792. Learn how the biggest ones affected the economy.
  3. Economics

    What The National Debt Means To You

    The U.S. deficit seems to grow every year. But how does it actually affect you?
  4. Economics

    Debt Monetization: A Nearsighted Government Policy?

    We look at whether this financial practice benefits a government in the long term.
  5. Economics

    How Governments Influence Markets

    The biggest influence in the markets today can create some unintended consequences.
  6. Taxes

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  7. Budgeting

    Current Account Deficits: Government Investment Or Irresponsibility?

    Deficit can be a sign of trouble for some countries, and of health for others. Find out what it means when more funds are exiting than entering a nation.
  8. 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.
  9. Economics

    Economic Meltdowns: Let Them Burn Or Stamp Them Out?

    Whether the Fed should intervene in market bubbles is up for debate. Learn about both sides here.
  10. Economics

    What is a Promissory Note?

    A written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center