Federal government shutdowns can cause major disruptions, leaving thousands of workers on furlough, many experiencing delays in their paychecks. Taxpayers may struggle to get responses to their inquiries, airport lines might grow longer during busy travel times, and many national parks are likely to close down.

Nonetheless, various vital government operations — including national defense, benefit distribution, and mail services — persist without interruption.

The uniquely American phenomenon of a partial government shutdown — arising from a divided government, a broken budget process, and a constitutional framework that necessitates consensus between the House, Senate, and president on spending — affects federal agencies in different manners.

Legislation from the 19th century essentially prevents federal agencies from expending funds beyond what Congress appropriates. Given that Congress usually allocates funding annually, this results in a potential shutdown threat every October 1, marking the start of a new fiscal year. This year, similar to prior years, Congress has implemented a short-term funding extension until December.

However, there are exceptions. Agencies focused on health, safety, and property protection are permitted to continue operations, including military personnel, homeland security, and food inspections.

The president is required to uphold constitutional responsibilities. Consequently, numerous offices within the White House, like the Office of the Pardon Attorney and the U.S. Trade Representative, will remain functional.

Additionally, several federal entities, including the Federal Reserve and the Consumer Financial Protection Bureau, which do not depend on annual appropriations from Congress, will be capable of continuing their work using their funding sources.

For those planning train travel or package shipments during the holiday period, Amtrak and the U.S. Postal Service will operate as usual during the shutdown.

The Office of Management and Budget requires that every executive agency develop a contingency plan in the event of a shutdown — known as a “lapse in appropriation.” Here are some important points:

Federal employees

Approximately 40% of federal employees will be furloughed and barred from working due to regulations prohibiting agencies from accepting volunteer labor. Essential personnel will continue working without pay.

High-ranking officials confirmed by the Senate are exempt from furloughs.

In anticipation of the 35-day shutdown that began in December 2018, Congress passed legislation ensuring that federal workers — both furloughed and essential — receive retroactive pay after the shutdown ends. However, checks will be halted during the shutdown, often leading to increased absenteeism.

Moreover, constitutional officers — inclusive of the president, congressional members, and judges — are entitled to their salaries as outlined in the Constitution.

Travel

The Federal Aviation Administration and the Transportation Security Administration will maintain their essential safety functions. However, travelers may face delays since air traffic controllers and TSA agents will be working without pay, which historically correlates with increased absenteeism during previous shutdowns.

U.S. consulates and passport offices will operate as long as they can utilize fee revenues.

Parks and museums

Most national parks are expected to close, restricting visitor access and negatively impacting businesses in the $800 billion outdoor recreation industry. Generally accessible public areas may remain open, but without regular staff and resources, leading to maintenance issues, such as unclean restrooms and litter problems.

Institutions like the Smithsonian and the National Gallery of Art may shut down if a shutdown persists.

Cemeteries, monuments, and visitor centers managed by the American Battle Monuments Commission will also be closed.

Inauguration

Donald Trump addresses attendees during the 58th presidential inauguration in Washington on January 20, 2017.

The inauguration of a new president is constitutionally mandated and will take place even if the spending lapse continues up to the January 20 event. Congress has already allocated $3.7 million for the inaugural ceremonies, and all heightened security measures surrounding the event would also remain unaffected by a shutdown. Inaugural balls and other festivities are funded through private contributions facilitated by the Trump-Vance Inaugural Committee, which has garnered million-dollar pledges from corporations such as Amazon.com Inc. and Meta Platforms Inc., along with personal donations from influential figures including Ken Griffin of Citadel Securities and Sam Altman of OpenAI.

Health and social security

Medicare benefits will continue, as will new and existing Social Security checks. However, some administrative processes — such as verifying benefits, updating earnings records, and issuing replacement cards — may experience delays.

The National Institutes of Health’s hospital in Bethesda, Maryland, will stay open to provide care for current patients, and research activities will persist where halting them could disrupt ongoing clinical trials.

Safety-net food assistance programs will also remain operational.

Medical services at veterans hospitals and clinics will continue, alongside programs for suicide prevention, medical and prosthetic studies, and burial benefits.

Nevertheless, additional veterans’ benefits, particularly those focusing on education, job training, and loans, may face delays.

National defense

Uniformed military personnel are exempt from furlough and will carry out their responsibilities without pay, while most civilian employees within the Defense Department will be furloughed.

The Pentagon may maintain specific contracting operations that support service members under an historical law known as the Feed and Forage Act. Burials and tours at Arlington National Cemetery will also remain unchanged.

Intelligence agencies provide limited information on their operations during a shutdown, but the Director of National Intelligence has stated that employees are not automatically exempt from furlough.

Labor department

Several agencies within the Department of Labor, including the Bureau of Labor Statistics, will be entirely closed. If the shutdown lasts through Inauguration Day, it may delay essential monthly reports like employment statistics, job openings, inflation rates, and import reports. Policymakers and investors needing to rely on this data will have to seek alternative sources for insight into the economy’s status.

Health and safety functions, such as workplace inspections conducted by the Occupational Safety and Health Administration, will continue. Many benefit programs will remain unaffected due to having permanent appropriations, including black lung benefits and COVID-19 assistance.

Treasury department

The Treasury Department has broadly indicated that essential services linked to market and economic updates, policy work, and other responsibilities essential for the president’s constitutional duties will proceed.

Numerous research and regulatory agencies funded through user fees will continue their operations, including the Office of Financial Research, the Office of Recovery Programs, and the Financial Stability Oversight Council.

Processing cases before the Committee on Foreign Investment in the United States will stop, potentially leaving major business decisions — such as the sale of U.S. Steel to Nippon Steel — uncertain if no recommendations reach President Joe Biden’s desk before that time.

Internal Revenue Service

The IRS will not respond to the average 46,000 calls it receives daily, and most tax administration functions will be suspended.

The Treasury will continue to implement tax credits established or extended through the Inflation Reduction Act. A shutdown does not delay tax withholdings or deadlines for any estimated tax payments due.

Regulatory agencies

The Federal Trade Commission will cease “the vast majority of its competition and consumer protection investigations.”

The Securities and Exchange Commission will stop its review and approval processes for registrations submitted by investment advisers, broker-dealers, transfer agents, rating organizations, investment companies, and municipal advisors.

The Commodity Futures Trading Commission will continue its critical market oversight functions, citing a legal opinion stressing the importance of preventing “massive dislocations and losses to the private economy and disruptions to society.”

The Consumer Product Safety Commission may still issue recalls when there is an “imminent threat to human life,” but routine monitoring will be paused.

Federal Emergency Management Agency

Most emergency relief workers will continue working. However, disaster relief payments are already at risk of delays due to a projected $39 billion shortfall in the Disaster Relief Fund by 2025 unless additional funding is secured.

Energy & environment

The Department of the Interior might process some permits for offshore oil and gas drilling, though these approvals could vary based on safety considerations and governmental interests in the involved properties.

The Environmental Protection Agency can continue certain programs funded by the Inflation Reduction Act and activities backed by alternative funding sources, including cleanup efforts at Superfund sites.

The Energy Information Administration, responsible for publishing reports on U.S. oil stocks and fuel demand, will maintain its data collection and publication schedule for the time being.

The National Nuclear Security Administration will focus on the maintenance and security of nuclear weapons and deployed naval reactors.

The Nuclear Regulatory Commission will suspend its licensing, certification, permitting, and inspection activities, along with emergency preparedness drills.

Housing

Mortgage programs managed by the Federal Housing Administration and Ginnie Mae will continue without interruption. Many block grants from the Department of Housing and Urban Development have been allocated to states already, preventing any disruption.

Subsidized housing programs, including public housing and Section 8 vouchers, do not rely on annual appropriations, yet they face potential funding shortages.

“Nearly all” fair housing initiatives would be suspended, as indicated in the contingency plans.

Small business

Loan accessibility will be contingent on their funding sources. Many disaster relief and COVID-19 assistance programs will proceed, but standard loan applications may be delayed. Programs dedicated to veteran-owned businesses, exports, and mentorship initiatives will cease operations.

Federal Courts

Most judicial functions can continue during a brief shutdown, with funding sourced from filing fees and various alternative avenues.

Federal Reserve

The Federal Reserve will maintain its operations, enabling the central bank to adjust interest rates, regulate financial institutions, and conduct economic research as normal.

Congress

Although Congress’s ability to fund itself might eventually run short, it needs to operate to resolve the shutdown. According to the 27th Amendment to the Constitution, members of Congress cannot change their pay rate during their terms, so they will continue to receive salaries. They will also need staff to assist in drafting legislation.

However, other associated agencies — including the Library of Congress and the U.S. Botanical Gardens — will close access to visitors.

Biden’s last acts

A shutdown could impede progress on various final policy decisions and regulations by President Biden’s administration in its closing weeks, including contract approvals and projects funded by the Inflation Reduction Act.

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