2.1 Overview of the Federal Budget Cycle
The United States operates on a fiscal year running from 1 October to 30 September. The process is governed mainly by the Congressional Budget and Impoundment Control Act of 1974, which established a formal timetable and institutions such as the Congressional Budget Office (CBO). The cycle involves three major phases:
- Presidential Budget Proposal – by law, the President submits a comprehensive budget request to Congress, traditionally by the first Monday in February (31 U.S.C. § 1105).
- Congressional Budget Resolution – the House and Senate each draft, debate, and (ideally) agree on a concurrent resolution that sets spending ceilings and revenue targets for the coming fiscal year. This resolution is not a law but a framework guiding appropriations.
- Appropriations and Authorisations – Congress must pass 12 regular appropriations bills covering major government functions (e.g., Defence, Homeland Security, Education, Health, etc.) before 1 October, or enact a continuing resolution (CR) to extend existing funding levels temporarily.
Failure to do so results in a funding gap, and, under the Antideficiency Act (ADA), a shutdown of non-excepted operations. (See GAO, 2023.)
2.2 Key Institutions
- Office of Management and Budget (OMB): coordinates the President’s proposal and issues guidance to agencies on priorities and contingency plans.
- House and Senate Appropriations Committees: write, amend, and reconcile appropriations bills.
- CBO: provides non-partisan budgetary and economic analysis.
- Government Accountability Office (GAO): oversees compliance with the ADA and reports on shutdown implementation.
Together, these bodies form a system of checks and balances designed to ensure fiscal responsibility, yet their separation also creates multiple veto points—any of which can block or delay appropriations.
2.3 Budget Timetable and Deadlines
| Stage | Approximate Date | Purpose |
|---|---|---|
| President submits Budget | February | Outlines funding priorities and economic assumptions |
| Congressional Budget Resolution agreed | April 15 | Sets overall spending/revenue targets (non-binding) |
| House & Senate Appropriations bills passed | June–September | Provide detailed funding to each department |
| Fiscal Year begins | 1 October | All appropriations must be enacted or extended by this date |
| If not completed | October 1 onward | Funding gap → agencies must implement shutdown plans |
If even one of the 12 appropriations bills fails to be enacted or covered by a CR, those specific agencies affected must shut down until authorised to spend.
2.4 How Risk Accumulates
Shutdown risk builds through a combination of:
- Political Polarisation: When Congress and the President belong to different parties, negotiations often stall over ideological priorities (e.g., healthcare reform in 2013 or border security in 2018–19).
- Procedural Complexity: Each appropriations bill must pass both chambers, then be reconciled, and finally signed by the President. Any disagreement at any stage may halt progress.
- Short-term CRs: Continuing resolutions can maintain funding but only temporarily. Repeated reliance on CRs increases uncertainty and delays long-term planning.
- Linkage Politics: Major policy demands (e.g., tax cuts, social-programme reforms) are sometimes tied to budget approval, turning fiscal deadlines into political leverage points.
- Public Messaging and Blame Games: Shutdown threats are often used for partisan positioning, which may delay compromise even when the fiscal stakes are high.
2.5 Comparative Note
Unlike in parliamentary systems, where failure to pass a supply bill constitutes a vote of no confidence, the U.S. system allows the executive and legislature to remain in office during a funding lapse. This structural independence makes shutdowns possible. For example, in the United Kingdom or Canada, the government would either fall or dissolve Parliament rather than cease essential operations (Peterson Foundation 2024).
2.6 Consequences of Procedural Delay
Each missed deadline amplifies the likelihood of:
- Agency disruption – planning, hiring, contracts, and payments slow.
- Economic uncertainty – investors and agencies delay spending decisions.
- Reduced government credibility – ratings agencies and international partners view repeated lapses as evidence of fiscal dysfunction.
Thus, the budget timetable itself—with numerous veto points and fixed deadlines—creates inherent fragility that, when combined with partisan conflict, leads to shutdown risk.
References
Congressional Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344, 88 Stat. 297 (1974).
Government Accountability Office (GAO) (2023) Antideficiency Act: A Primer on the Legal Framework. Washington, DC: GAO.
Peterson Foundation (2024) ‘A Brief History of U.S. Government Shutdowns—and Why Other Countries Do Not Have Them’. Available at: https://www.pgpf.org/article/a-brief-history-of-us-government-shutdowns-and-why-other-countries-do-not-have-them/ (Accessed 9 Nov 2025).
Congressional Research Service (CRS) (2024) Shutdown of the Federal Government: Causes, Processes, and Effects. Washington, DC: Library of Congress.