Government Shutdowns, the New Fiscal Politics, and the Case for Default Budgets

David Gamage

University of California, Berkeley - Boalt Hall School of Law

David Louk

Yale Law School; Jurisprudence & Social Policy, UC Berkeley

October 12, 2013

UC Berkeley Public Law Research Paper No. 2339314

Government shutdowns are costly, inefficient, and embarrassing. Standard & Poor’s estimates that the recently-concluded federal government shutdown has already wasted over $24 billion and shaved at least 0.6% off of annualized fourth-quarter U.S. GDP growth. As in recent government shutdowns in California, New Jersey, Minnesota, and Pennsylvania, government workers must forgo or are delayed pay, government contractors cannot work, important services close, and all stakeholders cannot plan effectively for the future.

Such shutdowns are due to an easily fixed quirk in America’s budget making processes. In nearly every other area of law and governance, default policies exist when lawmakers cannot pass new legislation — typically the prior status quo. Yet when Congress or a state legislature does not pass a budget on time, the result is the shutdown of government altogether. And thanks to a perfect storm of contemporary politics — acrimonious budget negotiations characterized by partisan brinkmanship, game-of-chicken strategies, and strong anti-tax sentiment among many conservatives — government shutdowns have become increasingly common.

Drawing on political science work on legislative negotiation theory and on several historical case studies of recent government shutdowns, we identify the causes of shutdowns or near-shutdowns. Then, drawing on this diagnosis of budgetary dysfunction, we advocate the adoption of default budgets policies — such as automatic continuing appropriations provisions, which maintain government operations in the event that legislators fail to pass a timely budget.

We then explain how default budgets policies might be implemented to avert shutdowns and to stabilize the budget making process. Properly enacted, default budgets policies have the potential to mitigate the harmful consequences of budget negotiation failures and to restore sanity to this era of new fiscal politics.

Number of Pages in PDF File: 55

Keywords: government shutdown, default budget, automatic continuing appropriations, fiscal politics, state budget, federal budget

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Date posted: October 13, 2013 ; Last revised: November 8, 2013

Suggested Citation

Gamage, David and Louk, David, Government Shutdowns, the New Fiscal Politics, and the Case for Default Budgets (October 12, 2013). UC Berkeley Public Law Research Paper No. 2339314. Available at SSRN: http://ssrn.com/abstract=2339314 or http://dx.doi.org/10.2139/ssrn.2339314

Contact Information

David Gamage (Contact Author)
University of California, Berkeley - Boalt Hall School of Law ( email )
Boalt Hall
Berkeley, CA 94720-7200
United States
David Louk
Yale Law School ( email )
127 Wall St.
New Haven, CT 06511
United States
Jurisprudence & Social Policy, UC Berkeley ( email )
School of Law
University of California
Berkeley, CA 94720-2150
United States
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