CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director U.S. Congress Washington, DC 20515
Honorable Joni Ernst United States Senate Washington, DC 20510
Re: Potential Effects of a Federal Government Shutdown Dear Senator Ernst: You have asked the Congressional Budget Office to assess the possible effects of a lapse in discretionary appropriations (often called a government shutdown) on the pay of federal employees, including members of the Armed Forces, as well as Members of Congress. You also have asked CBO to describe possible effects on the economy, business activity, procurements and contracts, and the operation of national parks and monuments. Some of your questions focused on the daily cost to the government for providing back pay to furloughed workers, for delayed procurements, and for contracts that may lapse during a shutdown. The Antideficiency Act generally prevents federal agencies and employees from obligating or expending federal funds in advance of or in excess of an appropriation and from accepting voluntary services.
Specifically, that law requires most federal employees to stop working during a lapse in appropriations unless they are considered “excepted” and thus are required to perform specific tasks other than the regular functions of government. 1 The effects of a shutdown depend on its duration and on an Administration’s decisions about how to proceed. An Administration is required, for example, to determine which executive branch employees are excepted and which to furlough. In this instance, the Administration has indicated that it might subject some employees, who might otherwise be furloughed, to a reduction in force. The 1. See the Antideficiency Act, 3
Administration also could decide to use mandatory funding provided in the 2025 reconciliation act or other sources of mandatory funding to continue activities financed by those direct appropriations at various agencies, including the Department of Defense (DoD), the Department of the Treasury, the Department of Homeland Security, and the Office of Management and Budget (OMB). In general, a longer lapse will have larger effects than a shorter one will. The analysis in this letter is based largely on work CBO published in 2019 after the five-week partial shutdown from December 22, 2018, until January 25, 2019.
2 Pay for Federal Employees Once discretionary appropriations for the federal government are enacted after a lapse, current law requires employees to be paid at their regular rate of pay—whether they are excepted employees who work during a shutdown or others who have been furloughed.
3 Excepted employees carry out activities for the protection of life or property or other activities defined in a federal agency’s contingency plan in accordance with guidance from OMB and the Department of Justice.
4 Using information from the agencies’ contingency plans and the Office of Personnel Management (OPM), CBO estimates that under a lapse in discretionary funding for fiscal year 2026 about 750,000 employees could be furloughed each day; the total daily cost of their compensation would be roughly $400 million.
The number of furloughed employees could vary by the day because some agencies might furlough more employees the longer a shutdown persists and others might recall some initially furloughed employees. An OMB memo, later referenced by OPM, directed agencies to consider notifying their employees of a reduction in force if their work is for programs, projects, or activities that would be subject to a lapse in appropriations; are 2. Congressional Budget Office, The Effects of the Partial Shutdown Ending in January 2019 (2019), www.cbo.gov/publication/54937
https://www.cbo.gov/system/files/2025-09/61773-Government-Shutdown.pdf
Comments
The OMB has reported that they could permanently lay off unnecessary federal employees and defund unnecessary programs if approved by the President and Agency Heads.
Norb Leahy, Dunwoody GA Tea Party Leader
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