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What Happens When There Is A Budget Showdown?

What Happens When There Is A Budget Showdown?

Budget showdown may cause a massive impact as it can lead to a government shutdown. Understanding what happens during a budget showdown is vital to prepare for its possible results. Learn more about how a budget showdown can affect the country, businesses, and individuals here.


What is a Budget Showdown?


Government shutdown
Photo by Gorodenkoff/Shutterstock



A budget showdown happens when the appropriate legislative body still needs to approve the government budget. It usually occurs due to disagreements on budget allocation, last-minute changes, failure to pass a budget, or overseeing the continuing resolution. A budget showdown may often be analogous to the term government shutdown.


In the U.S., the legislative body is the Congress. The House of Representatives and the Senate, which compose the United States Congress, form the Legislative Branch.


Budget Showdown vs Government Shutdown


People often interchange “budget showdown” and “government shutdown.” Listed below are some subtle distinctions between the two:


Budget Showdown:


  • Usually, it refers to political and legislative conflicts and negotiations about government financing or budget goals.
  • It includes discussions and debates before the budget deadline as Congress tries to agree on government budget expenditures.


Government shutdown:


  • It happens when a budget impasse or spending bills still need to be passed.
  • Occur when there is an unavailable continuing resolution bill or temporary funding measure from Congress to continue federal operations.


In conclusion, budget showdown is the political and legislative process leading to a potential government shutdown. In contrast, a government shutdown results from failing to enact a budget or continuing resolution. Therefore, a government shutdown can result from an unresolved government showdown. 

We listed a complete guide about the Government Shutdown. Read here.


What happens when there is a budget showdown?


What happens when there is a budget showdown? -
Photo by mark reinstein/Shutterstock


Several possible outcomes during a budget showdown rely on a country’s political and legislative systems. Here are the usual events that could take place during a budget showdown:


Political and legislative debate and discussion

It is inevitable during constitutional showdown to have conflicts and negotiations between lawmakers. Especially those from opposing parties may have divergent opinions on how taxes should be spent.


Government shutdown

Various reasons may cause a government budget, but usually because of budget showdown, budget allocation disagreements, and federal budget delay approval. 


What happens when there is a budget shutdown? Many concerns may arise during the shutdown; it’s like a domino effect on the economy! There will be insufficient funding for civilian benefits, and some operations may be held. However, other essential government operations like Medicare services, Social Security, and U.S. Postal will continue.


Delayed to no salary for government workers and contractors

Since a prolonged budget showdown may result in a shutdown, there is a considerable possibility to hold the budget for government employees. Once the shutdown is over, everything will go back to normal, and workers will receive their back pay. On the other hand, an extended duration of budget stoppage may force federal institutions to furlough employees.


Social and economic impacts

The effects of a government shutdown on the economy and society can be profound. Many public services and projects may be suspended. Some of these government programs include holding household federal benefits and postponing loan programs. 


Remember that every budget showdown may have differences and that the effects and repercussions will change according to the length and intensity of the situation. Whatever happens next depends on the political and legislative processes of the country, which is currently suffering a budget challenge.


United States’ budget showdown history


United States' budget showdown history
Photo by Vlad G/Shutterstock


The budget showdown result has shown from the early 1970s. Under the governance of former U.S. President Jimmy Carter in the late 1970s, numerous government agencies have had to close because of financial challenges. Here are some interesting trivia about budget showdown and government shutdown.


When did the first government shutdown happen?

President Jimmy Carter was the first official to suggest that the government be shut down if spending bills or continuing resolutions were not passed.


How many times did the U.S. Government shut down?

From the 1970s to the 1990s, there have been 17 government shutdowns. And since 1976, there have been a total of 21 budget stoppages. 


Which president had the longest government shutdown?

The longest shutdown throughout U.S. history happened from December 21, 2018, until January 25, 2019, or 34 days, under former President Donald Trump’s administration.


Under which president had the most shutdowns?

Former Pres. Ronald Reagan handled eight government shutdowns during his administration from 1980 to 1989. The longest one lasted three days.


The budget showdown will likely continue until lawmakers are able to deal with a budget agreement, approve a continuing resolution, or take other legislative action to provide temporary or full-year financing.


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