John CooneyA potential impasse is looming between President Obama and Congress over the federal budget. It is possible that parts of the federal government will run out of money on March 4 and have to close. The White House is reactivating a program for managing a shutdown that was developed by President Reagan and used successfully by President Clinton in 1995-96 to win a protracted budget battle with Speaker Gingrich and the Republican House. The shutdown program will again be center stage in the next weeks, as Congress and the White House seek to attract public support for their budgetary policies.

The governing principles were defined in a Jan. 1981 opinion that Attorney General Benjamin Civiletti wrote for President Carter. Under the Antideficiency Act, 31 U.S.C. ?1341, when annual appropriations for a federal program expire, it must cease operations and furlough its employees, unless: (1) the program has funding that covers multiple years; (2) it has authority to operate without appropriations, which includes taking steps necessary to protect human life and property; or (3) it has implied authority to pay employees to implement a function that has permanent spending authority (i.e., paying employees who generate Social Security checks, which are permanently authorized). If the program does not have such authorities, the agency may only undertake “reasonable” actions to shut down operations and put the function into cold storage.

In the early 1980s, the president (through the Office of Management and Budget) developed a process to implement the Civiletti opinion systematically. Each agency must submit a plan that tells the president which programs would continue to function during a funding hiatus and which would be closed and their employees furloughed. The agencies have substantial discretion how to apply the Civiletti opinion, especially the broad exception for protection of life and property.

To strengthen the president’s position in budget disputes with Congress, OMB operationalized the Civiletti rule that non-excepted employees may engage in “reasonable” shutdown-related activities to secure their workstations before being furloughed. On many occasions, Congress had not enacted appropriations by midnight of the day when appropriations expired, but was expected to provide short-term funding the next day under terms acceptable to the president. For these situations, OMB developed the “soft” shutdown, in which it directs agencies to allow non-exempted employees to report to work but to engage in “shutdown-related activities” only, until the president signs the funding bill. This approach gives the president another negotiating option between caving to Congress and precipitating Armageddon. It also potentially avoids the unnecessary loss of a full day’s productivity for much of the federal workforce.

If, however, the president and Congress reach a policy impasse, OMB directs the agencies to implement a “hard” shutdown and furlough all non-exempted workers. In 1995-96, many government programs experienced a “hard” shutdown for 21 days over the Christmas/New Year holidays. The shutdown management process allowed President Clinton to seize the moral high ground and attract popular support, which ultimately forced the House to fold and accept his budget priorities.

No one can predict if there will be a shutdown this year, but OMB has directed the agencies to update their plans. A shutdown today would differ from the 1996 one in two respects. Many more services are delivered by contractor employees, rather than by federal civil servants, than there were 15 years ago. In addition, the Internet revolution has occurred. Many federal IT systems support excepted and non-excepted programs. Determining which parts of government websites may still function could be a nightmare in the event of a lengthy shutdown.

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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