February 16, 2018

A continuing resolution, or “CR”, is a temporary funding measure that Congress can use to fund the federal government for a limited amount of time. Continuing resolutions are often employed to avoid a government shutdown and give lawmakers more time to come up with an agreement on funding for the year. 

On February 9, 2018, Congress and the President enacted another continuing resolution as part of the Bipartisan Budget Act of 2018 — the fifth CR so far in this fiscal year. That action provides funding for operations of the federal government through March 23, 2018. The legislation also:

  • Increased the caps on discretionary spending for fiscal years 2018 and 2019;
  • Suspended the debt limit through March 1, 2019;
  • Provided additional funding for disaster relief;
  • Extended dozens of tax breaks so that they would apply retroactively to 2017;
  • Enacted various changes to Medicare and other health care programs (including further extending the Children’s Health Insurance Program through fiscal year 2027); and
  • Extended certain fees and authorized sales from the Strategic Petroleum Reserve.

Temporary funding reflects the continued failure of lawmakers to reach agreement on appropriations for the full 2018 fiscal year, which began on October 1, 2017 and runs through September 30, 2018. Funding the government for a full year is preferable to using a CR because it allows government agencies to plan appropriately and match their resources with their responsibilities. That predictability in turn benefits the economy by providing certainty about government actions.

For example, appropriations support government activities that touch nearly every aspect of our daily lives as well as of the economy — including national defense, operating national parks, law and immigration enforcement, health care research, and a host of other activities.  All of those activities are funded through 12 regular appropriations bills that are supposed to be enacted into law each year by the Congress and President. Under regular budget order, lawmakers would enact all of those full-year appropriation bills before October 1.

The October 1 deadline, however, has not been met for more than 20 years. Instead, lawmakers have come to rely heavily on CRs — temporary, imperfect solutions that avoid the difficult but necessary work of allocating funding. In fact, lawmakers often enact multiple CRs in a single fiscal year before deciding on full-year funding levels. From FY 1998 through today, 114 CRs have been enacted.

Lawmakers’ dependence on CRs to fund the government on a short-term basis undermines the budget process and introduces uncertainty to government agencies and programs. By enacting full-year funding bills on-time, lawmakers can focus their attention on other important legislative duties and government agencies and programs can operate more smoothly and efficiently.

If lawmakers can’t work together to fund the government for the rest of fiscal year 2018 by the time the current CR expires — or if they don’t enact another set of temporary appropriations — another government shutdown would occur and would have widespread costs. It would disrupt government services and programs, create uncertainty about future fiscal policy, and impose unnecessary costs on the economy. A 2013 paper written by Macroeconomic Advisers found that those costs could include an increase in the rate of unemployment, lower GDP growth, and higher borrowing costs for creditworthy corporations. An S&P Analysis found that a shutdown could reduce economic activity by as much as $6.5 billion per week.

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