Government Shutdown

Government Shutdown

We are on our 5th government shutdown over the past 40 years. We had two in 1996, one in 2014 and 2019 and now one in 2025. The past shutdowns have lasted 5, 21, 16, and 34 days, respectively. As of this writing, the current shutdown is lasting longer than 3 of the 4 previous shutdowns. It is anyone’s guess how long this shutdown will last and which party will take the political blame for the shutdown.

I know several clients, friends, and acquaintances who are directly affected by the lack of pay during the shutdown. For anyone in that position, it can be incredibly stressful to work without receiving a paycheck. Fortunately, for many government employees, the expectation is that they will eventually receive back pay once the shutdown is resolved. While that may or may not be guaranteed in every case, it is generally the assumption.

From a fiscal perspective, I also recognize another side of the issue. The government continues to spend beyond its means, and at some point, that needs to be addressed. While a shutdown is far from ideal and has real impacts on people’s lives, it can also serve as a necessary reminder of the importance of responsible spending and fiscal discipline.

The concept that the federal government spends more money than it gets in revenue is a concerning concept that has been going on for decades. I am not as concerned about the overall national debt level, but I am concerned about the continued additions each year to the annual deficit. In 2025, the government is spending over $7 trillion and will receive only a little over $5 trillion in revenue.

If the government shutdown solved the national deficit, then I would be all for it. Unfortunately, I don’t expect the deficit to improve in any material way because of the shutdown. One reason for the shutdown is the partisan disagreement on whether to pay illegals’ medical costs with government money. This is an important issue that should be addressed.

The unfortunate reality is that government employees are being affected by the shutdown. This is an inherent risk of being a government employee. For these people, the risk of being fired for poor performance is lower than in the private sector, but the risk of unpredictable events like a shutdown is higher. 

The morals of the story are that the government should stop spending money that it doesn’t have and that everyone needs emergency reserves to cover the surprises.