After 43 days, the longest US government shutdown in history ended on November 12, 2025. As of late February 2026, a partial government shutdown remains in effect. Its fiscal and social consequences are well-documented: The disruption of critical federal services has resulted in billions of dollars lost in economic output and millions of affected citizens. Its cause is also seemingly well-documented: Political polarization is often cited as the culprit of Congress’ inability to agree on appropriations legislation, leaving federal agencies without authorized funding (better known as a government shutdown). But while government shutdowns are a uniquely American phenomenon, polarization is not. Shutdowns are a striking example of American exceptionalism in that they are a byproduct of institutional design: Failure to reach compromise currently results in externalized costs, which can be safely mitigated provided that internalized costs are also introduced.
Shutdowns are most commonly attributed to contemporary political polarization. It is true that polarized disagreement produces gridlock when the annual budget cannot be agreed upon. Budgets require presidential approval and a majority vote in the House and Senate to pass, with one party rarely holding a trifecta. This causes gridlock to self-correct to an extent: Under the current system, the hefty leverage of the opposition over the existing budget means negotiations and compromise must occur. However, this negotiation leverage currently takes the form of unnecessarily externalizing costs onto the American people. In October, thousands of government employees deemed “non-essential” were furloughed. Critical employees such as air traffic controllers worked without pay; around 40 million Americans relying on Supplemental Nutrition Assistance Program food aid benefits received only partial payments. Programs like the Low Income Home Energy Assistance Program, a heating subsidy program used by approximately six million Americans, and Head Start, an early childhood education program used by over 800,000 Americans, were expected to take weeks to rebound even after the November shutdown ended. Still, it is worth emphasizing that the long-term economic costs are limited. The cumulative impact of the shutdown was estimated to only “reduce real GDP (in 2025 dollars) by $11 billion [by the end of 2026]” — a relatively small impact of less than 0.04 percent on a $30 trillion economy.
While polarization is certainly relevant to the shutdown debate, it is institutional structures that grant the mechanism to pause the operations of government departments. Before the fundamental underlying effects and incentives of shutdowns can be addressed, however, reform must first begin by targeting relevant Congressional committees. While such reforms do not resolve the fundamental mechanism driving shutdowns, they do make shutdowns easier to avoid. At present, budgeting committees often receive relatively junior members, are capped by a term limit, and are “relatively toothless.” As such, the abundance of junior members and strict term limits on budgeting committees result in a lack of deep expertise (or any incentive to build it), while the appropriations committees (the ones who actually write the checks) often choose to ignore the budgeting committees’ suggestions. Thus, the budgeting committees’ structures need to be “strengthened or reimagined completely.” Additionally, we ought to provide better cost visibility. For example, every municipality and state government utilizes capital budgets that separate long-term capital expenditures from short-term operating ones. The federal government currently lumps these costs together. Distinguishing between how we are financing X and the operating costs of X provides the option for more responsible spending. Moreover, forecast expenditures are currently set at 10 years for the Congressional Budget Office. Some of the highest costs are accrued here, but they grow significantly after this set window. Yet, nobody is tasked with making longer-term cost forecasts. Once more, better spending visibility — for both the short and long term — is necessary; the prerequisite for better budgeting is a better understanding of costs. Of course, this is all much easier said than done. Changes are unlikely because they require a leadership interested in changing rules, procedures, and crafting legislation — reforms that must enjoy bipartisan support, no less. Nevertheless, although these reforms may not tackle the fundamental challenges of shutdowns — the underlying effects and incentives persist — they remain welcome. Not only are they relatively straightforward to implement, but they also represent a crucial step toward making shutdowns easier to avoid.
The first priority, then, is to eliminate the external costs. Comparing the United States to its democratic counterparts reveals that most do not externalize the burden of a shutdown onto the public via a provisional budget or automatic continuing resolution (ACR). Under a provisional budget system, if a new budget cannot be passed, funding either continues at the previous year’s levels or under a scaled-back provisional budget. This allows institutions, benefits, services, and projects to remain in motion. In Germany, if the provisional budget’s funding is insufficient, the government may also borrow 25 percent of the budget from the previous year to cover ongoing costs. This system prevents societal upheaval from repeated stops and starts of crucial federal programs that are relied upon by citizens. Moreover, this system is present in both presidential and parliamentary systems. It is a function of the budgeting process and can be applied to the United States without a system overhaul. It should not be considered a fundamental structural limitation only applicable to, say, parliamentary systems, as the drawing of the Prime Minister (PM) and cabinet from the legislative branch and the PM’s subsequent role primus inter pares (first among equals) within the executive is. Indeed, the United States had a similar mechanism not too long ago: The original interpretation of The Antideficiency Act, which currently prohibits federal spending without appropriations, was originally interpreted to permit federal agencies to continue operating when appropriations had expired. Nonessential operations were simply minimized under the logic “that Congress did not intend that agencies to close down.” Upon its reinterpretation by Attorney General Benjamin Civiletti in 1980, the approval of limited operations was replaced by a prohibition on nearly all spending.
However, solely implementing ACRs introduces a new set of challenges. The new status quo would be that the government stays open, thus lacking leverage to force a resolution or drive change. Year after year, Congress might continue to roll over the budget without making crucial decisions about funding, whether for energy transition projects or developing critical infrastructure. There would be no urgency for those satisfied with the existing budget; with the current setup, there are at least stakes in failing to reach a compromise. Given the razor-thin majorities in Congress today, the resistance of a single congressperson holds considerable power. The lack of urgency in this scenario might well mean foot-dragging by resistant congresspeople over minor issues. Even worse than shutdowns, Congress might run on autopilot forever.
While shielding the public from cost externalization is necessary, this alone does not guarantee legislative progress. To fix this, we must also set our sights on cost internalization. Forcing legislative decision-makers to bear the burden of failure would actively incentivize compromise on both ends of the political spectrum. Upon examination of other countries, however, it becomes apparent that the options for internalizing costs are limited. The failure to pass a budget in the United Kingdom and Canada is a matter of confidence; in other words, it typically results in the resignation or dissolution of government. The moment a government cannot supply the budget, its right to rule expires. Unlike these parliamentary systems, the United States has codified timeframes and no precedent for snap elections; there are a plethora of American constitutional barriers and structural limitations that prevent such a system from ever realistically taking shape. Moreover, snap elections themselves are problematic. They cost the economy hundreds of millions of dollars and shift the burden onto citizens to vote, while parties focus on campaigning instead of fixing the budget. Even worse, parties might be incentivized to trigger snap elections if they believe they are polling favorably among the populace. If it is instability we are fighting, this is not the answer.
Fortunately, a rather strong outline to achieve cost internalization has already been proposed: The Prevent Government Shutdowns Act of 2025 acts within constitutional boundaries, advocating for a carrot-and-stick approach. Not only does this bill propose enacting continuing appropriations if a budget cannot be passed, but it also proposes pausing “official travel, congressional recesses or adjournments, and the consideration of legislation that is unrelated to appropriations” until the appropriations process has been completed. These political consequences prevent the dreaded, never-ending autopilot mode, actively discourage foot-dragging, and encourage a timely compromise and resolution. Such a proposal is the first step in holding those in power accountable for their actions: it both mitigates external costs and addresses the consequences of only doing so by introducing internal costs.
This bill has not crossed the finish line. That should take nobody by surprise — politicians do not like internalized costs. Why would they? No rational actor is willing to surrender the ultimate bargaining chip they can deploy (at someone else’s expense, no less) for a system that causes personal misery when timely compromise cannot be reached. Until Congress is willing to shoulder accountability for its own gridlock, this bill, like the government often is, might just be stuck in legislative limbo.