When The Money Runs Out: The U.S. Shutdown - Should A Politician Be Paid

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 When governments stop paying their workers, economies don’t just pause — they fracture.

At the start of October 2025, the U.S. government entered another budget standoff, triggering a partial shutdown that left 1.4 million federal employees either furloughed or working without pay. The cause? Congress failed to agree on a spending package before the fiscal deadline.

While the political headlines focused on partisan blame, the deeper question is far more structural:

How does one of the world’s largest economies run out of money — again?

Why the Money “Ran Out”

In the U.S., federal agencies can’t spend without congressional approval. Each year, lawmakers must pass 12 appropriations bills that fund everything from border control to national parks. If they don’t, operations legally grind to a halt.

This year, sharp divisions over defence spending, foreign aid, and deficit control led to a funding lapse. Without an approved budget or a temporary extension (known as a continuing resolution), agencies lost spending authority.

That’s not the same as the government being “broke.” The U.S. can technically print and borrow money — but it can’t legally spend it without permission. The shutdown is less about cash shortage and more about political gridlock.

The Ripple Effect on Workers and the Economy

Around 670,000 workers were immediately furloughed, sent home without pay. Another 730,000 continued working because their roles were deemed “essential” — air traffic controllers, border agents, and security staff — yet they, too, went unpaid.

For most, the financial impact is immediate: missed mortgage payments, delayed childcare, strained credit. But the macroeconomic effects ripple wider:

  • Consumer spending drops. Federal employees spend less, hurting local businesses.

  • Service delays multiply. Visa processing, national park management, and tax refunds slow or stop entirely.

  • Investor confidence wavers. Each shutdown signals deeper dysfunction, influencing markets and credit outlooks.

The irony is hard to ignore: the people ensuring government functions are the first to lose their income when it stops functioning.

Why Politicians Still Get Paid

Members of Congress, however, continue to receive their salaries during shutdowns. Their pay is protected by a permanent appropriation, a standing law that allocates funds to cover compensation regardless of government funding gaps.

To many, this feels morally tone-deaf. That’s why the new No Pay for Congress During Default or Shutdown Act (H.R. 1973) is gaining traction. The bill proposes withholding congressional pay during shutdowns or debt defaults — not just deferring it, but cutting it entirely for each day the government remains closed.

It’s a small but symbolic step toward accountability. If lawmakers’ income stopped when public services did, incentives to find common ground might suddenly sharpen.

The Broader Economic Message

Every shutdown costs billions in lost productivity and delayed spending, but the greater damage is reputational. A government that can’t fund itself on time signals instability to investors and trading partners.

In a world where capital moves instantly, perception matters. When political theatre outweighs fiscal discipline, trust erodes and trust, not taxes, is the true currency of modern economies.


AI Insight: Forecasting Fiscal Crises Before They Happen

Artificial intelligence is beginning to reshape how nations monitor financial stability. Advanced predictive models can now flag early warning signs of budget gridlock, analysing legislative voting patterns, spending trends, and market sentiment to forecast the probability of shutdowns weeks in advance.

In theory, governments could use AI dashboards the same way investors track market risk, identifying pressure points early and adjusting policy before paralysis sets in.

If accountability is the problem, data-driven foresight may soon become the solution.


Read more on this topic on the main Karen Newton website - Should A Politician Be Paid blog

Definitions of words and phrases used in this blog can be found at our main Glossary

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