Continuing Resolution

A continuing resolution (CR) is a temporary law authorizing government spending at or near prior-year levels when Congress fails to pass regular appropriations bills on schedule. A CR typically runs for weeks or months, allowing time for budget negotiations to conclude. Without a CR or regular budget, agencies run out of authority to spend and must furlough workers or shut down. The CR maintains the status quo—freezing spending at prior levels, preventing new programs from launching—while Congress debates.'

Why CRs exist: appropriations deadlock

The federal budget process nominally requires Congress to pass 12 appropriations bills by September 30, funding all government agencies for the fiscal year beginning October 1. In practice, this has failed consistently since the 1990s. Political disagreements over specific riders (abortion, environmental rules, immigration enforcement, defense spending) cause appropriations to stall. Rather than allow a shutdown—where agencies cease operations and federal workers are furloughed—Congress passes a CR to maintain funding status quo.

This has become the norm. Fewer than a handful of complete, on-time appropriations bills have passed Congress since 2000. CRs have become the de facto annual budget mechanism, with a stopgap every few months or a longer-term CR spanning multiple months.

How CRs constrain agencies

A CR freezes agency spending and hiring at prior-year levels or a specific percentage thereof (often 70–100% of the previous year, depending on negotiations). An agency cannot launch new programs, expand positions, or commit to multi-year projects without explicit authorization in the CR. This creates inefficiency: a program planned for launch in October cannot start; positions cannot be filled even if budgeted; equipment upgrades are deferred.

Longer CRs are more disruptive. A six-month CR halts hiring decisions through March. Agencies cannot commit to new contracts. Private vendors depending on government contracts face uncertainty and often experience payment delays. The longer the CR, the broader the economic ripple.

The political leverage of CRs

CRs have become negotiating tools. A party seeking to block a spending initiative (say, border wall funding or climate programs) can condition the CR on excluding that item. The other party must choose: accept the exclusion, or risk a shutdown. This dynamic has made CRs increasingly contested, with riders attached to fund or defund specific policies.

In extreme cases, disputes over riders have caused government shutdowns (2013, 2018–2019, 2021). Shutdowns are unpopular because federal workers go unpaid and public-facing services (national parks, federal courthouses) close. The threat of shutdown is often enough to force compromise on CR language.

Economic impacts and uncertainty

CRs create uncertainty that ripples through the economy. Contractors cannot bid confidently on new government work if they don’t know if funding will be authorized. Hiring freezes mean government agencies operate understaffed, slowing permit processing and regulatory work. Private firms dependent on government purchases defer decisions. Small businesses winning federal contracts face payment delays if the CR doesn’t explicitly authorize timely payments.

Repeated, short-term CRs also increase administrative burden. Agencies must re-budget every few months, diverting resources from operations to compliance and planning. Long-term planning becomes nearly impossible.

The fiscal impact: discretionary spending frozen

CRs freeze discretionary spending but do not constrain mandatory spending (Social Security, Medicare) or interest on debt. As a percentage of GDP, discretionary spending has declined for decades because mandatory spending and debt service have grown. A CR that maintains prior-year discretionary funding effectively locks in a declining share of the budget, making it harder to fund defense modernization, infrastructure, or research.

Some argue this is intentional—a way to slowly shrink government size by default. Others argue it’s simply the byproduct of political dysfunction. Either way, the CR mechanism has structural consequences for budget composition.

Impasse resolution: negotiation or shutdown

When a CR expires and Congress cannot agree on new terms, agencies enter a funding lapse. If Congress authorizes additional spending (passes a new CR or regular budget), funding is restored and workers are paid retroactively. If the lapse extends, shutdown protocols trigger: non-essential workers are furloughed, essential functions (national security, law enforcement, courts) continue with unpaid staff.

Recent shutdowns have lasted days to weeks. The 2018–2019 shutdown lasted 35 days, the longest in U.S. history. It cost the economy billions in lost productivity and left federal workers in financial distress. The pressure to end a shutdown often forces the minority blocking party to concede, making shutdowns a powerful but costly negotiating tactic.

Looking forward: structural reform

Economists and budget experts have proposed reforms: moving to a two-year budget cycle (reducing annual negotiation friction), making appropriations automatic if Congress misses the deadline (eliminating shutdown leverage), or splitting appropriations into smaller, less contested tranches. None has gained traction, partly because the current system allows parties to use CRs and shutdown threats as leverage on unrelated issues.

Until Congress changes the formal process, CRs will likely remain routine, discretionary spending will be frozen or shrinking, and uncertainty will persist. Each CR represents a missed opportunity for long-term planning and can slow economic growth relative to a stable fiscal baseline.