A budget crisis is an informal name for a situation in which the legislative and the executive in a presidential system deadlock and are unable to pass a budget. In presidential systems, the legislature has the power to pass a budget, but the executive often has a veto in which there are insufficient votes in the legislature to override. If no emergency provisions are made for the government's budget, a budget crisis may develop into a government shutdown in which the government temporarily suspends non-essential services until a budget is passed.
Unlike parliamentary systems, where a loss of supply would trigger the immediate fall of the government, a budget crisis can often lead to an extended stand-off. At the federal level in the United States, a crisis can often be averted by a continuing resolution which appropriates funding at the same level as the previous budget.
A budget crisis can also occur if the legislative branch has a constitutionally mandated dissolution or suspension date and the budget hasn't been passed up to that point. The term "budget crisis" could be used for situation where the executive branch freezes certain funds (impoundment) despite the directions of the law on annual budget already passed by parliament.
Politically, a budget crisis may develop in a situation of disagreement between state and civil society. Constitutional economics is a field of economics and constitutionalism which describes and analyzes the specific interrelationships between constitutional issues and functioning of the economy including budget process. The standards of constitutional economics when used during annual budget planning, as well as the latter's transparency to the society, are of the primary guiding importance to the implementation of the rule of law. Also, the availability of an effective court system, to be used by the civil society in situations of unfair government spending and executive impoundment of any previously authorized appropriations, becomes a key element for the success of any influential civil society.
Examples
United States federal government shutdown of 1995 and 1996
A particularly severe budget crisis occurred in the United States in November 1995, when the House of Representatives under SpeakerNewt Gingrich and the administration of PresidentBill Clinton quarrelled over apportionments. The failure of the House and Clinton to pass a continuing budget resolution to apportion temporary funds forced a closure of most non-essential United States government offices for several weeks.
History repeated for the United States in 2013. It again occurred with a Democratic President, Barack Obama. The Republican-controlled House of Representatives boycotted the budget to protest the Affordable Care Act. The failure of the House to pass a continuing budget resolution forced a closure of most non-essential United States government offices for several weeks in October 2013.
The separation of powers is an approach to governing a state. Under it, a state's government is divided into branches, each with separate, independent powers and responsibilities so that the powers of one branch are not in conflict with those of the other branches. The typical division is into three branches: a legislature, an executive, and a judiciary, which is the trias politica model. It can be contrasted with the fusion of powers in parliamentary and semi-presidential systems, where the executive and legislative branches overlap.
The Westminster system or Westminster model is a democratic system of government that incorporates three arms of government - the executive, the legislature and an independent judiciary. It also refers to a parliamentary system—a series of procedures for operating a legislature—that was developed in England, which is now a constituent country within the United Kingdom. This term comes from the Palace of Westminster, the seat of the British Parliament. It is used, or was once used, in the national and subnational legislatures of most former colonies of the British Empire upon gaining self-government, beginning with the first of the Canadian provinces in 1848 and the six Australian colonies between 1855 and 1890. It is the form of government bequeathed to New Zealand and Singapore. However, some former colonies have since adopted either the presidential system or a hybrid system as their form of government.
A legislature is a deliberative assembly with the authority to make laws for a political entity such as a country or city. Legislatures form important parts of most governments; in the separation of powers model, they are often contrasted with the executive and judicial branches of government.
A veto is the power to unilaterally stop an official action, especially the enactment of legislation. A veto can be absolute, as for instance in the United Nations Security Council, whose permanent members can block any resolution, or it can be limited, as in the legislative process of the United States, where a two-thirds vote in both the House and Senate will override a presidential veto of legislation. A veto may give power only to stop changes, like the US legislative veto, or to also adopt them, like the legislative veto of the Indian President, which allows him to propose amendments to bills returned to Parliament for reconsideration.
The government of Puerto Rico is a republican form of government with separation of powers, subject to the jurisdiction and sovereignty of the United States. Article I of the Constitution of Puerto Rico defines the government and its political power and authority pursuant to U.S. Pub.L.82–447. Said law mandated the establishment of a local constitution due to Puerto Rico's political status as a commonwealth of the United States. Ultimately, the powers of the government of Puerto Rico are all delegated by Congress and lack full protection under the U.S. Constitution. Because of this, the head of state of Puerto Rico is the President of the United States.
A presidential system is a democratic and republican government in which a head of government leads an executive branch that is separate from the legislative branch. This head of government is in most cases also the head of state, which is called a president.
An executive order is a means of issuing federal directives in the United States, used by the president of the United States, that manages operations of the federal government. The legal or constitutional basis for executive orders has multiple sources. Article Two of the United States Constitution gives the president broad executive and enforcement authority to use their discretion to determine how to enforce the law or to otherwise manage the resources and staff of the executive branch. The ability to make such orders is also based on expressed or implied Acts of Congress that delegate to the president some degree of discretionary power.
The United States budget process is the framework used by Congress and the President of the United States to formulate and create the United States federal budget. The process was established by the Budget and Accounting Act of 1921, the Congressional Budget and Impoundment Control Act of 1974, and additional budget legislation.
A budget process refers to the process by which governments create and approve a budget, which is as follows:
A balanced budget amendment is a constitutional rule requiring that a state cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.
In the United States, a continuing resolution is a type of appropriations legislation. An appropriations bill is a bill that appropriates money to specific federal government departments, agencies, and programs. The money provides funding for operations, personnel, equipment, and activities. Regular appropriations bills are passed annually, with the funding they provide covering one fiscal year. The fiscal year is the accounting period of the federal government, which runs from October 1 to September 30 of the following year. When Congress and the president fail to agree on and pass one or more of the regular appropriations bills, a continuing resolution can be passed instead. A continuing resolution continues the pre-existing appropriations at the same levels as the previous fiscal year for a set amount of time. Continuing resolutions typically provide funding at a rate or formula based on the previous year's funding. The funding extends until a specific date or regular appropriations bills are passed, whichever comes first. There can be some changes to some of the accounts in a continuing resolution. The continuing resolution takes the form of a joint resolution, and may provide bridging funding for existing federal programs at current, reduced, or expanded levels.
Government shutdowns in the United States occur when there is a failure to pass funding legislation to finance the government for its next fiscal year or a temporary funding measure. Ever since a 1980 interpretation of the 1884 Antideficiency Act, a "lapse of appropriation" due to a political impasse on proposed appropriation bills requires that the US federal government curtail agency activities and services, close down non-essential operations, furlough non-essential workers, and only retain essential employees in departments covering the safety of human life or protection of property. Voluntary services may only be accepted when required for the safety of life or property. Shutdowns can also occur within and disrupt state, territorial, and local levels of government.
Rechtsstaat is a doctrine in continental European legal thinking, originating in German jurisprudence. It can be translated into English as "rule of law", alternatively "legal state", "state of law", "state of justice", or "state based on justice and integrity".
In politics, gridlock or deadlock or political stalemate refers to a situation when there is difficulty passing laws that satisfy the needs of the people. A government is gridlocked when the ratio between bills passed and the agenda of the legislature decreases. Laws may be considered as the supply and the legislative agenda as demand. Gridlock can occur when two legislative houses, or the executive branch and the legislature are controlled by different political parties, or otherwise cannot agree.
Budget theory is the academic study of political and social motivations behind government and civil society budgeting. Classic theorists in Public Budgeting include Henry Adams, William F. Willoughby, V. O. Key, Jr., and, more recently, Aaron Wildavsky. Notable recent theorists include Baumgartner and Jones--Frank R. Baumgartner and Bryan D. Jones, Richard Fenno, Allen Schick, Dennis Ippolito, Naomi Caiden, Irene Rubin, James D. Savage, Thomas Greitens and Gary Wamsley. Budget theory was a central topic during the Progressive Era and was much discussed in municipal bureaus and other academic and quasi-academic facilities of that time such as the nascent Brookings Institution.
The 2006 New Jersey state government shutdown was the first shutdown in the history of the U.S. state of New Jersey. The shutdown occurred after the New Jersey Legislature and Governor Jon Corzine failed to agree on a state budget by the constitutional deadline. Furthermore, Corzine and the Legislature clashed on the issue of raising the state sales tax to help balance budget. Exercising his constitutional powers as governor, Corzine ordered the shutdown as a means of pressuring the Legislature to pass a budget. The shutdown began at midnight on July 1, 2006, when Corzine called for an orderly shutdown of non-essential government services, which was followed by a second round of shutdowns three days later on July 4.
From October 1 to October 17, 2013, the United States federal government entered a shutdown and curtailed most routine operations because neither legislation appropriating funds for fiscal year 2014 nor a continuing resolution for the interim authorization of appropriations for fiscal year 2014 was enacted in time. Regular government operations resumed October 17 after an interim appropriations bill was signed into law.
The United States federal government shutdowns of 1995 and 1995–96 were the result of conflicts between Democratic President Bill Clinton and the Republican Congress over funding for education, the environment, and public health in the 1996 federal budget. The shutdowns lasted from November 14 through November 19, 1995, and from December 16, 1995, to January 6, 1996, for 5 and 21 days, respectively.
The United States federal government shutdown of 1990 occurred over the 1990 Columbus Day weekend, from Saturday, October 6 through Monday, October 8. The shutdown stemmed from the fact that a deficit reduction package negotiated by President George H. W. Bush contained tax increases, despite his campaign promise of "read my lips: no new taxes", leading to a revolt led by House Minority Whip Newt Gingrich that defeated the initial appropriations package. Because the shutdown occurred over a weekend, the effects of the shutdown were lessened, with the National Parks and the Smithsonian museums being the most visible closures. Around 2,800 workers were furloughed, with the government losing $2.57 million in lost revenue and back wages.
Government shutdowns occur when the government refuses passage of key bills, resulting in the cessation of some or all operations by the government.
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