What happens if the 2025 CR expires without new funding?

1. Why a lapse in the 2025 CR produces immediate legal and operational effects that force agencies to stop spending

A CR’s expiration creates a statutory funding lapse: federal agencies are generally prohibited from obligating or expending funds after appropriations end, so offices begin orderly shutdown procedures for programs lacking statutory authority to operate. The Library of Congress overview and GAO explanations make plain that a funding gap changes agencies’ legal footing and triggers internal contingency plans and furloughs for non-excepted employees ^{[1] [2]}. Local governments and counties pushing Congress for final FY2026 appropriations underscore that uncertainty complicates state and local budgeting and service delivery, which rely on federal grants and predictable cash flows ^[4]. The immediate effect is not uniform: some activities legally continue, while many others stop pending resolution.

2. What “essential” services keep running and who gets furloughed when the CR lapses

During a lapse, national security, public safety, air traffic control, and certain health emergency responses continue because statutes or national security needs exempt them from furloughs; employees in those categories typically work without pay until appropriations resume ^[3]. Agencies identify “excepted” personnel required to perform activities that protect life and property, while non-excepted staff are furloughed. The U.S. Postal Service, TSA screening and air traffic controllers generally operate, but other operations such as permitting, grant processing, new loans, and many administrative services stop or slow, creating cascading effects for small businesses and disaster relief recipients ^{[3] [5]}. The uneven continuation of services creates practical disruptions even where legally some benefits like Social Security continue, because new enrollments and verifications can be delayed.

3. The economic and ripple effects: why shutdowns matter beyond the federal workforce

A lapse in funding can have measurable macroeconomic impacts and localized consequences because federal shutdowns interrupt payments, contracting, and project starts, stalling economic activity and complicating state and local budgets. Reporting and analysis tied to the 2025 shutdown highlight furloughs of nearly a million employees and knock-on disruptions to air travel and food aid programs, with forecasters expecting a sharp near-term drag on GDP growth for the quarter ^{[6] [7]}. Beyond headline furlough numbers, small businesses and grantees see revenue and cash-flow interruptions; federal permit delays hold up construction and transport projects; and consumer confidence can suffer. Counties and municipalities specifically warn that prolonged uncertainty undermines efficient local budgeting and program delivery ^[4].

4. Political dynamics and bargaining: how congressional standoffs shape outcomes

Congress often uses short-term CRs as leverage in broader budget negotiations, so the risk of lapse is intertwined with partisan bargaining. Recent reporting shows political disputes can extend a shutdown, with offers to reopen the government tied to unrelated policy priorities. The 2025 dispute included proposals linking reopening to tax-credit extensions for Affordable Care Act plans, which Republicans resisted until the government was reopened — illustrating how policy bartering can prolong funding gaps and amplify impacts ^[7]. Political incentives cut both ways: some lawmakers push for full-year appropriations to provide certainty to local governments, while others prefer temporary measures to negotiate larger policy goals, meaning a CR expiry is as much a political outcome as a procedural one ^[4].

5. Variations in analysis and the sources of disagreement about impacts

Analysts and official descriptions agree on the legal mechanics of a lapse, but they differ on scope and secondary impacts, often reflecting the vantage point of the analyst. GAO and Congressional guidance emphasize legal constraints and operational procedures ^[2], while reporting focused on the 2025 shutdown details the human and economic consequences — furloughs, travel disruptions, and proposed political fixes ^{[6] [7]}. Local government groups stress budgeting uncertainty and service-level risks ^[4]. Discrepancies typically reflect whether the emphasis is legal mechanics, economic modeling, or political strategy; combining these perspectives gives the clearest picture of both immediate agency effects and downstream societal costs.

6. Options to avert or mitigate a lapse and what each approach would mean in practice

Options to avoid a shutdown include passing full-year appropriations, a short-term CR extension, or targeted funding measures; each has trade-offs. A full-year appropriations package eliminates repeated stop-gap uncertainty but requires resolving policy and spending disputes. Short-term CRs buy time but perpetuate uncertainty for states and agencies ^{[4] [8]}. Targeted emergency funding can keep critical programs running but leaves many activities vulnerable. In 2025, political proposals to trade policy concessions for reopening the government illustrate how mitigation frequently depends on negotiation outcomes rather than purely managerial fixes ^[7]. The practical upshot: preventing a lapse requires congressional action, and the choice of instrument shapes both certainty and policy outcomes ^[5].