A
budget crisis is an informal name for a situation in which the legislative and the executive in a
presidential systemA presidential system is a system of government where an executive branch exists and presides separately from the legislature, to which it is not accountable and which cannot, in normal circumstances, dismiss it....
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 shutdownA government shutdown occurs when a government discontinues providing services that are not considered "essential." Typically, essential services include police, fire fighting, armed forces, utilities and corrections....
in which the government temporarily suspends non-essential services until a budget is passed.
Unlike parliamentary systems, where a
Loss of SupplyLoss of supply occurs where a government in a parliamentary democracy using the Westminster System or a system derived from it is denied a supply of treasury or exchequer funds, by whichever house or houses of parliament or head of state is constitutionally entitled to grant and deny supply. A...
would trigger resignations and new elections, a budget crisis can often lead to an extended standoff.
Discussion
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A
budget crisis is an informal name for a situation in which the legislative and the executive in a
presidential systemA presidential system is a system of government where an executive branch exists and presides separately from the legislature, to which it is not accountable and which cannot, in normal circumstances, dismiss it....
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 shutdownA government shutdown occurs when a government discontinues providing services that are not considered "essential." Typically, essential services include police, fire fighting, armed forces, utilities and corrections....
in which the government temporarily suspends non-essential services until a budget is passed.
Unlike parliamentary systems, where a
Loss of SupplyLoss of supply occurs where a government in a parliamentary democracy using the Westminster System or a system derived from it is denied a supply of treasury or exchequer funds, by whichever house or houses of parliament or head of state is constitutionally entitled to grant and deny supply. A...
would trigger resignations and new elections, a budget crisis can often lead to an extended standoff. At the federal level in the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, a crisis can often be averted by a
continuing resolutionA continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year...
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.
Examples
A particularly severe budget crisis occurred in the United States in November 1995, when the
House of RepresentativesThe United States House of Representatives, commonly referred to as the "House," is the lower house of the bicameral United States Congress, the upper house being the United States Senate. The composition and powers of the House and the Senate are established in Article One of the Constitution...
under
SpeakerThe Speaker of the United States House of Representatives is the presiding officer of the United States House of Representatives. The current Speaker is Nancy Pelosi, a Democrat representing California's 8th congressional district....
Newt GingrichNewton Leroy "Newt" Gingrich is an American politician who served as the Speaker of the United States House of Representatives from 1995 to 1999. In 1995, Time magazine selected him as the Person of the Year for his role in leading the Republican Revolution in the House, ending 40 years of the...
and the administration of
PresidentThe President of the United States is the head of state and head of government of the United States and is the highest political official in the United States by influence and recognition...
Bill ClintonWilliam Jefferson "Bill" Clinton was the 42nd President of the United States from 1993 to 2001. He was the third-youngest president; only Theodore Roosevelt and John F. Kennedy were younger when entering office...
quarreled over apportionments. The failure of the House and Clinton to pass a continuing budget resolution to apportion temporary funds forced a closure of most nonessential United States government offices for several weeks.