Continuing Resolution: CNBC Explains

President Barack Obama arrives at the Capitol for a meeting with the House Republican Conference.
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President Barack Obama arrives at the Capitol for a meeting with the House Republican Conference.

Congress is in the midst of trying to agree on government spending for the rest of this year, plus a budget for next year. As is often the case, members are battling it out over what they think the government should spend its money on.

Meanwhile, spending reductions known as the sequester are going into effect, unless a deal can be worked out a deal to prevent those automatic cuts. Given the high stakes, President Barack Obama is trying to broker an agreement, called a continuing resolution, to fund the government for the rest of the year. So what is a continuing resolution? CNBC explains.

What is a continuing resolution?

A continuing resolution, or CR, is legislation in the form of a congressional joint resolution when a fiscal year is about to begin or has begun, to allow federal agencies and programs to continue to operate at current funding levels through a fiscal year.

A continuing resolution must be passed by both houses of Congress and signed into law by the president.

When does the fiscal year begin and end?

The federal government operates on a budget calendar from Oct. 1 through Sept. 30.

The president sends a proposed budget for the next fiscal year to Congress each February.

Congress divides the budget proposal into 12 separate appropriations bills that it must pass separately. The president must sign them before Oct. 1. to ensure that government continues operating.

If Congress doesn't pass the bills or the president doesn't sign them, nonessential government functions cease, as the legislative and executive branches are prevented by law from spending more money. That's why Congress will usually pass a CR—to prevent a government shutdown.

How much time does a continuing resolution normally cover?

If Congress is close to an agreement, a continuing resolution may be needed for only a few days. Sometimes the CR is extended many times. And sometimes, there is a longer-term CR covering the remainder of the fiscal year.

How common are continuing resolutions?

They've been around for more than 135 years and are pretty common. In fact, Congress has passed all its appropriation bills before the beginning of the fiscal year only four times since 1975, so all the other years required continuing resolutions.

But before 1980, even if a CR wasn't enacted, the government would often continue to operate under the assumption that Congress didn't actually intend to shut down the government. But that year, an attorney general's decision concluded that continued operations were unconstitutional, so CRs became more important.

Has the government ever shut down because Congress and the president couldn't agree on a continuing resolution?

Yes. Perhaps the most infamous example occurred in 1995-1996, when a standoff between President Bill Clinton and congressional Republicans led to two separate federal government shutdowns, totaling 26 days.

Although they didn't have enough votes to override Clinton's veto of the GOP budget, Republicans didn't submit a revised budget. Instead, they allowed the previously approved appropriations to expire, which caused parts of the government to shut down.

The exceptions included soldiers, border guards and doctors on duty. The second of the shutdowns, lasting three weeks, resulted in 284,000 (out of 1.9 million) federal employees being placed on furlough without pay.

Is there any advantage to continuing resolutions?

Standoffs between the president and Congress or between political parties can be highly dramatic and full of verbal posturing. The CR is like a circuit breaker, allowing the government to take its time making difficult fiscal decisions.

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