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Abudget crisis is a situation in which thelegislative and theexecutive in apresidential system deadlock and are unable to pass a budget. In presidential systems, thelegislature has the power to pass abudget, but the executive often has aveto 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 agovernment shutdown in which the government temporarily suspends non-essential services until a budget is passed.
Unlike parliamentary systems, where aloss 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 theUnited States, a crisis can often be averted by acontinuing 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 byparliament.
Politically, a budget crisis may develop in a situation of disagreement betweenstate andcivil society.Constitutional economics is a field ofeconomics andconstitutionalism which describes and analyzes the specific interrelationships between constitutional issues and functioning of the economy includingbudget 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 therule of law. Also, the availability of an effective court system, to be used by thecivil 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.
A particularly severe budget crisis occurred in the United States in November 1995, when theHouse of Representatives underSpeakerNewt Gingrich and the administration ofPresidentBill 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 aDemocratic President, Barack Obama. TheRepublican-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.
In the episode"Shutdown" ofThe West Wing, a budget crisis situation like the1995-1996 federal government shutdown was depicted whenJosiah Bartlet and Republican Speaker of the House Haffley disagree over budget cuts and shuts down the government for a number of days.