A Budget Reform Travelogue: Automatic Continuing Resolutions
“Sorry, we’re closed.” It’s a sign you might expect on a shop door, not plastered across federal agencies. Yet in December 2018, this became a reality for more than 800,000 government workers, forced to clock in without knowing when they’d see their next paycheck. As the shutdown dragged on, it didn’t just impact federal employees—it carved an $8 billion hole in the U.S. economy.
Government shutdowns are one of the most dramatic acts in the theater of American politics, forcing citizens to confront the importance of the budgeting process and the consequences of governance failure. This spectacle is also uniquely American: No other developed nation exposes its governmental dysfunction so publicly and disruptively.
The degree of polarization in American politics may make government shutdowns seem like an unavoidable political tactic, but a more immediate, pragmatic solution exists that many other countries have long since adopted: automatic continuing resolutions (ACRs).
To understand how things could be different, look no further than two U.S. allies in East Asia: Japan and South Korea. At first glance, these nations appear to have exceptionally stable governments. The World Bank’s Government Effectiveness Index ranks Japan and South Korea first and second, respectively, among countries with over 50 million inhabitants. Yet what’s intriguing is not their governments’ stability, but how they maintain it despite their budget processes that, in some aspects, rival the United States’ when in chaos.
Consider this: The U.S. Congress has only met its October 1 budget deadline three times in 50 years. But Japan and South Korea fare no better. Japan missed its March 2 deadline for 20 straight years from 1972 to 1992. And when South Korea passed its budget on time in 2014, it was such a rarity that The Wall Street Journal deemed it newsworthy. When it seemed a supplementary budget wouldn’t be passed by the deadline, the Japanese Diet “stopped the clock” on the floor to make it appear as if the budget had passed on time. In South Korea, before a 2014 law prohibited it, physical altercations over budget bills were not uncommon on the National Assembly floor.
Yet the public in these nations often seems oblivious to this fiscal rollercoaster. This perceived stability is made possible largely due to two factors. First, South Korea and Japan have set a legal deadline for the national budget one month before the start of the fiscal year, which provides a buffer for further negotiation if initial compromise attempts fail. Second, both countries have implemented legal mechanisms for temporary budgeting that effectively serve as ACRs. Article 54 of the South Korean Constitution allows for the seamless implementation of a provisional budget, which should be sized in line with the previous fiscal year’s allocations. This temporary measure remains in place until a new budget is passed, at which point all provisional expenditures are incorporated into the main budget. While Japan doesn’t implement an ACR at the national level, Article 179 and Article 218 of the Local Autonomy Act allow local government heads to approve provisional budgets independently, ensuring no gaps in funding at the local level.
South Korea’s national government has thus far narrowly avoided invoking its ACR mechanism, but not without nail-biting finishes. When the National Assembly misses the initial budget deadline, a month-long period of intense public scrutiny begins. Missing the initial budget deadline plunges the National Assembly into a 30-day gauntlet of public and media pressure, with budgets frequently sealed just as the clock ticks toward a new fiscal year. However, this doesn’t mean the ACR system is gathering dust, as both Japan and South Korea have frequently relied on these fiscal safeguards at the municipal level. A striking example unfolded in 2016 in Gyeonggi Province, South Korea’s most populous region, when a fierce dispute over a free child care program between the local government and council persisted beyond the buffer period and led to an automatic provisional budget being implemented for 28 days. This two-tiered strategy of early deadlines with public accountability nationally and ACRs standing ready at all levels forms a comprehensive defense against fiscal paralysis.
In the polarized landscape of American politics, simply moving up legal deadlines as practiced in Japan and South Korea may not be enough to prevent government shutdowns. However, adopting their second approach, ACRs, is an attainable solution that should be considered. Its simplicity is what makes the measure effective. In many countries, ACRs were not introduced through extensive research or advocacy; they were already embedded in the system. South Korea’s ACR system, for example, emerged as a byproduct of constitutional reforms in 1960 when the requirement for parliamentary approval of continuing resolutions was simply removed. Similarly, the United States might be able to integrate such a system without the need for complex policy design or extensive legislative overhaul, making it a more feasible option in the current political climate.
Moreover, ACRs already enjoy bipartisan support. The Prevent Government Shutdowns Act of 2023, sponsored by Sen. James Lankford (R-Okla.), drew support from across the political spectrum: 17 Republicans, 2 Democrats, and 1 Independent. It just didn’t gain enough traction to pass the Committee on Homeland Security and Governmental Affairs. The missing ingredient here is sufficient political will, and keeping this issue in the spotlight could very well be the catalyst needed to bring such legislation to the floor and secure its passage.
While some critics fear that ACRs might empower those seeking to shrink government size and potentially replace regular appropriations in some cases, East Asian experiences paint a different picture. ACRs create a restrictive environment where discretionary power becomes extremely nebulous, making it challenging to take voluntary administrative actions beyond maintaining essential operations. This creates a strong incentive to exit this state of limbo swiftly.
Legislators can also implement safeguards to prevent ACRs from being misused. The End Government Shutdowns Act, introduced by former Sen. Rob Portman (R-Ohio) in 2021, proposed a “tightening screw” approach: a 1 percent reduction in continuing appropriations after 120 days, with an additional 1 percent cut every 90 days thereafter. To enhance effectiveness, a series of penalties could also be triggered even before ACRs take effect when a timely budget resolution appears unlikely. This would create a buffer period similar to the earlier legal deadlines seen in East Asia, helping to introduce the pressure needed to reach a budget agreement in time.
These measures might not be able to solve the root cause of budget conflicts, but they would eliminate the most damaging symptom: unnecessary and severe economic repercussions caused by government shutdowns. The United States has an opportunity to implement a system that maintains governmental stability even in the face of political gridlock, just as Japan and South Korea have managed to shield their citizens from the fallout of budget disputes. Adopting ACRs could be the initial, viable, and crucial step to preserve economic vitality and stabilize America’s budget process for generations to come.