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The United States federal government shutdown of 1995 and 1996 was the result of conflicts between Democratic President Bill Clinton and the Congress over funding for Medicare, education, the environment, and public health in the 1996 federal budget. The government shut down after Clinton vetoed the spending bill the Republican Party-controlled Congress sent him. The federal government of the United States put non-essential government workers on furlough and suspended non-essential services from November 14 through November 19, 1995 and from December 16, 1995 to January 6, 1996, for a total of 28 days. The major players were President Clinton and Speaker of the U.S. House of Representatives Newt Gingrich.
When the previous fiscal year ended on September 30, 1995, the President and the Republican-controlled Congress had not passed a budget. A majority of Congress members and the House Speaker, Newt Gingrich, had promised to slow the rate of government spending; however, this conflicted with the President's objectives for education, the environment, Medicare, and public health. According to Clinton's autobiography, their differences resulted from differing estimates of economic growth, medical inflation, and anticipated revenues.
When Clinton refused to cut the budget in the way Republicans wanted, Gingrich threatened to refuse to raise the debt limit, which would have caused the United States Treasury to suspend funding other portions of the government to avoid putting the country in default.
Clinton said Republican amendments would strip the U.S. Treasury of its ability to dip into federal trust funds to avoid a borrowing crisis. Republican amendments would have limited appeals by death-row inmates, made it harder to issue health, safety and environmental regulations, and would have committed the President to a seven-year balanced budget. Clinton vetoed a second bill allowing the government to keep operating beyond the time when most spending authority expires. A GOP amendment opposed by Clinton would not only have increased Medicare Part B premiums, but it would also cancel a scheduled reduction. The Republicans held out for an increase in Medicare part B premiums in January 1996 to $53.50 a month. Clinton favored the then current law, which was to let the premium that seniors pay drop to $42.50.
Since a budget for the new fiscal year was not approved, on October 1 the entire federal government operated on a continuing resolution authorizing interim funding for departments until new budgets were approved. The continuing resolution was set to expire on November 13 at midnight, at which time non-essential government services were required to cease operations in order to prevent the country from defaulting on its debt. Congress passed a continuing resolution for funding and a bill to limit debt, which Clinton vetoed as he denounced them as "backdoor efforts" to cut the budget in a partisan manner.
On November 14, major portions of the federal government suspended operations. The Clinton administration later released figures detailing the costs of the shutdown, which included payments of approximately $400 million to furloughed federal employees who did not report to work.
The first budget shutdown concluded with Congress enacting a temporary spending bill, but the underlying disagreement between Gingrich and Clinton was not resolved, leading to the second shutdown.
A 2010 Congressional Research Service report summarized other details of the 1995-1996 government shutdowns, indicating the shutdown impacted all sectors of the economy. Health and welfare services for military veterans were curtailed; the Centers for Disease Control and Prevention stopped disease surveillance; new clinical research patients were not accepted at the National Institutes of Health; and toxic waste clean-up work at 609 sites was halted. Other impacts included: the closure of 368 National Park sites resulted in the loss of some seven million visitors; 200,000 applications for passports and 20,000 to 30,000 applications for visas by foreigners went unprocessed each day; U.S. tourism and airline industries incurred millions of dollars in losses; more than 20% of federal contracts, representing $3.7 billion in spending, were affected adversely.
Clinton's approval rating fell significantly during the shutdown. According to media commentators, this indicated that the general public blamed the President for the government shutdown. However, once it had ended his approval ratings rose to their highest since his election.
During the crisis, Gingrich made a complaint at a press breakfast that, during a flight to and from Yitzhak Rabin's funeral in Israel, Clinton had not taken the opportunity to talk about the budget and Gingrich had been directed to leave the plane via the rear door. The perception arose that the Republican stance on the budget was partly due to this "snub" by Clinton, and media coverage reflected this perception, including an editorial cartoon which depicted Gingrich as an infant throwing a temper tantrum. Opposing politicians used this opportunity to attack Gingrich's motives for the budget standoff. Later, the polls suggested that the event damaged Gingrich politically and he referred to his comments as the "single most avoidable mistake" as Speaker.
The shutdown also influenced the 1996 Presidential election. Bob Dole, the Senate Majority Leader, was running for President in 1996. Because of his need to campaign, Dole wanted to solve the budget crisis in January 1996 despite the willingness of other Republicans to continue the shutdown unless their demands were met. In particular, as Gingrich and Dole had been seen as potential rivals for the 1996 Presidential nomination, they had a tense working relationship. The shutdown has also been cited as having a role in Clinton's successful re-election in 1996.
According to Gingrich, positive impacts of the government shutdown included the balanced-budget deal in 1997 and the first four consecutive balanced budgets since the 1920s. In addition, he has stated that the first re-election of a Republican majority since 1928 was due in part to the Republican party's hardline on the budget. The Republican Party had a net loss of eight seats in the House in the 1996 elections but retained a 228-207 seat majority. In the Senate, Republicans gained two seats.