Rethinking Disaster Relief in America

November 17, 2025.Reading time 17 minutes.

Why States Can Absorb More—and Why the Federal Government Should Become a True Backstop

A collaboration between Lewis McLain & AI

Introduction

For decades, disaster relief in America has operated under a familiar assumption: states cannot reliably handle the financial shock of natural disasters, so the Federal Emergency Management Agency (FEMA) must stand ready as the first and primary payer whenever storms, fires, floods, or earthquakes strike. This model dates back to 1979, when President Jimmy Carter created FEMA to consolidate civil defense and disaster-response functions into a single federal agency. After the attacks of September 11th, FEMA was folded into the Department of Homeland Security in 2003, broadening its responsibilities and cementing its role as the nation’s manager of both large and routine emergencies.

Yet the fiscal and operational landscape has changed sharply since those foundational decisions. States today maintain much stronger budgets, far deeper rainy-day reserves, more diversified revenue sources, and more mature emergency-management agencies than they had in the late twentieth century. Meanwhile, FEMA itself has grown increasingly bureaucratic, with administrative costs rising from around 9 percent of disaster spending in the early 1990s to roughly 18 percent between 1989 and 2011, and often exceeding its own internal cost targets. The agency has become indispensable in catastrophic cases but inefficient and slow in everyday ones.

This white paper examines whether FEMA must continue to function as a first-dollar payer, or whether a more modern system would assign routine responsibilities to states and reserve federal involvement for extreme, budget-threatening disasters. What emerges is a surprising conclusion backed by hard data: most states can, in fact, absorb the disaster costs FEMA typically covers, which ranged from 0.41 percent to 5.58 percent of state spending in the 2022–2024 period, with a national average of 1.19 percent. At the same time, states have median rainy-day reserves equal to 13–14 percent of their general-fund spending, and many maintain reserves far larger than that.

The implication is profound. FEMA is essential for rare catastrophic events—but its role as the payer of routine disaster bills imposes high overhead and creates slow, inefficient recovery cycles. This paper lays out a new model in which states pay their own ordinary disaster costs up to a clear percentage of their budgets, and the federal government becomes a streamlined, formula-driven backstop above that threshold. The goal is to reduce federal bureaucracy, preserve national capacity for massive events, and match responsibilities to the actual fiscal capabilities of states today.

I. FEMA’s Role and the Growth of Federal Disaster Spending

When FEMA was created in 1979, the federal government consolidated more than 100 disparate disaster- and civil-defense programs. Its newer home in the Department of Homeland Security expanded its remit, placing it at the center of national preparedness, mitigation, response, and recovery. Through its Disaster Relief Fund (DRF), FEMA has spent approximately $347 billion (in 2022 dollars) over the past three decades, with more than half of that total coming after 2005 as disasters increased in frequency and severity.

Despite the DRF’s historic role in major recovery efforts—Hurricanes Katrina, Sandy, Harvey, and Maria being among the most notable—the agency has become known for slow reimbursements, multi-year project closeouts, and a documentation system so complex that many counties wait months or even years to recover funds already expended. A single North Carolina county spent more on debris removal after Hurricane Helene than its entire annual budget and waited over a year without full reimbursement, a pattern familiar to many local governments.

Yet reliance on FEMA is not uniform across the country. Some states receive enormous federal aid in catastrophic years; others receive relatively little even across multiple years. It is only by understanding this distribution that a reformed model can be imagined.

II. How Dependent Are States on FEMA? Quantifying the Financial Exposure

The best picture of ongoing reliance comes from the 2022–2024 FEMA obligations dataset, which compared how much FEMA spent in each state to that state’s total expenditures. The findings provide a clear map of how deeply—or how little—states depend on the agency in routine years.

A. National Average

Across all fifty states, FEMA obligations equaled only 1.19 percent of total state spending. This means that for the average state, FEMA’s typical-year disaster role is fiscally small—a burden that could, in principle, be absorbed using normal budget tools without major restructuring.

B. Most FEMA-dependent states (recent years)

Though the national average is small, some states exhibit higher FEMA reliance:

Louisiana: 5.58% of total state spending
Florida: 4.39%
Montana: 3.91%
New York: 2.44%
Vermont: 2.14%
Virginia: 1.72%
Alaska: 1.71%
Rhode Island: 1.70%
Hawaii: 1.60%
Colorado: 1.58%

Importantly, even in these “higher exposure” states, the FEMA share of total expenditures remains well below the rainy-day reserves most states currently hold.

C. Least FEMA-dependent states

At the other end:

Nevada: 0.41% of state spending
Wyoming: 0.48%
Oklahoma: 0.58%

For these states, FEMA’s role is nearly negligible as a share of governmental revenue.

D. The catastrophic-year exception

These routine-year percentages mask an important truth: when disasters like Katrina or major multi-storm years hit, federal aid can reach staggering proportions. Pew’s long-term analysis showed that Louisiana’s federal disaster aid approached 19 percent of its general-fund spending in one extreme year. Such rare events are the moments where federal backstop capacity is crucial.

The real message in the data is this: states can handle the predictable; they cannot self-insure the catastrophic.

III. States’ Rainy-Day Funds: A Strong Foundation for a New Model

As federal disaster costs have grown, so too has state fiscal strength. Over the last decade, state rainy-day funds—formally called Budget Stabilization Funds—have reached historic highs.

Total U.S. state rainy-day funds (FY 2024): $158 billion
Total general-fund spending (FY 2024): $1.29 trillion
Median rainy-day balance: ~13–14 percent of general-fund expenditures
Some states far exceed that median:
- Texas holds reserves equal to ~18 percent of annual general-fund spending.
- Wyoming holds reserves equal to nearly 70 percent.
- California’s reserve system in 2022 accounted for nearly half of all rainy-day dollars nationwide.

These figures dwarf the routine-year FEMA exposure numbers. For example, Florida’s FEMA dependence at 4.39 percent of spending is overshadowed by its double-digit rainy-day reserves. Montana’s 3.91 percent figure fits comfortably against the national 13–14 percent median. Even Louisiana, at 5.58 percent, can theoretically cover such costs with existing reserves in a typical year.

This means that the primary fiscal justification for FEMA as a first-dollar payer has largely evaporated; states now have mature financial defenses that simply did not exist decades ago.

IV. FEMA’s Bureaucracy Cost: The Inefficient Load-Bearing Wall

The financial problem with FEMA is not simply the cost of disaster payments—it is the cost of administering them. GAO’s multi-decade analyses show a clear historical trend:

In the early 1990s, FEMA’s administrative costs averaged about 9 percent of disaster spending.
From 1989 to 2011, the average nearly doubled to around 18 percent.
Many small- and medium-scale disasters exceeded FEMA’s own internal administrative-cost targets—which ranged from 8 percent to 20 percent depending on disaster size.

These numbers mean that for every $1 billion in disaster assistance, taxpayers may be funding $120 million to $180 million in federal overhead.

This inefficiency is not due solely to waste; it is structural. The current FEMA reimbursement system:

requires extensive documentation for thousands of separate projects;
demands eligibility reviews, re-reviews, appeals, closeouts, and audits;
relies on multi-year case management;
burdens counties that must front millions of dollars;
often requires several rounds of resubmission for small technical errors.

The system is built for granular reimbursement, not for speed, clarity, or administrative efficiency.

Any serious reform must begin with this reality: FEMA’s overhead is too high for routine work but entirely justified for rare catastrophic events.

V. A New Structure: State-First Responsibility with a Federal Safety Net Above a Threshold

The empirical question—whether states can absorb FEMA’s typical yearly costs—has been answered by the data: yes, they can. What states cannot absorb are the extreme, once-in-a-generation events that create fiscal shocks exceeding 10–20 percent of a budget year.

A modernized system should reflect this difference.

A. States handle their own disaster costs up to a fixed percentage of their budget

A clear and uniform rule could be adopted nationwide:

A state must cover disaster-related costs up to 3 percent of its prior-year general-fund expenditures before federal aid begins.

This threshold is intentionally set:

above the national FEMA-reliance average (1.19%);
above most moderate-exposure states’ reliance;
below the high-exposure states’ routine-year experience (3.91–5.58%);
and well within median rainy-day capacity.

This requirement is neither punitive nor unrealistic. It simply aligns responsibility with the fiscal strength states have already built.

B. States rely on rainy-day reserves and disaster accounts first

States already use a mix of rainy-day funds, disaster funds, supplemental appropriations, and budget flexibility to manage emergencies. In a reformed model, these existing tools would be applied in a structured, predictable sequence—not in political improvisation after the fact.

C. The federal government acts only as a high-threshold backstop

Once a state’s disaster costs exceed the 3 percent trigger, the federal government intervenes. For truly catastrophic years—costs exceeding 10 or 15 percent of state general-fund spending—the federal share could increase to 90 or even 95 percent.

This preserves national solidarity for the events no state can manage alone, while eliminating unnecessary federal entanglement in predictable, lower-level disasters.

D. Federal overhead is reduced dramatically

Under the backstop model, the federal government would only process a small number of large, formula-based payments rather than tens of thousands of reimbursement claims. This change alone could reduce federal overhead from the current 13–18 percent range to 3–5 percent, freeing substantial tax dollars for actual recovery work.

VI. Why a State-First, Federal-Backstop Model Is the Right Path Forward

A system in which states handle ordinary disasters and the federal government protects against the extraordinary aligns perfectly with the fiscal and operational realities of the 2020s.

For states, this model restores autonomy and incentivizes better land-use planning, improved mitigation, and more responsible financial preparation. It also removes the long bureaucratic delays associated with FEMA reimbursements, which often burden local governments more than the disasters themselves.

For the federal government, the model offers clarity and efficiency. Instead of struggling to administer thousands of granular projects—including small-dollar repairs that should never have been federalized—the national government can focus its resources on high-impact events, surge capacity, interstate coordination, and macro-level resilience.

For taxpayers, the new model promises a better mix of value and protection. Money that once funded administrative overhead can instead flow to recovery. At the same time, Americans maintain confidence that when the unimaginable occurs—a Katrina, a California megaquake, a Category 5 storm impacting two states simultaneously—the nation remains ready.

Conclusion

The debate around eliminating FEMA has often been framed as a choice between total federal withdrawal and the continuation of an increasingly bureaucratic status quo. The data, however, points to a more balanced and responsible path. Most states rely on FEMA for only 1 to 2 percent of their total spending in typical disaster years. Even the states with higher exposure—Louisiana at 5.58 percent, Florida at 4.39 percent, and Montana at 3.91 percent—retain rainy-day reserves far larger than these amounts. With median rainy-day balances now reaching 13 to 14 percent of general-fund spending, the financial capacity to absorb routine disaster costs already exists at the state level.

At the same time, the extreme years—the years where total federal disaster aid climbs into double digits as a share of a state’s budget—prove unequivocally that a national safety net remains essential. No state can self-fund a shock approaching one-fifth of its general fund, as Louisiana once experienced. In those moments, the federal government must still be the guardian of last resort.

The most effective reform lies in between: eliminate FEMA’s role as the payer of first resort and reshape the federal role into a streamlined backstop triggered only when a state’s disaster costs exceed a fixed percentage of its budget—3 percent being the most logical threshold. This shift would dramatically reduce federal overhead, accelerate recovery timelines, clarify responsibilities, reward mitigation, and ensure that the nation’s full strength remains available when true catastrophe strikes.

In short, the future of American disaster management should not be FEMA everywhere or FEMA nowhere. It should be FEMA where it matters most, and a state-first model where it does not. This approach honors both fiscal responsibility and national solidarity, and it reflects the actual capabilities of states today—capabilities strong enough to shoulder their own burdens, and a nation still strong enough to stand with them when those burdens become too great.

The One-Page Fix That Costs a Thousand Pages to Execute:

November 17, 2025.Reading time 14 minutes.

A collaboration between Lewis McLain & AI

Why Good Intentions Make Bad Laws When Enforcement Is an Afterthought

Every society faces moments of shock: a fire that traps a family behind burglar bars, a child injured by a defective product, a tragedy on a highway that could have been prevented. In the aftermath, the public demands that leaders take action. Elected officials, caught between moral responsibility and political pressure, reach for the fastest tool available — a new law. Something must be done. And too often, that “something” becomes a one-page ordinance drafted in the heat of the moment, written more out of outrage than out of careful design.

The universal political problem is not that lawmakers lack compassion or sincerity. The problem is the widespread illusion that a simple rule on paper automatically translates into a solution in real life. The moment we shift from the writing of a law to the carrying out of it, the entire landscape changes. Costs appear. Complexity expands. Enforcement becomes slow, difficult, and expensive. The people whom the rule was meant to protect often end up carrying financial or administrative burdens that no one anticipated. And the government itself becomes vulnerable when it fails to follow through.

The Fire, the Burglar Bars, and the One-Page Rule

A tragic fire in a home offers a perfect example. Smoke fills a hallway, flames rise, and a family cannot escape because the house has fixed burglar bars welded into place decades earlier. The heartbreak is immediate and raw. City leaders respond swiftly. Within days, a simple new ordinance is passed requiring that all burglar bars have an interior quick-release mechanism. The rule is one sentence long. It seems humane, obvious, and urgent.

But the unseen consequences emerge almost immediately. Many older homes have bars so firmly welded that retrofitting them requires grinding, re-cropping, and re-anchoring — a major metalworking project that costs far more than homeowners expect. Thousands of residences suddenly need professional work, and installation prices spike because demand overwhelms supply. Inspectors who were already stretched thin must now visit property after property, unsure whether they should enforce the rule retroactively, gradually, or with some form of grace period. Elderly residents, fixed-income families, and absentee landlords all face the same problem: they cannot comply quickly, and in many cases, they cannot afford to comply at all.

What began as a compassionate one-page fix turns into a months- or years-long administrative and enforcement burden. The good intention remains, but the machinery required to turn that intention into reality simply was not considered.

And this same pattern repeats itself in city halls across the country.

Other Cases Where a Simple Rule Created Complex Enforcement

Consider smoke detector mandates, which often follow a fatal fire. The ordinance usually states that all homes must have working smoke detectors in certain locations. It sounds like a straightforward safety measure. But in older houses without existing wiring, even a basic battery-powered unit may not be enough to meet the fire code. Landlords must retrofit dozens of apartments at their own expense, often discovering that chirping detectors lead tenants to remove the batteries, leaving the owner liable. Inspectors, already responsible for restaurant checks, rental registrations, and fire lane reviews, suddenly face a tripled workload just to verify compliance. A rule that looked effortless on paper becomes a citywide logistical challenge.

A similar situation arises with ADA-compliant handicap parking spaces at older businesses. A short ordinance may require every business to provide at least one properly sized and striped space. On paper, it is a hallmark of accessibility and fairness. But many small storefronts built decades ago have parking lots too narrow to meet the required dimensions without removing all other usable parking. Simple striping becomes an expensive project involving repaving, regrading, and reconfiguring the entire lot. Small business owners, already struggling with rent and utilities, find themselves facing thousands of dollars in unplanned costs. The city, meanwhile, must process waves of variance requests, appeals, and inspections — none of which were contemplated in the original vote.

Short-term rental regulations — the Airbnbs and VRBOs of the world — also illustrate this point well. Cities often pass two-page ordinances requiring hosts to register, meet safety standards, and pay a modest fee. But enforcement becomes a technological and legal minefield. Identifying unregistered properties requires ongoing web-scraping, sophisticated tracking tools, and interdepartmental coordination. Noise complaints surge. Neighborhoods push back. Large corporate rental companies hire attorneys to challenge citations. What seemed like a simple licensing rule becomes a multi-year enforcement project that consumes far more staff time than anticipated.

Plastic bag bans follow the same pattern. A half-page ordinance prohibits thin plastic bags at retail counters. It appears clean and elegant. But stores quickly switch to thicker bags that still count as plastic, just technically meet the law. Small retailers struggle with the cost of paper or reusable bags. Inspectors must decide which kinds of plastic sleeves, produce bags, and delivery packaging are exempt — a process that often requires issuing clarifying memos and amendments. A symbolic environmental gesture becomes a regulatory tangle.

Even texting-while-driving laws, which seem universally logical, reveal the same problem. Officers must determine whether a driver was texting, dialing, using GPS, or simply holding the phone. Proving intent becomes a courtroom battle. Defense attorneys argue privacy issues, argue that GPS use is protected, or claim the driver was simply moving the phone out of the sun. The law, though well-intentioned, is far easier to write than to enforce fairly.

Fire sprinkler retrofit mandates in older apartment complexes are another classic case. After a tragic fire, a city requires that all older buildings install sprinklers. But the cost per unit can run between six and ten thousand dollars, a financial shock that owners cannot absorb without raising rent sharply or closing the property. Inspectors cannot keep up with the inspections, owners beg for extensions, and cities often quietly delay or soften the rule because the housing market cannot handle the immediate impact. Again, the intent is noble; the implementation is overwhelming.

Even drought-triggered lawn-watering restrictions illustrate the same dynamic. A simple rule allows watering only on certain days. But enforcing the rule requires inspectors driving around at dawn or dusk, when sprinklers actually run. Complex irrigation systems malfunction. Elderly residents forget their watering day and unintentionally violate the rule. Neighbors call code enforcement on each other. What seems like a routine drought-management law turns into a delicate exercise in neighborhood diplomacy and enforcement discretion.

The Biggest Cost of All: When the City Gets Sued for Not Enforcing Its Own Laws

Beyond installation costs, administrative burdens, and inspector workloads lies an even greater consequence — one so significant that cities often hesitate to speak of it openly. When a city passes a law and then fails to monitor or enforce it, the government can find itself in the middle of lawsuits alleging negligence, indifference, or failure to uphold its own safety standards.

Courts sometimes treat a safety ordinance as a kind of promise. When a city requires smoke detectors, quick-release bars, ADA access, sprinkler systems, or short-term rental safety checks, it creates a public expectation that these rules will not merely exist on paper but will be enforced. When tragedy occurs — a fire in a unit the city never inspected, a crime at a short-term rental the city never registered, an accident in a business that never complied with parking mandates — attorneys do not hesitate to include the city in the lawsuit.

The legal cost of defending these cases can dwarf the cost of implementing the rule in the first place. Years of depositions, expert testimony, and appeals drain city budgets. Settlements are quietly negotiated because the cost of fighting is even higher. And the political consequences are severe. Newspaper headlines do not say, “City Struggled With Limited Staff Resources.” They say, “City Failed to Enforce Safety Law Before Deadly Fire.” Even when enforcement lapses are rooted in budget constraints or administrative overload, the public sees only that the city wrote a rule it did not uphold.

This is the deepest irony: the cost of not enforcing an ordinance can be higher — sometimes exponentially higher — than the cost of enforcing it.

Why Governments Keep Repeating This Mistake

This dynamic repeats itself across time and geography. The reason is simple. Writing a law is fast; enforcing it is slow. Writing a law is cheap; enforcing it is expensive. Writing a law is politically satisfying; enforcing a law is administratively difficult. And writing a law happens at the height of emotion, when a tragedy is fresh and the public clamors for action, whereas enforcement occurs quietly, day after day, long after public attention has moved on.

Legislators legislate. Administrators administer. Budgets lag. And the machinery required to implement a rule rarely matches the emotion that produced it. The one-page fix becomes a long-term burden, often borne by people who were never considered in the original debate.

What Good Governance Would Require

A better, healthier way of governing would pair every urgent rule with a sober and realistic analysis of what it will take to make that rule real. That means identifying who will carry out the inspections, how long the work will take, what it will cost residents and businesses, how the city will fund the enforcement, how exceptions will be handled, and how the rule will be revisited after the initial surge of compliance. Good policy demands a slower, steadier rhythm than the rapid political impulse that produces these one-page solutions. It requires clarity, patience, and a willingness to acknowledge complexity.

The Universal Lesson

Whether the issue is burglar bars, smoke detectors, ADA parking, short-term rentals, sprinkler systems, plastic bags, or drought-time watering schedules, the pattern is the same. The simpler the law looks on paper, the more complicated it becomes in the real world. The true work of government is not the drafting of a sentence but the building of the machinery behind that sentence.

Until policymakers take the time to consider the cost, the complexity, the staff workload, and the legal exposure that follow every new ordinance, we will continue to pass rules that feel good in the moment yet falter when confronted with the realities of implementation. A tragedy may demand action, but action must be grounded in humility — the humility to recognize that real-world solutions require more than good intentions. They require the discipline to think through the entire life cycle of a law, from its birth in crisis to its long-term enforcement in the quiet, everyday life of a city.

When a Reopening Bill Isn’t Really a Reopening Bill (Updated Nov 10th)

November 9, 2025.Reading time 11 minutes.

A collaboration between Lewis McLain & AI

I. The Headlines vs. the Fine Print

When the Shutdown Fairness Act (S. 3012) first appeared on news tickers, it sounded like the long-awaited solution to the nation’s longest government shutdown on record. “Senate Moves to Restore Federal Pay,” the headlines proclaimed, and for a moment, optimism broke through weeks of gridlock. Markets climbed, pundits nodded, and weary federal employees allowed themselves a cautious breath of hope.

But headlines have a way of simplifying what the legislative text complicates. Once the fine print emerged, it became clear: this bill didn’t reopen the government — it merely papered over the pain.

II. What the Bill Actually Does

The Shutdown Fairness Act, introduced in October 2025, provides appropriations for pay and allowances of “excepted employees” — those federal workers already required to report to duty during a lapse in funding (TSA agents, border patrol, air traffic controllers, etc.).

It also extends coverage to certain contractors who directly support those workers, a gesture meant to include the unseen workforce that keeps critical operations running during crises. On paper, that’s progress. But beneath that headline, several key limitations emerge:

It doesn’t fund the government. Agencies remain closed, programs remain suspended, and the rest of the workforce remains furloughed.
It transfers discretion to executive branch appointees — the bill empowers each agency head to determine who qualifies as “excepted,” effectively giving the President sweeping authority to decide who gets paid and who doesn’t.
It blurs accountability. By easing the pressure on both parties while keeping the government officially shut, the bill risks normalizing shutdowns as a recurring political tactic rather than a national emergency.

In short, it treats the symptoms without curing the disease.

III. The Politics Behind the Vote

On November 8, 2025, the Senate voted 53 to 43 to advance the bill — seven votes short of the 60 needed to overcome the filibuster.

Republicans uniformly supported it, framing the legislation as an act of compassion for unpaid federal workers. Democrats, however, largely opposed it, citing both structural and ethical concerns. They argued that the bill gave too much unilateral power to the executive branch and failed to address the broader shutdown itself.

Still, a few cracks appeared in the Democratic wall.

John Fetterman (D-PA), who had already sided with Republicans in calling for a “clean reopening,” stayed consistent with his prior votes.
Raphael Warnock and Jon Ossoff (both D-GA) and Ben Ray Luján (D-NM) broke ranks for the first time, voting yes. Their explanation: the prolonged hardship on federal workers and contractors in their states had become intolerable.

These defections didn’t change the outcome, but they did change the temperature. For the first time in over a month, the Senate’s political map showed visible strain.

IV. Why the Bill Fell Short

The problem wasn’t the intention; it was the architecture.

While restoring pay for “excepted employees” sounds reasonable, the bill’s narrow scope meant that most of the government would remain frozen. Museums would stay dark. Grant reviews would stay paused. Routine operations — from the EPA to housing vouchers — would stay idle.

Worse, by selectively paying some workers, the bill threatened to dull the political urgency that historically forces compromise. If the pain of a shutdown is eased but not ended, there’s less incentive for lawmakers to fix the underlying appropriations impasse. In effect, it could have turned a temporary failure into a tolerable new normal.

That’s why Democrats — even many moderate ones — balked. Supporting the bill might have looked compassionate, but it risked legitimizing shutdowns as a viable governing tool.

V. The Market Misread

Wall Street, as usual, traded first and read later.

Stock futures jumped after headlines announced “Senate Votes to Restore Federal Pay.” The S&P 500 futures rose about 0.5%, the Nasdaq 0.7%, and the Dow about 135 points — all on the hope that this meant a full reopening was near.

But the fine print cooled that optimism. Analysts realized the Shutdown Fairness Act wasn’t a reopening bill at all; it was a partial relief measure. By Sunday evening, futures flattened, and analysts described the move as “hope without foundation.”

Markets crave certainty, not theater — and the Senate had offered more of the latter than the former.

VI. What This Reveals About Governance

The deeper story isn’t just about one bill. It’s about how governing by crisis has become the new normal. Each year, shutdowns are handled less like emergencies and more like bargaining tools. And each time Congress tries to mitigate their effects without fixing their cause, the precedent hardens.

The Shutdown Fairness Act offered temporary fairness — but at the cost of long-term accountability. It tried to make a shutdown less painful instead of making one less possible.

VII. A Final Thought

Sometimes the measure of good governance is not what’s easy to pass, but what’s honest to reject. Senators who voted no weren’t denying workers their pay; they were resisting a bill that risked institutionalizing dysfunction.

The Shutdown Fairness Act was born of good intentions and bad timing. It addressed hunger without restoring work, anxiety without restoring trust.

The government doesn’t need another half-measure; it needs a full reopening and a return to the quiet, unglamorous work of budgeting like adults. Until then, the shutdown may end, but the crisis of governance continues.

Appendix: A Realistic but Positive Scenario for Full Reopening

If this standoff ultimately leads to a genuine reopening, the most realistic yet hopeful path looks something like this:

1. A Face-Saving Compromise That Works

Both sides inch toward a short-term continuing resolution (45–60 days) to reopen government fully. Republicans agree to move the health-insurance subsidy debate to a separate track, while Democrats accept temporary funding without policy riders. Each side can claim victory: Republicans restore normal operations; Democrats protect core programs.

2. Confidence and Functionality Return

Federal employees get their paychecks and dignity back.
Markets rebound as predictability returns.
Public sentiment steadies as Washington finally behaves like Washington used to — imperfect but functional.

3. Structural Reform Momentum

In the aftermath, moderates on both sides revive shutdown-prevention proposals:

Automatic continuing resolutions to prevent future lapses.
No budget, no pay for lawmakers who fail to act.
Transparency rules requiring agencies to publish contingency plans.

These modest but meaningful steps make shutdowns rarer and shorter.

4. Economic Recovery and Civic Reset

As contracts resume and delayed data flows again, the economy catches its breath. Federal projects restart, local grants flow, and household spending normalizes.
The political temperature cools just enough for leaders to reconsider governing as service rather than spectacle.

5. The Quiet Victory

A reopened government, a calmer public, and a Congress reminded of its duty — that’s the attainable, not utopian, win.

The crisis will have hurt, but it will also have humbled.

If lawmakers learn from it, the Shutdown Fairness Act might ultimately be remembered not for what it failed to do, but for what it forced others to finally fix.

Update — November 10, 2025

In the days since this essay was written, the Senate advanced a continuing resolution (CR) by a 60–40 vote — the first credible step toward ending the historic shutdown. The measure would fund the government through January 30, 2026, while granting full-year appropriations for a few essential agencies such as Veterans Affairs and Agriculture. In return, Republicans agreed to schedule a separate December vote on extending the Affordable Care Act subsidies — the core Democratic demand that helped trigger the impasse in the first place.

For now, this deal signals relief: agencies could reopen, workers could return, and markets have already priced in a modest rebound. But it’s still a temporary armistice, not a peace treaty. The same structural fragilities remain — partisan brinkmanship, dependence on continuing resolutions, and a budgeting system that governs by countdown clock.

If the CR passes both chambers and is signed, the lights will come back on in Washington — but they may flicker again soon. By early 2026, Congress will once more face another funding cliff, another negotiation, and another test of will.

In other words, this crisis may be ending — but the next one is already on the calendar.

Government Shutdowns: Crisis or Farce?

September 29, 2025.Reading time 12 minutes.

A collaboration between Lewis McLain & AI

From 1976 to Today

Every few years, Americans brace for news of a looming federal government shutdown. Media coverage describes them as looming catastrophes, filled with images of barricaded monuments, national parks closed, and frustrated travelers at airports. Politicians on both sides amplify the tension, using the threat of shutdown as leverage in their broader battles. But step back from the noise, and a more complicated picture emerges. Shutdowns are disruptive, yes—but much of the panic they generate stems from a broader financial reality: many workers, public and private alike, simply don’t have enough savings to weather even a temporary pause in pay.

The Mechanics of a Shutdown

By law, when Congress fails to pass appropriations, agencies must cease operations that are not legally “excepted” for safety or essential services. Furloughed employees are ordered home, barred from working even if they wish to. Others—air traffic controllers, Border Patrol agents, TSA officers—must continue working without pay until the shutdown ends. Since the Government Employee Fair Treatment Act of 2019, federal workers are guaranteed back pay once the government reopens. Contractors, however, are not: a janitor or cafeteria worker may permanently lose income for the weeks the government was closed.

The Record Since 1976

The modern shutdown era began after a 1976 Justice Department opinion forced agencies to halt during funding gaps. Since then, there have been 10 shutdowns where furloughs actually occurred:

In the early 1980s, several shutdowns lasted 1–3 days each over spending disputes.
In 1986, there was a 1-day lapse.
In 1990, a 3-day shutdown unfolded during deficit reduction talks.
In late 1995, the government closed for 5 days, followed soon after by a 21-day shutdown into early 1996.
In 2013, the government shut down for 16 days over the Affordable Care Act.
In January 2018, a 3-day lapse occurred, followed by a few-hour closure in February 2018.
From December 2018 to January 2019, the U.S. endured its longest shutdown, lasting 34–35 days over border wall funding.

The averages

10 shutdowns since 1976 with furloughs.
~87 total days lost to shutdowns.
Average length: about 8–9 days each.
Average spacing: roughly 51 months between shutdowns or just over 4 years.
Longest: 2018–19 (35 days). Second-longest: 1995–96 (21 days).

The Savings Problem

Here lies the heart of the issue. For all the headlines about missed paychecks, the true problem is one shared across the American economy: too many households have little or no emergency savings. Federal Reserve surveys consistently show that a significant share of Americans struggle to cover even a $400 unexpected bill.

To put this in perspective, the average federal worker earns about $75,000 per year, or roughly $6,250 per month before taxes. If an employee had just one month’s salary set aside, most shutdowns—lasting a week or two—would be a financial nuisance rather than a personal crisis. Yet many federal workers, like many in the private sector, do not keep that cushion. The result is that a temporary disruption is felt as if it were permanent.

Public vs. Private Sector Contrast

In fact, federal employees are relatively shielded compared to their private-sector counterparts. Federal workers furloughed during a shutdown now know they will receive full back pay once it ends. That makes a shutdown more like a forced, interest-free loan taken from their personal finances—unpleasant, but not ruinous for those with only modest savings.

Private-sector workers, by contrast, face layoffs or plant closures with no promise of retroactive pay. When a factory shuts down or a store closes, wages are gone permanently. The drama over government shutdowns often overlooks this harsher reality faced daily by millions outside the public sector.

The Theatrics of Shutdowns

Here lies the “farce.” The political theater surrounding shutdowns magnifies their significance beyond their actual economic scope. Members of Congress stage dramatic press conferences in front of locked gates to national parks or shuttered museums. Leaders exchange blame in nightly news cycles, accusing the other party of holding the nation hostage.

Yet the reality is that these shutdowns are typically short—averaging less than nine days over the last 50 years—and resolved with little structural change. They function less as fiscal turning points and more as bargaining chips in partisan standoffs. For many politicians, the shutdown becomes a stage prop: a way to appear tough, principled, or uncompromising before their base, while knowing full well that the lights will turn back on once both sides agree to a continuing resolution.

Anecdotal Stories and Media Amplification

The media plays its own role in heightening the drama. During shutdowns, reporters easily find stories of hardship: a young family lining up at a food pantry, a federal employee selling personal belongings online, or a worker worried about making rent. These are real and often heartbreaking situations, but they are also selective snapshots. By highlighting the most sympathetic cases, the press frames shutdowns as universal devastation rather than as uneven disruptions that many households could withstand with even modest savings. The cycle feeds public anxiety, while offering politicians ready-made examples to cite in their rhetorical battles.

Conclusion and Prescription

Government shutdowns are disruptive and unnecessary, but they are not the economic cataclysm they are often made out to be. Federal employees, uniquely, are made whole with back pay; private-sector workers are not so fortunate. The real lesson is not just about partisan gridlock but about financial preparedness. If American households—federal and private alike—had even a modest emergency fund, much of the sting would disappear.

Epilogue: Preparing for the Inevitable

Shutdowns are not a question of if but when. For the average federal employee earning approximately $6,250 per month (gross pay), setting aside 5–10% of their income could quickly build a safety net. Within two to three years, such a worker could accumulate two months’ expenses in savings—enough to glide through even the 35-day shutdown of 2018–19 without panic. The same principle applies to private-sector employees, who face even harsher risks with no guarantee of back pay. Theatrics will continue in Washington, but for workers, the best defense is the same as for any economic shock: live as though a disruption is always around the corner, and be ready when it arrives.

Beyond Government: A Call for Financial Common Sense

One final lesson extends beyond shutdowns: governments and all employers should take a proactive role in preparing their workers for financial resilience. Offering personal finance workshops—covering emergency savings, debt management, and budgeting—would give employees tools to withstand not just shutdowns but any economic shock. Teaching that a minimum of one month’s savings is essential could shift shutdowns from feared national dramas to mere inconveniences. In the end, the best safeguard against political theater is not another law from Congress, but households equipped with the discipline and knowledge to weather storms on their own.

Appendix: Common-Sense Financial Resilience Training — Questions for Employees

Premise: don’t be surprised by the predictable. Cars age. Roofs wear out. Water heaters (tanks) fail. Paychecks get disrupted. The goal is to plan for what will happen so you don’t add new debt when it does.

A. Paycheck Reality Check

If your paycheck stopped today, how many days could you cover essential bills (housing, utilities, food, transportation) from cash on hand?
Could you cover one missed paycheck? two? What specifically would break first?

B. Emergency Fund

What is one month of essentials for your household (in dollars)?
Do you have that amount in liquid savings?
What automatic transfer (5–10% of pay) will get you there in the next 12 months?

C. Predictable Replacements

Car: age, mileage, major repairs due? Tires, brakes, battery?
Roof: age, replacement cost target?
HVAC: age (12–15 year lifespan), plan if failure hits peak season?
Water heater: age (8–12 years), funds set aside for replacement?
Appliances: fridge, washer/dryer, dishwasher—what’s next to fail?

D. Insurance & Deductibles

Do you have cash equal to your health, auto, and home/renter deductibles?
Do you know your out-of-pocket max for health insurance?

E. Debt

Balances, interest rates, and minimums?
Which debts can be deferred in hardship?
Which must be paid first to avoid cascading damage?

F. Cash-Flow Triage

What subscriptions and extras get cut first?
Which bills stay on autopay, which switch to manual to prevent overdraft?
Who do you call in week 1 (landlord, mortgage servicer, credit cards, utilities)?

G. Banking Setup

Do you keep your emergency cash in a separate account?
Are due dates aligned with paydays?
Is overdraft protection turned off to avoid hidden fees?

H. Income Backstops

What side jobs or overtime are realistic in a crunch?
Do you have licenses/gear ready to activate them?

I. Documentation

Do you have account numbers, phone contacts, hardship scripts written down?
Are IDs and policies stored securely but accessibly?

J. Household Coordination

Does every adult know the cutback order?
What are the “spending freeze” triggers?

K. Shutdown-Specific Planning

Federal employees: do you have one month’s expenses in cash (back pay is coming)?
Contractors: do you have 2+ months saved (no back pay guarantee)?

L. After-Action & Rebuild

After disruption, do you rebuild the emergency fund before lifestyle upgrades?
What habit (auto transfer, monthly review) keeps the cushion growing?