No More Shutdowns? New Bill Automatically Funds Government, But Slashes Spending by 1% Every 90 Days

This bill, officially titled the Government Shutdown Prevention Act of 2025, sets up a fiscal autopilot system designed to keep federal agencies running even if Congress misses the budget deadline. If a new fiscal year starts without a budget, this mechanism kicks in automatically, continuing funding for programs that received money the year before. This is a huge deal because it essentially prevents the total government closures—with all their associated headaches—that we’ve seen so many times.

The 94% Solution and the Rolling Cut

When this automatic funding starts (SEC. 2), it doesn't just copy last year's budget. Instead, it caps the initial funding rate at 94 percent of the preceding year's level. Think of it as an instant, mandated 6% budget cut across the board for every non-mandatory program. But that’s just the start. If Congress still hasn't passed a proper budget after the first 90 days, the funding rate is reduced by another 1 percentage point. This 1% cut happens again every subsequent 90-day period the government remains on autopilot. For an agency like the National Park Service or the FDA, this means their budget keeps shrinking automatically the longer Congress stalls, forcing them to make operational cuts that Congress never explicitly voted on.

The Grant Freeze: What It Means for Your Town

While the bill keeps the lights on, it puts a hard stop on certain types of spending. Specifically, it prohibits any “high initial spending rates or immediate distributions” and blocks the awarding of any grants that would “lock in final funding decisions” while the automatic mechanism is running (SEC. 2). This is where the rubber meets the road for local communities. Imagine your state or city is expecting a large federal grant to start a major infrastructure project—say, upgrading the water treatment plant or funding a critical job training program. Under this bill, that money is frozen. A construction company waiting on that grant to start pouring concrete or a non-profit ready to launch a new program could face months of delays, creating significant uncertainty and economic drag at the local level.

Mandatory Payments: The Safety Net Stays Put

One crucial provision ensures that the safety net remains intact: funding for entitlements and other mandatory payments must be sufficient to keep those programs running exactly as current law dictates (SEC. 2). This means that programs like Social Security and Medicare payments would continue without interruption, unlike the uncertainty that often surrounds these programs during a traditional shutdown threat. For retirees and those relying on these benefits, this provides a vital layer of security.

The Takeaway: A Trade-Off for Stability

This bill trades the chaos of a full shutdown for the slow, steady squeeze of automatic budget cuts. It keeps the government functioning, preventing the furlough of essential workers and the closure of federal services. However, it introduces a powerful incentive for Congress to pass a budget quickly—the longer they wait, the deeper the automatic cuts go. For regular people, this means essential services keep running, but the quality and scope of those services, especially those delivered through state and local grants, could be significantly hampered by the rolling 1% reductions and the freeze on new grant distributions.