Final answer:
Encumbered appropriations that do not carry forward typically lapse. In the absence of a budget agreement, Congress must pass a Continuing Resolution to prevent a government shutdown. The Pay-As-You-Go Act ensures continual deficit offsetting to avoid increases in the federal deficit.
Step-by-step explanation:
If encumbered appropriations do not carry forward at the end of the budget period, they are typically said to lapse. In the context of the federal budget process, if Congress and the president cannot agree on a budget and appropriations are not passed by the start of the fiscal year on October 1, a Continuing Resolution (CR) must be passed to avoid a government shutdown. Without a CR, non-essential government operations will cease, as witnessed during the 2013 shutdown over the Affordable Care Act and the 1995-1996 shutdown. Furthermore, to control deficit spending, the 2010 Pay-As-You-Go (PAYGO) Act mandates that any increases to the deficit caused by new legislation should be offset with equivalent deficit-reducing measures. If PAYGO is violated, it triggers sequestration to balance the costs.