The first government shutdown in the modern sense occurred in November 1981 during the presidency of Ronald Reagan. Lawmakers were having trouble reaching an agreement over federal spending cuts. Reagan demanded $8.4 billion in domestic spending cuts and threatened to veto any bill without at least half those cuts. The Senate was willing to comply, but the House insisted on bigger defense cuts and pay increases for itself and the civil service. The deal they reached fell $2 billion short of Reagan’s threshold, prompting him to veto the bill and shut down the government.
Before that, earlier "shutdowns" were more about disputes over funding specific departments or programs, such as vetoes by President Ford of funding bills for Departments of Labor and Health in 1976, or President Carter vetoing a defense spending bill in 1978 due to objections over funding a nuclear- powered aircraft carrier and pork projects.
So, the key issue lawmakers were having trouble agreeing about when the government first shut down in the current sense (1981) was the level and composition of federal budget cuts, particularly domestic spending and defense appropriations.
