Correct, if the new year starts and the budget is not finalized all governemt shuts down and nobody gets paid. It has happened quite a few times in the last 10 years.

The last few times the GOP has actually held the whole country hostage by refusing to pass anything until they get a whole bunch of questionable spending attached. They are just pissed this time the shoe is on the other foot. Both parties do it to an extent, but the GOP is the party that throws a huge hissy fit about it.