about 2 years ago
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By Ruma Dubey

We have heard of shops shutting down or even schools/companies shutting down. But a government shutting down? And that too the US Govt?  Unbelievable as it sounds, this is indeed one more brinksmanship politics or stalemate politics, call it what you may, which has really shut down the Govt for the past three days!

For us Indians, this is unheard of so this very concept is alien to us. Thus for the ignoramus like us, a quick synopsis of what awaits the US Govt is not resolved quickly.

What is this US Govt shutdown?

A shutdown usually happens when there is a failure of Congress to enact an annual Federal Budget within the timeframe established by law.  As per the US Constitution itself, all expenditures and funds have to be authorized by the Congress and approved by the President. The Federal Budget process operates on a fiscal cycle starting 1st Oct to midnight 30th September. If the Congress is unable to get a majority or consensus and pass the Bills which forms the annual federal Budget, where spending has to be extended beyond the end of the fiscal, then there will be a shutdown of the Govt.  In short, if the Congress fails to pass the Budget, there will be a shutdown.

The disagreement this time has been over the immigrants. The Democrats was Trump to negotiate the immigration deal as part of the Budget but the Republicans do not want to do so – they want border security funding, which includes the infamous border wall with Mexico, increased military spending and yes, some immigration reforms.

If Trump had his way, he wants to send back the “Dreamers” or the over 7 lakh undocumented migranst who come to USA as children. And the Democrats, rightly so, does not support this. This is the main bone of contention.

This shutdown comes at a time when it is the Republicans who control both the White House as well as the Congress. And pay attention to the timing – on 20th Jan, exactly a year after Trump took charge.

Does this mean all things have come to a standstill?

The shutdown means certain non-essential functions of the government is closed down due to lack of congressionally-authorized funding. The result is a government shutdown. Air travel, control rooms, visa offices, embassies and consulates across the world and in US will continue to work. Unemployment benefits, medicare, social security benefits – all will come but there could be delays. Federal Courts will work for 10 days after shutdown but after that, will have to start looking at furloughs - temporary unpaid leave of some employees. But cases will continue to be heard and verdicts meted. US postal services will continue. National parks will be shut down and so will tourist attractions like - Statue of Liberty and Ellis Island in New York, Independence Hall in Philadelphia, Alcatraz Island near San Francisco and the Washington Monument. Thankfully, based on the previous shutdown experience which had sparked an outrage, the tourist places will remain open.  Hospitals will work but new patients under National Institutes of Health will not be accepted into clinical research. US FDA will suspend routine inspections. Most of the “Head Start’ programs would be severely hampered. Most food assistance programs will be shut down. Taxes will have to paid but the IRS will suspend tax audits and no toll-free helplines will work. Federal Housing Administration which provides loans will be shut down.  NASA will continue to work and all homeland security services will function as usual.  The military's 1.4 million active duty personnel would stay on duty, but their paychecks could be delayed. About half of the Defense Department's civilian employees would be furloughed. 

Remember the shutdown of 2013?

At that time, when Obama was the President, Republicans in the House of Representatives passed a resolution that would fund the US Govt only if the Democrats agreed to a one-year delay to Mr Obama's controversial healthcare reforms. Obama rejected the Republican proposal and this non-agreement between the Democrats and the Republicans to fund the Bill brought the country to a standstill and introduced the world to a new meaning of “shutdown.”

What happens now?

In a rare occurrence, the US Senate was working through the weekend to try and reach an agreement before Monday began. But no compromise was reached on Sunday. Once again, a vote to end the shutdown till happen today at 10.30 PM (India time).



 If the US govt shuts down for over 10 days (unlikely):

Stock markets are sure to fall

Weaker global economy will hit domestic growth

Exports would be hit

Investors will seek safer havens – gold and ironically, the US dollar

IT companies could be hard hit

Pharma companies will have to wait longer for approvals

Consumer spending will go down in US thus affecting demand.  

Crude oil prices to come down


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