US Government Shutdown ??


THE US government faces it first shutdown since 1996 after the Republican-held House of Representatives passed a measure on Sunday that would derail President Obama’s healthcare bill by stripping out the funding to pay for it.

What causes a shutdown? Under the US Constitution, both the Senate and the House of representatives have to pass a law renewing the government’s authority to spend money every year. If the bill isn’t passed by the end of the fiscal year, which falls on 30 September, that authority elapses and many government services are suspended.

The impact. About eight lakh government employees will be asked to work without pay, or go on a leave. Besides, US soldiers will not be paid as scheduled; only essential services will be provided for, like the police, fire department, etc, while all non-essential services are halted.


How has this impasse been reached? As USA Today explains, the Republican-controlled House has passed a spending bill that “maintains spending levels but does not provide funding to implement the Affordable Care Act, or Obamacare”. The result would be to delay the introduction of President Obama’s set-piece health reforms. The Democratic-controlled Senate has insisted that “the program be fully funded and that Congress pass what they call a ‘clean’ CR” — a continuing resolution that would fund all government business without requiring changes in policy.

How will the Senate respond? The Senate is “expected to reject decisively a House bill” when it arrives in the chamber on Monday, according to the LA Times. The Democrat Senate Majority Leader Harry Reid has told the Republicans to quit playing “futile political games” and promised that the Senate would “reject any Republican attempt to force changes to the Affordable Care Act through a mandatory government-funding bill”.

What happens next? The New York Times reports that the Senate will simply remove the House’s amendments and send a new bill back to the lower house. It describes that as “a plain budget bill, stripped of its provisions to delay the full effect of the health care law, repeal a tax on medical devices and allow businesses to opt out of contraception coverage for their employees”. For this to happen Reid requires 51 Democrats to vote with him. According to Senator Richard J Durbin of Illinois, a senior party figure, the Democrat senators are unified and will put the ball back into the House’s court.

Will the House vote for the bill? Maybe. Charlie Dent, a Republican congressman from Pennsylvania, said on Sunday that he was seeking cross-party support for a temporary spending bill before the midnight Monday deadline, with or without the additional measures added by the House over the weekend. “I’m prepared to vote for a clean resolution tomorrow,” he said. “It’s time to govern. I don’t intend to support a fool’s errand at this point.”

US shutdown

If the US does go into shutdown how long will it last? Of the 17 shutdowns since 1977 “most last no more than three days” and many are over within 24 hours. However, in December 1995, under President Clinton, the country experienced a 21-day shutdown.

How have the markets responded? The BBC reports that “worries over the US shutdown had hit Asian shares” with Japan’s Nikkei 225 index closing 2% lower, the Hong Kong Hang Seng down 1.5%, Australia’s ASX down 1.7% and South Korea’s Kospi falling 0.7%. “It is the fear of the unknown,” financial expert David Kuo said. “No one knows what is really going to happen and markets don’t like uncertainty…until that [the prospect of a shutdown] is resolved, we are likely to see volatility in the markets.”



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