By Anahat Danewalia
On October 1, 2013, The United States Buck Stopped! Literally! This isnt the first in American history though; America has withstood many previous shutdowns with the last one being in 1995-96, 17 years ago and lasting 20 days! Hence, on October 1st, The United States federal government once again came to a screeching halt as the Fed entered a shutdown, a first, under President Obama.
The Key Issue? Republicans – mostly The Tea Party faction- want the Affordable Care Act fondly referred to as “Obamacare” delayed, Democrats don’t. Fittingly enough, the first day of the 2014 federal fiscal year, October 1, 2013, was also when many of Obamacares measures, including the health insurance exchanges, first took effect.
What is a Shutdown? The US federal departments and agencies are bound by the Anti-Deficiency Act-incorporated into the Constitution roughly 200 years ago-which basically stipulates that they can’t spend money that they don’t have. Hence every time a bill fails to be passed or is passed by the Congress and vetoed by the President; a shutdown can take place forcing the legislature to take decisions as the nation stands still with the Government being virtually held hostage.
This time, the shutdown resulted in a political stalemate between the President, the Democrat-led Senate and the Republican-led House of Representatives. It was specifically on the Senate’s rejection of House budget bills which included separate provisions delaying or defunding health insurance programs authorized by the Patient Protection and Affordable Care Act, and the President’s statement that he would veto such a budget.
What happens in a Shutdown? With no money in the hands of the Federal departments and Agencies, courtesy the Anti-deficiency Act, some departments keep operating as normal as long as they can, before sending non-essential staff home. Most staff is furloughed- meaning they now have to stay home and may not ever be paid for the duration of the closure. There are Government offices however, that are exempt because they don’t rely on discretionary spending through annual appropriations (i.e. money from the budget). Meanwhile, Members of Congress keep getting paid during a shutdown, courtesy the 27th amendment to the US constitution-not that it makes much difference protesting against this, given how deep their pockets already are!
As of October 1, Congress hasn’t given Federal Departments or agencies any money. Statistically, over 8, 00,000 Government employees-roughly 1/3rd of the Federal workforce- have been furloughed and another 1.3 million asked to work without pay. People classified as essential employees – such as air traffic controllers, Border Patrol agents and most food inspectors, social security (pension) payments, the US postal service, active military, NASA Mission Control and air traffic controllers, etc. shall continue to work.
The Consequences? Interestingly, in an era when the Internet is the major mode of Government-public communication, the shutdown effect was first visible on Fed websites. NASA’s famed website, haunt of air and space buffs across the world, flashed a Not Available due to lack of Federal funding sign. The White House website itself threw up this message on Wednesday morning: Due to Congress’s failure to pass legislation to fund the government, the information on this web site may not be up to date. Some submissions may not be processed, and we may not be able to respond to your inquiries. As the economy remained deadlocked, all inconvenience remains deeply regretted!
On the international front, one immediate consequence is that tourists, both domestic and foreign faced frustrating “closed” signs at national monuments including The Smithsonian, landmarks like The Statue of Liberty and National Parks. Germany and Britain became the first countries to issue a “travel warning” for the United States. This is just one of many unexpected fall-outs from the shutdown spectacle that is attracting universal bemusement and dismay, and a growing domestic backlash.
The shutdown stalemate is already rattling investors. Stock markets in the US and overseas are falling and this poses a major risk if protracted. Back at home, Indian exports to the US account for 12-14 per cent of the total outbound shipments worth USD 300 billion. In 2012-13, exports to the US were USD 36 billion. The shutdown of the US government is hence expected to hit Indian exports due to crippling of trade facilities at ports and airports. However, IT and pharmacy sectors-two major players- are likely to escape unscathed as they are not directly linked to Federal Spending
With majority of the public blaming the Republicans, the Democrats are having a field day simply waiting for the Republicans to bow under the pressure and withdraw. The Democrats are leaving no stone unturned to show how Obamacare is already a law and by rallying against it, Republicans are directly questioning and protesting the Law of the Land. However, the latter remain adamant. Following the meeting on October 3rd, it seems as if The Congressional stalemate and government shutdown are likely to end with a Continuing Resolution, which will provide money for government services until a broader budget agreement is reached. Agreement on a budget is far from certain however, with Continuing Resolutions having of late become the lifeblood of the US government, adding to uncertainty and a sense of dysfunction.
While some remain hopeful that this latest bout would end soon, others fear another showdown that may follow! The U.S. Government needs to raise the US debt ceiling by October 17 so that it can pay its bills. Republicans have threatened to throw more sand in the wheels, spooking an already nervous international community that is starting to worry about the political and financial stability of the United States.
In Conclusion, what was actually incorporated into the Constitution as a safeguard against tyranny by Americas Forefathers after the Civil War now stands to cripple the very institution it was built to protect. A ticking bomb, a shutdown today virtually brings down the entire democracy at the feet of the Congress, utterly subject to their verdict; and a shutdown today can lead to another one tomorrow. An impasse is unavoidable. Perhaps it is time, to alter this law which is currently impossible as Constitutional amendments in the US must be ratified by three-quarters of the states which is pretty unthinkable, courtesy the rampant gerrymandering! Keep your fingers crossed, the U.S. just might dole out many more surprises before Christmas is over!
The Author is currently pursuing Economics Honors at Shri Ram College Of Commerce with a penchant for anything involving World History, Corporate Finance and Economics. A voracious reader, Classical Dancer (Kuchipudi and Bharatnayam), avid Debator and a National-level Swimmer, I like to explore my potential to the fullest. Currently, I’m actively involved with various NGO’s like Child Rights and You, Nanhi Chaan etc. You can contact me at anahat.srcc@gmail.com.