Government shutdown: What it entails

Government shutdown as discussed here is solely as concerns US politics.

Capitol Hill

Amidst widespread economic uncertainties, the government shutdown couldn’t have come at a worse time. It may be over now as a matter of just under 24 hours ago, but there is some something in it for everyone to learn.

What is a government shutdown? This is the cessation of “non-essential” government functionaries because there is no congressional authorization to spend federal funds.

What causes this? The US constitution makes it mandatory for Congress (Senate and House of Representatives) to authorize government to spend taxpayers’ money, but that’s not what causes a government shutdown per se. The US fiscal/financial year runs from October 1 to midnight September 30. Before the close of a fiscal year on September 30, congress is expected to pass spending bills which comprise the annual federal budget or “continuing resolutions” for the next fiscal year which is then signed by the president. When congress for one reason or the other fails to pass these bills before due date, or the president vetoes the bill for whatever reason, it becomes constitutionally illegal for the federal government to make any expenditure with public funds; this would lead to the furlough of federal employees considered non-essential (those whose services are not especially necessary for protection of life and property) simply because it can no longer pay for their services – an estimated 800,000 to 1million workers (about 40% of federal workers) fall into this category.

What are the consequences? A government shutdown no matter how short has far reaching effects. Delays become fraught in the system, and many state funded departments grind to a halt.

• Environment: Toxic waste clean-up workers are sent home. Diseases could spread.
• US Veterans: Could be cut off from many of their benefits ranging from health and welfare to finance and travel. For many, it’s their only source of livelihood.
• National parks, museums, zoo, monuments: Visitors not allowed in. This leads to huge revenue losses.
• Government-sponsored loans: Delays in releasing federal mortgage loans. Over 10,000 low income families benefit from it.
• National Archives and libraries: They will all be shutdown; only those that generate their own revenues (i.e. profit oriented) may still operate.
• Passport and Visa Applications are also cancelled; tourist industry takes a huge hit.
• Social Security: Claims are not processed, new card issuances are not made and hotlines for queries are closed. Several thousands of America’s aged, disabled and unemployed benefit from this service.

So many other sectors take a huge hit during a government shutdown.

What caused the 2013 federal government shutdown? The 16 day long shutdown (October 1 to 17) was as a result of failure of the two chambers of government to agree to a compromise continuing appropriations resolution. The Republican led House of Representatives agreed to defund Obamacare, while the Democratic led Senate insisted that a clean continuing resolutions be passed, one without any policy changes, including defunding Obamacare.  

How much did it cost the US? Official reports put the cost at $24billion in lost revenue and a 0.6% drop in yearly fourth quarter GDP growth.

How many times has the government shutdown? According to the Congressional Research Service, since 1976 there have now been 18 shutdowns. The most recent was 17 years ago when Bill Clinton was president.

Did you know? The 16 day long shutdown of 2013 is now the third longest in American history.