US SHUTDOWN

Abhishek Gaurav 11024Ankur Agrawal 11116Pranav Bhargava 11511

What Just Happened The U.S. Shutdown continued from October 1st till October 16th

The Shutdown was propelled because the Congress failed to enact legislation appropriating funds for fiscal year 2014, or a continuing resolution for the interim authorization of appropriations for fiscal year 2014

The shutdown situation is a product of the US democratic system. The president is both head of state and head of the federal government, without a guaranteed majority in either of the legislative bodies where new laws are debated and voted upon (because presidents, congressmen and women and senators are elected separately).

The president can't simply ram laws through Capitol Hill.  In a shutdown, the government lacks the legal authority to spend money on non-essential services.  Under a federal law known as the Anti-Deficiency Act, it can be a felony to spend taxpayer money without an appropriation from Congress.

And What Followed• During the Shutdown, the non-essential government services

remained suspended. National parks — such as the Grand Canyon, Zion and Yosemite — were closed since Oct. 1 and more than 20,000 park employees were forced to go on leave without pay

• National landmarks such as the Statue of Liberty in New York, Independence Hall in Philadelphia and the Washington Monument were closed to visitors during the shutdown.

• Approximately 800,000 federal employees in various other services were indefinitely furloughed, and another 1.3 million were required to report to work without known payment dates. 

• Only those employees and services deemed "essential" under the Anti-deficiency Act like Military, Medicare, Social Security continued government operations.

Has it happened Before• Technically, 17 times. But a serious, prolonged shutdown has

happened only once before.

• Since 1976, there have been 17 times when Congress has allowed government funding to lapse. Back in the 1970s, this happened on six occasions, although those lapses didn't lead to actual, physical shutdowns — government carried on as usual.

• In the 1980s, the Anti-Deficiency Act actually required government agencies to close down if their funding expired. Since then, a failure to fund the government has meant an actual, tangible shutdown. Most of the shutdowns in the 1980s were however, brief affairs.

• By far the most significant shutdown to date came in 1995-'96 and lasted 21 days, as Bill Clinton wrangled with congressional Republicans over budget matters.

Why did it happen at all• The US financial year ended on 30 September, and politicians on the

Capitol Hill failed to agree a new budget for the 2013-2014 financial year. Even a 'stopgap' funding deal proved beyond them. Without a budget deal approved by both parts of Congress, the House of Representative and the Senate, there was no legal agreement to pay non-essential staff and so their furloughing started

• Under the US constitution, the President cannot unilaterally bring in legislation. And despite weeks of talks, Republicans continue to include cuts and delays to Barack Obama's Affordable Care Act in the budget legislation they sent up to the Senate.

• The House of Representatives is controlled by the Republican Party, whose Tea Party movement remain deeply opposed to Obamacare. They tried to use the budget as leverage to crowbar changes to the Act. The Senate, which is under the control of Obama's Democrats, has stood firm.

Why could not a deal be agreed upon

• Thirdly, the US recovery from the recession since 2008 is incomplete and the failure of the Congress to pass the budget has begun to hit the poor.

• More than 45 million people in the US are below poverty line and 23 million households gets government food assistance for survival) which includes the war veterans, the home loan applicants, the tourists, and many others.

• Inequality in American society is spectacularly high. President Barack Obama and his Democratic Party liberals have taken steps to alleviate the suffering of the downtrodden with a new healthcare act, called Obama Care, and several other entitlement programmes for the poor.

• But the wealthy Americans have their representatives in the Republican Party and the ultra conservative section within that party is opposed to big government spending for the poor and is supportive of a policy that could give tax rebates to the wealthy. 

Are the Republicans Justified• The US is a two-party state. The Republicans are split. Many utterly detest

their Democrat president. They want to gut the contents of Barack Obama’s healthcare legislation.

• This introduces what we might recognise as a health service for millions of Americans for whom there is currently none. Other Republicans take a less partisan view and recognise that Obama won the last presidential election on the basis of his healthcare plan. So he has the political authority for his plan

• In the proposed US budget ,they get the reduction in overall government spending they want. But because Obama gets his healthcare policy funded the Republicans oppose the overall deal.

• The Republicans’ extraordinary position is being led by Senator Ted Cruz. He is a right-wing Texan with his eyes on a run at the White House. He opposes everything Obama proposes. He is leading the so-called Republican political strategy. They take a pretty jaundiced view of Washington DC.

How will it affect everyone• The local economy around Washington, D.C. is expected to lose some

$200 million in economic activity for each day that the government is shut down.

•  A short government shutdown, which would send more than 800,000 federal workers home, could shave about 0.3 percentage points off economic growth in the fourth quarter of 2013 

• U.S. tourist industries and airlines are expected to suffer millions of dollars in losses during the ongoing shutdown, in part because so many parks and museums have shut down, turning away millions of visitors.

• The Department of Interior would temporarily stop reviewing permits for onshore oil and gas drilling as well as applications for renewable energy projects on public land. 

Economic Costs• The yield on short term US Treasury bonds - the amount the US

government most pay to investors to hold US debt - has risen, increasing US borrowing costs and indicating that global investors have become unhappy with Washington wrangling.

• Standard & Poor's says the shutdown has cost the US economy $24bn (£15bn), shaving 0.6% off of economic growth this quarter.

• Furthermore, the shutdown impacted the release of economic data, particularly important measures of job creation and prices.

• Consumer confidence measures plunged as a result of the shutdown - not a good sign for the US economy, because consumers account for 70% of all spending.

Conclusions• However as of now, President Barack Obama has signed into the law

approved by Congress on Wednesday 16th October to reopen the federal government and avert an unprecedented debt default, ending a bitter and partisan 16-day impasse.

• The Congress has passed bill to raise the US debt ceiling and end shutdown. The fiscal Bill passes with majorities in Senate and House. The deal funds federal government through 15th January. It pushes debt ceiling deadline to 7th February.

• Obama rightly summed the spirit of all Americans in his statement made soon afterwards the end of shutdown “My hope and expectation is everybody has learned that there is no reason why we can't work on the issues at hand, why we can't disagree between the parties while still being agreeable, and make sure that we're not inflicting harm on the American people when we do have disagreements”