US GOVT SHUTDOWN - BRINKMANSHIP POLITICS
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 threatens to shut down the US govt, starting midnight Monday.
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 and the world post Monday midnight.
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.
Does this mean all things come to a standstill?
The shutdown means certain non-essential functions of the government may be 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. 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 could be furloughed. Thus there will be delays but not a complete shut down which will cripple the country or bring it to a standstill.
Why this US Govt shutdown is looming large now?
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 who has ruled out making any changes to this “Obamacare” legislation. The current spending Resolution expires at midnight on Monday, leaving little or no time to reach an 11th hour compromise to avert the shutdown. In short, this is a kind of blackmail politics. This non-agreement between the Democrats and the Republicans to fund the Bill will cripple the country and not needed at this juncture.
One cannot help but feel, based on past experience that this Budget brinksmanship might not happen. This is exactly what had happened last time too, remember the Fiscal Cliff? The deadline then was 31st Dec and right before the clock struck 12, the posturing and the ‘pushing to the edge of the precipice” ended with the Republicans agreeing to more spending – for that which was already Budgeted., That is also what will happen this time. USA, which is always shown in Hollywood as the perpetual ‘saviour of the world’ will most likely remain true to its image and get back the country and the world from the brink. What we are now seeing is brinkmanship politics. There is no doubt that neither the Democrats nor the Republicans would want to go the US Govt to shut down now when things are getting back on track but if it does happen, it will indeed be very unfortunate at this juncture.
| IMPACT ON INDIA If the US govt does shut down and that too for over 10 days: 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 |