USA: Possible Shutdown and its consequences on US economy

The forthcoming operating breaks (the so -called shutdown) of the government of USA They have almost become a routine in Washington.

In March, Congress was a few days before a partial shutdown, before legislators reached an agreement to finance US government parts. It was another example of Congress that postponed difficult decisions until the last minute. Now, with the deadline for October 1, Congress is facing another impasse on government funding.

The House of Representatives, led by the Republicans, voted on a provisional bill that will extend funding by November 21, but to vote on the Senate, the bill needs the support of at least 8 democrats.

Democratic leaders insist on including health care provisions not included in the Republican bill: the extension of Affordable Care Act (ACA) subsidies (ACA) – which expire at the end of the year – and the overthrow of cuts to the funding of Medicaid. They also want new restrictions on President Donald Trump’s ability to refuse to spend money approved by Congress.

Congress leaders did not show signs of progress towards an agreement on a short -term expenditure bill during a meeting with Trump on September 29. Trump has stated that he is not willing to make concessions to the Democrats and has threatened to permanently fool the federal officials in the event of the government.

Memories of the longest -running shutdown in US history – 35 days from late 2018 to early 2019 – due to Trump’s insistence on adding $ 5.7 billion to budget for a wall on the border with Mexico, remain alive.

Why does the government close?

The US government is operating on the basis of 12 bills to approving credit voted by Congress each year and signed by the president. In financial years such as what is going to start, when all 12 bills have not been approved by October 1, the start date of the financial year – the current count is zero, for those who hold score – the Congress and the President maintain the operation of the government by voting in short.

If they cannot agree on a CR, the US government has what is called financial gap and federal services may need to take steps to close. For the financial year 2025, Congress has voted on three such temporary funding measures, with the latter coming in March.

How many times has this happened?

There have been 14 breaks in 1981, with a duration ranging from one day to 35 days, in 2018 – 2019 (before 1981, services were mostly operated during the financial gaps, with their expenses being covered retroactively as soon as an agreement was reached).

Shutdown due to spending disputes are different (and less serious) than would if the US violated their debt ceiling and defamed some of their obligations. This has never happened, though the US has come close to this point in 2023.

What does a shutdown mean?

It means that many, though not all, the functions of the federal government are suspended and many, though not all, federal officials are made available. The services that the government considers “essential”, such as those related to law enforcement and public security, continue to operate. These essential employees work without pay until the shutdown is over. In 2019, Congress has passed a law that guarantees that federal employees will be available will receive their salaries retroactively as soon as the government is funded again.

Which workers are “necessary”?

This decision will be up to Trump’s politicians and the White House if Congress fails to avoid closing. The individual ministries – and the politicians who run them – have a reason for who will come to work and who will stay at home. At least theoretically, a federal employee who works during closing but should not do so could face fines or prison sentences in accordance with the so-called Anti-Deficiency Act law.

Which government services are interrupted in case of shutdown?

Among the most noticeable disorders is the closure of the facilities of national parks and Smithsonian museums in Washington, as well as delays in processing applications for passports and visas. It is expected that the supervision of the financial markets and investigations into complaints about political rights in the workplace are expected to be stopped. The financial reports of the Ministries of Labor and Trade may be delayed depending on the duration of Shutdown. The Ministry of Finance has stated that most basic tax functions will be stopped in the event of the government’s termination, which means that taxpayers’ telephone calls will not be answered and tax refunds will not be processed electronically.

What government functions will not be affected?

Military operations, air traffic control, veterans’ medical care and federal criminal investigations are among the basic activities that will continue. US military forces will continue to operate, but without pay. (During the 2019 shutdown, air traffic auditors threatened to abandon their work after a month of work without pay – a development that accelerated the end of the interruption). The US Postal Service and the US Federal Bank (FED) have their own sources of funding, so they are not greatly affected.

What about federal contracts?

Private companies based on federal contracts – from Elon Musk’s SpaceX to cleaning service providers for local federal buildings – will face loss of revenue. Employees with service contracts have historically been made available during the closure and have not received retrospective remuneration when the government reiterated its functions.

What about state checks?

Benefits such as social security and Medicare are considered mandatory costs, which means that they do not need annual credits to continue to distribute money. This does not mean that these programs are guaranteed that they will not be affected.

During the 1996 interruption, even when social security checks continued to be issued, “staff handling new registrations and other services, such as the change of addresses or the handling of applications for new social security cards, was initially made available,” according to a committee. And during the interruption of 2018-2019, the Ministry of Agriculture had to rely on a special power included in the previous ongoing decision to continue the issuance of food vouchers.

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