International
Why is US government on the brink of a shutdown?
- The world’s largest economy is on the brink of a significant fiscal crisis. The US is facing the possibility of a government shutdown if lawmakers fail to pass crucial spending bills by the September 30 deadline.
- This is because of an ongoing bitter feud between President Joe Biden’s Democrats and their Republican counterparts in Congress over crucial spending bills.
- This standoff between the two blocs of the Congress in the US government is coming from the dispute between the far-right Republicans and other lawmakers, potentially jeopardizing the financial stability of hundreds of thousands of workers employed in national parks, museums, and other federally funded entities.
- The White House has pointed out that the House of Republicans have not shown their support behind the government spending levels previously agreed upon by Biden and Speaker Kevin McCarthy, the highest-ranking Republican in Congress.
- This situation carries potential political risks for President Biden who is eyeing re-election in 2024.
- These types of shutdowns in the US government occur when lawmakers fail to pass the bills regarding the allocation of funding to 438 government agencies in order for them to function as usual. There have been fourteen shutdowns since 1981.
- When no funding legislation is enacted, federal agencies have to stop all non-essential work and will not send paychecks as long as the shutdown lasts resulting in federal workers being left without pay, causing grave disruptions in various services from financial oversight to even trash pickup as well. ‘Essential’ workers continue working but go unpaid.
- A shutdown would directly reduce GDP growth by around 0.15% points for each week it lasts, according to Goldman Sachs but growth would rise by the same amount after the shutdown was resolved.
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