The United States and the Government Shutdown

Simply mind-boggling! The world’s biggest economic juggernaut is now, in shutdown mode!

Starting on 1^st of October 2013, the Obama administration has been forced to announce a government shutdown until a budget is hopefully approved by the Congress, sooner or later. Around 800,000 federal government employees were forced to go on unpaid holiday until a date to be announced later. Most government offices and departments, including tourist hotspots were shut following the budget impasse.

How did it start?

Government shutdown is not something new in the United States. 17 years ago, during the Clinton administration, the government was forced to shut its operations down as the result of a gridlock amongst the Congressmen in approving the budget. The United States’ fiscal year ends on 30^th of September every year and annual budget for the upcoming fiscal term has to be sanctioned by the Congress before it. In 1996, disagreement on the need to further extend the duration of Medicare, a federal government-funded health programme for the elderly and disabled citizens, brought the nation to experience entire government shutdown except for certain critical departments such as the police force.

Now, 17 years later, in the presidency of America’s first Afro-American president, history has repeated itself. The Republicans demand for the Medicare or also dubbed as “Obamacare” to be delayed by a year for the budget to be approved. But, the White House has been firm that any action seeking to delay Obamacare will be vetoed by the President himself.

The structure of the Congress itself has made any concrete decision-making on the new budget gruelling. The lower chamber of the Congress (House of Representatives) is controlled by majority Republicans while the upper chamber (House of Senate) is dominated by the Democrats. Unwillingness of both parties to tolerate in achieving a consensus will prove to be detrimental to the nation’s development. Until the moment this article is written, the Tea Party faction of the Grand Old Party is insistently, calling for the delaying of Medicare whilst the Democrats are seeking to lift the debt-ceiling now set at US$ 16.7 trillion.

Debt and More Debt!

Believe it or not, the United States is infamously known for its hefty debt which is now threatening its economic survival. To be precise, during the reign of George Bush Jr. (2000-2008), America has gone on a spending spree, emphasising on military spending in the invasions of Afghanistan and Iraq. With expenditures spiralling beyond national income, Washington D.C. was forced to deal with the threats of “fiscal cliff”, a term coined by Mr Ben S. Bernanke, the outgoing Federal Reserve chairman and sequester cuts all within the past two years. Even worse, all these occurred in the midst of the United States recovering from the 2007 Great Recession.

Looking at America’s debt-ceiling of US$ 16.7 trillion, it clearly indicates a worrying status quo. Rather than formulating to bring down the sky-rocketing debt, the representatives in Congress are keener in raising the debt-ceiling. To the uninitiated, “debt-ceiling” refers to the limit of amount of debt allowed to be borrowed by the US government. In previous occasions, the Congress has managed to raise the debt-ceiling higher to avoid from defaulting on its borrowings.

Actually, if worse comes to worst, the US government can print more greenbacks (US dollars) to repay its escalating debt as most international debts are dealt in the US’ currency denomination. This, however, will have other devastating effects on the economy as a whole such as depreciation of currency value and etc.

To date, it has been five days of government shutdown and still counting. The worst is expected to be experienced by October 17^th, where the Congress has to ultimately decide to solve this budget deadlock, otherwise will plunge the United States into debt-default. However, from the accounts of experts and the President himself, the Congress is expected to raise the debt-ceiling -again- to “save” the Uncle Sam’s nation. GOD, when will ever these people learn?

P/S: America can no longer afford having feuding Congressmen, failing to approve a budget. Many people especially civil servants, are struggling to make ends meet, unlike the members of the Congress who still get paid regardless of government shutdown!