US Shut Down

US Shut Down is creating news headlines not only in US but globally as this recent political drama has impacted economy locally as well as globally and Trump government is not giving ears to any one.

US Government shutdown: What, Why and How will it Impact

Deadlocks between the Democrats and the Republicans are not unheard of. The two parties seldom see eye to eye on policies regarding matters of the state. One such deadlock occurred on 21st December 2018, when the Congress stood at an impasse over the allocation of new funds to build a wall on the southern US border. The wall in question is the wall to secure the US-Mexican border as promised by President Donald Trump during his presidential election campaign. President Trump was requesting fresh funding of $5.7 billion which the Democrats vehemently opposed, but Trump didn’t back down, and a government shutdown went into effect the following day, on 22nd December 2018. It ended on 25th January 2019 becoming the longest shutdown in the history of the United States, lasting 35 days.

What is a government shutdown?

A government shutdown is a closure of non-essential discretionary federal programs. It occurs when there is a funding gap period, and some or all of the government functions stop working.

In the normal budget process, the Congress appropriates funds by September 30 for a given fiscal year. It enacts a continuing funding resolution when the above mentioned does not happen. If Congress can’t agree on that, it results in a shutdown. When this happens, it signals a complete breakdown in the budget process.

The following table will help you understand better.

Government shutdown: What Is Closed?
Services Agencies
Internal Revenue Service Department of Commerce
National Aeronautics and Space Administration U.S. Department of Education
Department of Labor Department of Energy
Department of Housing and Urban Development Environment Protection Agency
Food and Drug Administration


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Immediate Impact of US Shut down

Many of the non- critical workers went without pay, and many of the critical workers were working without pay from the beginning. The below table gives you a statistical view of workers furloughed in each major department.

STATISTICS- Immediate impact on nine major agencies
Non-critical Employees: who were sent without pay 3,80,000
Critical Employees: who were working without pay 4,20,000
Department Wise- 9 major departments
1.       Agriculture(40% workers furloughed) 38,150
2.       Commerce (87% workers furloughed) 41,670
3.       Homeland Security (13% workers furloughed) 30,272
4.       Housing and Urban Development (95% workers furloughed) 7,122
5.       Interior (78% workers furloughed) 53,406
6.       Justice (17% workers furloughed) 19,406
7.       State- US Workers (42% workers furloughed)

US Employees (26% workers furloughed)

8.       Treasury (83% workers furloughed) 72,432
9.       Transportation (34% workers furloughed) 18,438

In addition to this, many smaller agencies and administrations were shutdown.

Impact on the Economy of US Shut down

The shutdown started affecting the US economy after two weeks. According to the Congressional Budget Office, the gross domestic product reduced by $11 million because workers and contractors who didn’t get paid cut down on their spending. After the government restores to its full functions, all but $3 billion will be recovered. The true cost, however, could not be ascertained and could very well be higher than stated by the CBO.

Current status of the US shut down

The shutdown ended on 25th January when President Trump signed a bill that would fund the government at current levels for three weeks, and a bipartisan committee will review measures to tighten border security. The committee must reach an agreement for a bill that will be passed by the Congress before the deadline of 15th February, failing which the government will shutdown again.

The shutdown has so far impacted 800000 government workers and employees who have either resorted to working part-time jobs or have been working without pay for the duration of the shutdown. The departments facing the brunt of the shutdown have witnessed employees working overtime to compensate for the low staffing. There have been instances of food shortages for the coast guard members, fears of unsafe food due to suspended food inspection by the FDA, hurricane preparation has been halted, and numerous public services and small businesses have taken a hit due to lack of federal patronage.

The long term impacts of this shutdown are yet to be ascertained, but they sure will not be for the good of the American people.

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