The Meaning of the US Shutdown

We all heard about the US Federal government shutdown. But if you like us, did not know exactly what this implicates, this small piece will enlighten your doubts.

How come did this happen?

The Federal government shutdown is an inherent illustration of the American democracy. Under the country’s Constitution, both parts of Congress, the House of Representative and the Senate, must agree on the US annual financial budget. The President by himself cannot bring legislation unilaterally. The problem is that by this date, the Senate is controlled by Obama’s Democrats and the House of Representatives by the Republicans, whose Tea Party strongly opposes to the Obamacare. Until the two parties reach an agreement, Congress will be unable to set the 2013-2014 budget and the Federal government will remain shutdown. There is not magic potion: someone’s gotta give.

What does the shutdown mean?

It means that about 700 000 workers in non critical services were sent home. For instance, public employees in museums, national parks and zoos are not working since October 1st. If you are in the US and wanted to visit the Statue of Liberty or the magnificent Yosemite National Park you will have to wait because they were closed until further notice. More importantly, American passports and foreigner’s visa applications for the US are frozen until the government reopens. Garbage in Washington DC will not be collected and will pile up until the end of the shutdown. And just in case you’re wondering if all these people will be paid, well, no one really knows. The last shutdown occurred during the Clinton administration in 1995 and Federal workers were paid retroactively. So, the majority of analysts defend that there is no need for panic: people will be paid. Yet, during the period of shutdown, federal salaries are frozen for these non critical employees and of course, if this people aren’t paid, they don’t spent and the entire economy suffers huge losses. And as this Guardian’ clarifying article reveals, according to analysts at IHS Global Insight, every day of shutdown equals to losses of 300 million of US total economic output.

Every day is a race against the machine. And as stated above, the longer this continues, the bigger will be the costs.

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