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Current stakes involved in the US government shutdown

11.01.2019
Article from AFRIC Editorial
Economic growth in the United States may plunge if the current government shutdown which has been ongoing for the past weeks persist. Analysts indicate that the shutdown has a toll on government spending which contributes to about 18 percent of economic output. Employees of nine agencies who were sent home without pay are also suffering from the devastating effects of this impasse. What led to the shutdown and how it is affecting the everyday life of US citizens is now a major cause for concern.

Government shutdowns in the United States generally occurs when the President and one or both of the chambers of Congress have disagreements over budget allocations before the existing budget cycle ends.

In such a case, the Anti deficiency Act requires that the federal government call for a “shutdown” of the affected activities involving the furlough of non-essential personnel if necessary and limitation of agency activities and services.

The ongoing shutdown which started since 22 December may prolong if the President Donald Trump and the congress fail to resolve impending issues. This may however not have immediate effects on the government, but will obviously badly affect employees who have either been sent home or are working without pay.

HOW DID THE US GET HERE?

The US president, Donald Trump and Democrats are in loggerhead over the construction of a border wall on the southern border. Trump demanded that $5.7bn which is intended for the construction of the said wall be added to the new federal spending legislation that had to be passed before the previous spending expired on December 21.

On several occasions, he threatened a shutdown if Democrats failed to include the additional $5 billion for the construction of the wall on the U.S.-Mexico border.

Contrarily, Democrats who considered such project ineffective offered $1.3 billion to continue current border-security funding to reinforce the security around the border.

The inability of the two parties to come to a compromise led to a government shutdown which according to Trump may continue for months if his demands are not met.

WHAT GOES WRONG SHOULD THE SHUTDOWN EXTEND?

Currently, 25% of the government have been affected while close 800,000 federal employees furloughed; temporarily laid off or forced to work without pay including tens of thousands of workers in federal law enforcement and national security positions, such as FBI, Border Patrol, Secret Service and Transportation Security Administration agents due to the shutdown.

The situation is gradually deteriorating as most workers are now forced to deep into their savings, rely on credit cards or even crowd source funds to make ends meet.

According to a 2017 report by employment website CareerBuilder, close to 78% of US workers live paycheck to paycheck, this situation is particularly very hard as their major source of funding has been cut off.

Several of such workers have taken to social media, specifically twitter to decry their present conditions, sharing their stories and calling on the administration to resolve the issue.

It is also reported that the Trump administration had not expected that the shutdown would be prolonged and are now getting to feel the consequences of the extended shutdown which has led to delays of $140 billion in tax refunds.

Though the government has assured and ordered continuity in tax refunds, there is still a big question as to how many workers will be present to carry out the payments.

WHAT HAPPENS WHEN US INSTITUTIONS STOP WORKING?

Despite the fact that employees who have been laid off and Americans who depend on suspended services may bear the full brunt of the shutdown, some agencies which can continue functioning without allocated budget may use up saved funds, while other services will have to close.

If such a situation goes beyond two weeks, economic growth will be affected because government spending which is component of gross domestic product has been tampered with.

Economists have already estimated the cost of the shutdown on the U.S. economy at about $1.2 billion for each week, approximately 0.05 percentage points off the GDP growth rate.

Eventually, employees who have their pay checks suspended will also have to cut down on spending and consumption habits. It is also worth noting that Private-sector contractors and some other services which is linked to the government could also be affected.

While workers whose daily lives have been badly affected by the shutdown hope that the stalemate is quickly resolved, the president on his part is not willing to back down on his demand. The tug of war between Trump and the Congress will definitely have to end soon to avoid a spillover of the crisis which already has devastating effects.  However, there is uncertainty as to what may eventually happen should the shutdown persist any longer.

Article from AFRIC Editorial

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