by Marco Valsania
The fiscal year ends at midnight, and without a new budget, hundreds of thousands of state workers will be laid off and non-essential businesses will close
3′ reading
The time for a government shutdown in the USA is approaching. Unless a last-minute agreement is reached, the new crisis will begin at midnight today, Saturday, September 30th. A partial but widespread closure of administration and all activities deemed non-essential at the end of the fiscal year. Avoiding this will require approval of a new budget agreed upon by a divided and polarized Congress. They find themselves in an impasse that threatens to deal new blows to the credibility of the United States, and fiscal dysfunction could again challenge the country’s debt ratings and harm the economy.
The path to shutdown
President Joe Biden has denounced Republican extremism as the cause of the impending shutdown. Washington was particularly at risk of paralysis due to the uprising of an influential group of ultra-conservative populists who grew up in the shadow of Donald Trump. They have effectively distanced themselves from a bipartisan agreement that could have prevented an out-of-control budget dispute in the run-up to the 2024 election. The agreement between Republican and Democratic leaders and the White House last May had suspended the cap on American debt, which would result in a de facto spending freeze for next year. The radical Republican representatives in the House of Representatives have now raised the bar: They are demanding significant spending cuts and a series of other measures that many observers see as ideological and provocative, and are constantly escalating. They also voted to cut Defense Secretary Lloyd Austin’s salary to $1, calling him incompetent.
The hit from the right to McCarthy
Their position made agreement impossible even within the ranks of their party, which even has a slim majority among deputies: on Friday they even refused to vote for an interim budget proposed by the Republican speaker that would keep the government open for another 30 days would even Kevin McCarthy, who proposed 30% cuts to many programs. The desertion of around twenty MPs led to the failure of the measure. The rebels said they only wanted to vote for even more ambitious and draconian annual budget laws and no new aid to Ukraine. Although the emergency solution was to be dismissed as unacceptable and draconian by the Democratic-controlled Senate, the defeat in the House of Representatives was a harsh rejection for McCarthy and a sign of the tense and chaotic climate in the Republican Party. A Republican congressman from New York, Mike Lawler, called one of the Ultra leaders, Matt Gatez, a “charlatan.” McCarthy is still trying to propose a shorter funding measure of just 14 days.
The impact
The effects of a shutdown depend on its duration. A few days and it will be contained; weeks and will spread like wildfire and reduce GDP. Hundreds of thousands of employees from a variety of ministries and services are suspended from work without pay. The soldiers, 1.3 million, remain in service, but for their part they receive no wages, which they will only get back when the paralysis is over. Of the 800,000 civilians employed at the Pentagon, 200,000 will work without pay and the rest will be suspended. Across the government, 2.1 million workers and 4 million temporary workers will be affected by the lockdown. Some businesses will close completely, such as national parks. But also aid programs for the poor and needy, including 7 million women and children, kindergartens and meals for the elderly. Others are reduced. Services that will remain operational include pensions and health care for the elderly and poor. In the public health sector, 42% of employees will be suspended from work due to lack of resources and 80% in the National Institute for Health will stop research activities
The history of standstills
No shutdown has been triggered since 2018: back then it lasted 35 days. The crisis was triggered by Donald Trump’s demand for billions of dollars for a wall against Mexico. But with increasing polarization in American politics, shutdowns have become more common and damaging in recent decades. In 2013, he was associated with the Republican protest against Barack Obama’s healthcare reform Obamacare. Generally, they are the result of the conflict between Republican demands for significant cuts in social spending and Democrats’ plans to defend or expand them. However, experts warn that strict fiscal policy has very little impact: in the United States, much of the increase in the deficit and debt (which now exceeds $33,000 billion) is linked to the aging of the population and spending on pensions and health care happen automatically year after year, rather than so-called discretionary spending that is voted on every year. The only major discretionary item is defense, which itself has grown significantly in recent years. But no one, not even radical Republicans, wants to insist on reform or austerity on these fronts.
Marco Valsania
journalist
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