Reasons :
- On Oct 1 2013 ,the US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget.Under U.S. law ,a new bill to approve funding for the next financial year is required, which must have been approved by the House of Representatives, and the Senate, and the president
- The core problem is that the Republican party controls the lower house, or House of Representatives, while the Democrats control the Senate.The Republican-led House of Representatives insisted on delaying Democratic President Barack Obama's healthcare reform - dubbed Obamacare - as a condition for passing a bill.The Democratic-led Senate twice rejected bills from House Republicans that would have funded the government only if funding for President Obama's healthcare law was delayed for a year.ITS a DEADLOCK.
- More than 700,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over.
- It is the first shutdown in 17 years.The US government has not undergone a shutdown since 1995-96, when services were suspended for a record 21 days.
Who will be Impacted :
- State department will be able to operate for limited time
- Department of defence will continue military operation.
- Department of education will still distribute $22bn (£13.6bn) to public schools, but staffing is expected to be severely hit
- Department of energy - 12,700 staff expected to be sent home, with 1,113 remaining to oversee nuclear arsenal
- Department of health and human services expected to send home more than half of staff
- The Federal Reserve, dept of homeland security, and justice dept will see little or no disruption
- US Postal Services continue as normal
- Smithsonian institutions, museums, zoos and many national parks will close
- Under the shutdown, national parks and Washington's Smithsonian museums will close, pension and veterans' benefit cheques will be delayed, and visa and passport applications will go unprocessed.
Why it doesn't happen in other countries :
The shutdown situation is a product of the U.S. democratic system. The President is both head of state and head of the federal government, without a guaranteed majority in either of the legislative bodies where new laws are debated and voted upon (because Presidents, congressmen and women and senators are elected separately). The President can’t simply ram laws through Capitol Hill.
How does the US shutdown row tie in with the debt ceiling battle?
The shutdown battle is about approving future spending. The debt ceiling is another problem facing Washington — America has a legal limit on its borrowing of $16.7tn dollars, and it’s likely to hit that point in mid-October.(17 Oct 2013)
If a deal isn’t reached, then America would run out of borrowing room, meaning the world’s biggest economy would default on its debts. Both problems need solving — and a shutdown would eat into valuable time to fix the debt ceiling.
Why can’t they just raise the debt ceiling?
It’s up to the House of Representatives and the Senate.And both are unpredictable.
Impact on Stock market :
Moody’s, the rating agency, calculates that a two—week shutdown would cut 0.3% off US GDP, while a month—long outage would knock a whole 1.4% off growth
