US government shutdown: What is it and why is it happening?

US shutdown

New Delhi: The US government, the world’s largest superpower, is facing a shutdown after midnight tonight. This means that all non-essential government services and operations will be suspended until a budget agreement is reached. This is the fourth time in the last decade that the US has experienced a shutdown. It is expected to have an impact not only on the US but on the entire world. In today’s global era, a government shutdown in the US can have a negative impact on the confidence and mood of investors. As a result, markets around the world may be affected by this US shutdown.

From an economic point of view, this shutdown will affect the sentiments of investors all over the world including the US, which may lead to a decline in the stock markets. It is natural that one may wonder what this US shutdown means and what has caused it. Let us explain to you the complete story behind this.

What is a US shutdown?
A US shutdown occurs when there is a deadlock between the government and the opposition over the funding of the government. The US government operates on an annual budget that needs to be approved by both houses of Congress, the House of Representatives and the Senate, and signed by the President. If this does not happen by a certain deadline, usually September 30, then the government runs out of money and has to shut down.

When a shutdown happens, about 4 million federal government employees do not get paid and many of them are furloughed or sent on unpaid leave. Research by agencies like NASA is disrupted. National parks are closed. All the things that are funded by the government are stopped, except for emergency services. However, it does not have much impact on the private sector.

Why did it happen?
The current situation arose because the House of Representatives failed to pass a stopgap measure on September 29 to keep the government running for another month. The stopgap measure was opposed by 232 members, mostly from the Republican Party, while only 198 members voted in favor of it. The Republicans tried to introduce provisions that would cut the spending of federal agencies and ban immigration, but they were rejected by the Democrats who control the House. Even if these provisions had passed the House, they would have faced resistance in the Senate, where President Joe Biden’s Democratic Party has a majority.

US shutdown

What will happen next?
The US government will remain shut down until a budget agreement is reached between the two parties or another stopgap measure is passed. This could take days or weeks, depending on how willing they are to compromise and negotiate. The longer the shutdown lasts, the more damage it will cause to the economy and public services.

The last time the US faced a shutdown was in 2018-2019, when it lasted for 35 days, making it the longest shutdown in US history. It was caused by a dispute over funding for a border wall with Mexico that President Donald Trump wanted to build. It ended when Trump agreed to sign a bill that did not include money for the wall.

The US shutdown is a rare and extreme event that reflects the deep political divisions and dysfunction in the country. It also affects its global reputation and influence as a superpower and a leader of democracy.