What is the ‘shutdown’ and why would it paralyze the United States government?

With information from AFP

The United States is mired in uncertainty. At the start of the new fiscal year, October 1, an agreement has not yet been reached to approve or extend the federal budget. This could cause—in less than 24 hours—the partial paralysis of various activities, services and key functions of the White House. That is, a ‘shutdown’ or closure of the federal government.

The reasons? The lack of consensus between the Senate, mostly composed of Democrats, and the House of Representatives, under the command of Republicans, on budget amounts and fiscal debt.

One of the main issues in dispute is the military and humanitarian aid of more than US$24 billion destined for Ukraine. In that sense, the Republican wing has been against the inclusion of this proposal.

What sectors does the ‘Shutdown’ affect in the United States?

According to the White House Budget Office (OMB), the shutdown could affect up to 1.5 million officials, and around two million military personnelwho would stop receiving their salary or would enter the process of technical unemployment.

The suspension also affects air traffic controllers and public employees of the Transportation Security Agency (TSA), which could cause delays in flight departures or even airport closures.

In addition, social food assistance programswhich benefit around 7 million women and children, could be delayed, as could support for victims of natural disasters.

At the information level, official figures for GDP, inflation, unemployment, among others, will not be released. Likewise, national and tourist places such as the Statue of Liberty or Yosemite and Yellowstone parks would close their doors.

It should be noted that some functions considered essential such as border protection, hospital care and maintenance of the electrical grid will continue to be carried out.

According to the financial group Goldman Sachs, each week of the ‘Shutdown’ would cost 0.2 points to GDP in the fourth quarter. Along those lines, the rating agency Moody’s could also begin to downgrade the rating for the US debt that remains at AAA.

Has a ‘Shutdown’ happened before in the United States?

This is not the first time that the United States has faced a situation of this nature. During Donald Trump’s term, one of the longest “shutdown” in history occurred: from December 22, 2018 to January 25, 2019.

Estimates indicate that the losses to the US GDP were approximately more than US$3 billion.

Can ‘Shutdown’ be avoided?

For her part, Shalanda Young, director of the White House Office of the Budget (OMB), He stated that a last-minute agreement can still be reached.

“We still have a day and a half to find what is needed to approve the agreement,” he said on September 29.