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The threat of shutdown once again looms over USA

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As the possibility of another government shutdown arises, discover the potential consequences and implications for the United States.

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The United States government is facing the possibility of a shutdown for the fourth time in less than a decade, as lawmakers struggle to agree on a spending bill before the deadline of September 30. A shutdown would mean that many federal agencies and services would stop operating, affecting millions of Americans and the economy. In this blog post, we will explore the reasons behind the impasse, the potential consequences of a shutdown, and the possible ways to avoid it.

Why is there a risk of a shutdown?

The main reason for the deadlock is the disagreement between Democrats and Republicans over the debt ceiling, which is the legal limit on how much the government can borrow to pay its bills. The debt ceiling was suspended in 2019, but it was reinstated on August 1, 2021, at about $28.4 trillion. Since then, the Treasury Department has been using extraordinary measures to keep paying the government’s obligations, but it has warned that it will run out of cash by mid-October.

Democrats want to raise or suspend the debt ceiling as part of a broader spending bill that would also fund the government for the next fiscal year and advance President Biden’s $3.5 trillion social and environmental agenda. Republicans, however, oppose the spending plan and have vowed to block any attempt to increase the debt limit, arguing that it would enable more wasteful and irresponsible spending by the Democrats.

If Congress fails to pass a spending bill by September 30, or if President Biden vetoes it, the government will enter a partial shutdown, meaning that only essential functions and personnel will continue to operate. If Congress fails to raise or suspend the debt ceiling by mid-October, or if President Biden refuses to sign it, the government will default on its debt obligations, which could trigger a financial crisis and a global recession.

Also read: US House Passed Debt Ceiling Bill: What it Means for Americans

What would be the effect of a shutdown?

A government shutdown would have significant and widespread impacts on various sectors and groups of people. According to a report by the Congressional Research Service, some of the effects of a shutdown include:

  • About 800,000 federal employees would be furloughed or work without pay, affecting their income and morale.
  • Many federal programs and services would be suspended or reduced, such as national parks, museums, passport offices, veterans’ benefits, food stamps, health care, education, research, and law enforcement.
  • The economy would suffer from reduced consumer spending, lower tax revenues, delayed payments to contractors and vendors, and increased uncertainty and volatility in the financial markets.
  • The public health response to the COVID-19 pandemic would be hampered by disruptions in testing, vaccination, surveillance, and research.
  • The national security and foreign policy interests of the United States would be compromised by reduced military readiness, intelligence operations, diplomatic activities, and international aid.

The duration and severity of these effects would depend on how long the shutdown lasts and how much funding is restored retroactively. According to estimates by Standard & Poor’s, the longest shutdown in history (35 days in 2018-2019) cost the economy about $11 billion in lost output and reduced growth by 0.2 percentage points in the first quarter of 2019.

What are the possible solutions?

The only way to prevent or end a shutdown is for Congress to pass and President Biden to sign a spending bill that funds the government for the next fiscal year or for a shorter period of time. The bill could also include provisions to raise or suspend the debt ceiling or to address other policy issues that are important for both parties.

However, reaching such an agreement is not easy, given the deep divisions and distrust between Democrats and Republicans. Both sides have accused each other of playing politics with the fate of the nation and have refused to compromise on their demands. Moreover, some lawmakers within each party have also expressed dissent or reservations about their own leadership’s strategy or priorities.

One possible way to break the impasse is for Democrats to use a process called reconciliation, which allows them to pass certain budget-related bills with a simple majority in both chambers of Congress without facing a filibuster in the Senate. This way, they could raise or suspend the debt ceiling and advance their spending plan without any Republican support. However, this option also faces some challenges and risks:

  • Reconciliation can only be used once per fiscal year, so Democrats would have to combine their spending plan with their infrastructure bill that they already passed in August using reconciliation.
  • Reconciliation has some rules and limitations that could prevent Democrats from including some of their policy proposals in their spending plan or force them to modify them significantly.
  • Reconciliation requires unanimous support from all 50 Democratic senators (and Vice President Harris as a tie-breaker), which is not guaranteed given that some moderate senators like Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have expressed concerns about the size and scope of the spending plan.
  • Reconciliation could take several weeks or months to complete, which could delay the resolution of the debt ceiling issue and increase the risk of default.
  • Another possible way to avoid a shutdown is for both parties to agree on a short-term spending bill that would fund the government for a few weeks or months at current levels, while they continue to negotiate on a longer-term solution. This option would also require bipartisan cooperation and compromise, but it could buy some time and prevent the immediate disruption and damage of a shutdown. However, this option also has some drawbacks and uncertainties:
  • A short-term spending bill would not address the underlying issues that are causing the impasse, such as the debt ceiling and the spending plan, and could simply postpone the crisis to a later date.
  • A short-term spending bill could face opposition from some lawmakers who want to use the leverage of a shutdown or default threat to push for their policy goals or concessions from the other side.
  • A short-term spending bill could be vetoed by President Biden if it does not include his priorities or if it contains provisions that he opposes.

Conclusion

The threat of a shutdown once again looms over America, and it could have serious and lasting consequences for the government, the economy, and the people. The root cause of the impasse is the disagreement between Democrats and Republicans over the debt ceiling and the spending plan, which reflect their different visions and values for the country. The only way to avoid or end a shutdown is for both sides to reach a compromise and pass a spending bill that funds the government and addresses the debt ceiling. However, this is easier said than done, given the political polarization and complexity of the issues involved. There are some possible ways to break the deadlock, such as using reconciliation or passing a short-term spending bill, but they also have some challenges and risks. The clock is ticking, and the stakes are high. Will Congress and President Biden be able to find a solution before it is too late?

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