1. US SHUTDOWN
Abhishek Gaurav 11024
Ankur Agrawal
11116
Pranav Bhargava 11511

2. What Just Happened

The U.S. Shutdown continued from October 1st till October 16th

The Shutdown was propelled because the Congress failed to enact legislation
appropriating funds for fiscal year 2014, or a continuing resolution for the interim
authorization of appropriations for fiscal year 2014

The shutdown situation is a product of the US 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. In a shutdown, the
government lacks the legal authority to spend money on non-essential
services. Under a federal law known as the Anti-Deficiency Act, it can be a felony
to spend taxpayer money without an appropriation from Congress.

3. And What Followed
•
During the Shutdown, the non-essential government services remained
suspended. National parks — such as the Grand Canyon, Zion and Yosemite —
were closed since Oct. 1 and more than 20,000 park employees were forced to go
on leave without pay
•
National landmarks such as the Statue of Liberty in New York, Independence Hall
in Philadelphia and the Washington Monument were closed to visitors during the
shutdown.
•
Approximately 800,000 federal employees in various other services were
indefinitely furloughed, and another 1.3 million were required to report to work
without known payment dates.
•
Only those employees and services deemed "essential" under the Anti-deficiency
Act like Military, Medicare, Social Security continued government operations.

4. Has it happened Before
•
Technically, 17 times. But a serious, prolonged shutdown has happened
only once before.
•
Since 1976, there have been 17 times when Congress has allowed
government funding to lapse. Back in the 1970s, this happened on six
occasions, although those lapses didn't lead to actual, physical
shutdowns — government carried on as usual.
•
In the 1980s, the Anti-Deficiency Act actually required government
agencies to close down if their funding expired. Since then, a failure to
fund the government has meant an actual, tangible shutdown. Most of
the shutdowns in the 1980s were however, brief affairs.
•
By far the most significant shutdown to date came in 1995-'96 and
lasted 21 days, as Bill Clinton wrangled with congressional Republicans
over budget matters.

5. Why did it happen at all
•
The US financial year ended on 30 September, and politicians on the Capitol Hill
failed to agree a new budget for the 2013-2014 financial year. Even a 'stopgap'
funding deal proved beyond them. Without a budget deal approved by both parts
of Congress, the House of Representative and the Senate, there was no legal
agreement to pay non-essential staff and so their furloughing started
•
Under the US constitution, the President cannot unilaterally bring in legislation.
And despite weeks of talks, Republicans continue to include cuts and delays to
Barack Obama's Affordable Care Act in the budget legislation they sent up to the
Senate.
•
The House of Representatives is controlled by the Republican Party, whose Tea
Party movement remain deeply opposed to Obamacare. They tried to use the
budget as leverage to crowbar changes to the Act. The Senate, which is under the
control of Obama's Democrats, has stood firm.

6. Why could not a deal be agreed upon
•
Thirdly, the US recovery from the recession since 2008 is incomplete and the
failure of the Congress to pass the budget has begun to hit the poor.
•
More than 45 million people in the US are below poverty line and 23 million
households gets government food assistance for survival) which includes the war
veterans, the home loan applicants, the tourists, and many others.
•
Inequality in American society is spectacularly high. President Barack Obama
and his Democratic Party liberals have taken steps to alleviate the suffering of the
downtrodden with a new healthcare act, called Obama Care, and several other
entitlement programmes for the poor.
•
But the wealthy Americans have their representatives in the Republican Party
and the ultra conservative section within that party is opposed to big government
spending for the poor and is supportive of a policy that could give tax rebates to
the wealthy.

7. Are the Republicans Justified
•
The US is a two-party state. The Republicans are split. Many utterly detest their
Democrat president. They want to gut the contents of Barack Obama’s healthcare
legislation.
•
This introduces what we might recognise as a health service for millions of Americans
for whom there is currently none. Other Republicans take a less partisan view and
recognise that Obama won the last presidential election on the basis of his healthcare
plan. So he has the political authority for his plan
•
In the proposed US budget ,they get the reduction in overall government spending
they want. But because Obama gets his healthcare policy funded the Republicans
oppose the overall deal.
•
The Republicans’ extraordinary position is being led by Senator Ted Cruz. He is a
right-wing Texan with his eyes on a run at the White House. He opposes everything
Obama proposes. He is leading the so-called Republican political strategy. They take
a pretty jaundiced view of Washington DC.

8. How will it affect everyone
•
The local economy around Washington, D.C. is expected to lose some $200
million in economic activity for each day that the government is shut down.
•
A short government shutdown, which would send more than 800,000 federal
workers home, could shave about 0.3 percentage points off economic growth in
the fourth quarter of 2013
•
U.S. tourist industries and airlines are expected to suffer millions of dollars in
losses during the ongoing shutdown, in part because so many parks and
museums have shut down, turning away millions of visitors.
•
The Department of Interior would temporarily stop reviewing permits for onshore
oil and gas drilling as well as applications for renewable energy projects on public
land.

9. Economic Costs
•
The yield on short term US Treasury bonds - the amount the US
government most pay to investors to hold US debt - has risen,
increasing US borrowing costs and indicating that global investors have
become unhappy with Washington wrangling.
•
Standard & Poor's says the shutdown has cost the US economy $24bn
(£15bn), shaving 0.6% off of economic growth this quarter.
•
Furthermore, the shutdown impacted the release of economic data,
particularly important measures of job creation and prices.
•
Consumer confidence measures plunged as a result of the shutdown not a good sign for the US economy, because consumers account for
70% of all spending.

10. Conclusions
•
However as of now, President Barack Obama has signed into the law approved
by Congress on Wednesday 16th October to reopen the federal government and
avert an unprecedented debt default, ending a bitter and partisan 16-day impasse.
•
The Congress has passed bill to raise the US debt ceiling and end shutdown. The
fiscal Bill passes with majorities in Senate and House. The deal funds federal
government through 15th January. It pushes debt ceiling deadline to 7th February.
•
Obama rightly summed the spirit of all Americans in his statement made soon
afterwards the end of shutdown “My hope and expectation is everybody has
learned that there is no reason why we can't work on the issues at hand, why we
can't disagree between the parties while still being agreeable, and make sure that
we're not inflicting harm on the American people when we do have
disagreements”