US government shuts down following budget block

1 Oct 13
Many US government services will close down today after days of political gridlock in Washington meant Congress failed to agree a federal budget

Speaking before the midnight deadline expired, President Obama warned of the dire economic consequences of a shutdown.

‘It would throw a wrench into the gears of our economy at a time when those gears have gained some traction,’ he said. The White House estimates that a week-long shutdown would cost the US economy $10bn.

It will see government offices close, pensioners’ and veterans’ payments delayed, national parks and monuments not open to visitors and hundreds of thousands of civilian government employees ‘immediately and indefinitely’ put on unpaid leave.

However, social security payments, the postal service, military operations, border checks and public health and safety services will all continue. 

The shutdown, the first for 17 years, has been caused by an impasse between the two houses of Congress. Republicans, who control the House of Representatives, had made their approval of the federal budget contingent on a delay to implementation of controversial ‘ObamaCare’ health reforms. However, the Democrat-controlled Senate rejected their demands and a deal could not be struck in time.

Speaking yesterday, Obama said the American people ‘expect that we don’t bring the entire government to a halt or the entire economy to a halt just because of [political] differences’. 

‘They’ve worked too hard, for too long to recover from previous crises just to have folks here in Washington manufacture yet another one that they have to dig themselves out of.’

Republican House Speaker John Boehner blamed the situation on an intransigent Senate.

‘The House has made its position clear: keep the government running and ensure basic fairness for all Americans under ObamaCare,’ he said. 

‘Unfortunately, Senate Democrats chose to shut down the government rather than discuss or even recognise ObamaCare’s failures. 

‘The best path forward right now is for both chambers to convene a formal conference committee where we can resolve our differences, and move forward on important legislation that gets control of spending and strengthens our economy.’

The US faces a possibly even bigger fiscal crisis late this month when the deadline to raise the statutory debt ceiling is reached.

Last month, Treasury Secretary Jack Lew wrote to Boehner warning that if Congress fails to increase borrowing limits the US’s credit rating could be jeopardised.

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