Who would have thought, US government shuts down due to lack of budget.
Don’t worry much, this is not because US government is running out of USD. It’s because it failed to have the budget bill approved before their 01Oct deadline, which is today. Due to lack of approved budget and funding, government services will be put on hold, leaving government employees to temporary unpaid leaves.
And this is not the first time. A similar shut down occurred 17 years ago, during Clinton’s presidency. And a handful more prior to that. Basically, the main reason why the budget bill did not meet the deadline is due to failure of Republicans and Democrats to agree on the contents of the bill. So it’s a matter of principle and politics I suppose.
Right now in the US, Senate is controlled by Democrats while the Congress is majority from Republicans. Republicans wanted to include some items to “defund, delay or dismantle” Barack’s health care law, also dubbed as Obamacare. Of course, the Senate would not have it, and even if it does, Democrats claim that Barack won’t sign it.
US Congress is next tasked to enact a law that will temporarily provide budget and restore spending power to its government functions. Interestingly in the Philippines, if our Legislators fail to enact the budget for the following year, the last approved budget is used as reenacted budget. So I’m part wondering why the US government does not have this, to avoid such shutdowns.
The shutdown will have implications on US economy as government spending and functions slow down, while government employees become temporarily out of work with no pay. Here’s a well written article on which government services will shut down and which will remain BAU (read here). Although another article says the economy in fact boomed during the last shut down. So we’ll see.
As for us, the stock market is jittery as this is uncertainty to one of the worlds biggest economies. Corporate functions will likely go on as BAU, but still this economic and political uncertainty will not be taken lightly by the stock markets.
Another major concern, perhaps bigger, as reported by Rappler is the US debt ceiling, which if not lifted, will prevent the US from further borrowing, which it needs to do to repay its other loans, not doing so could then lead to US defaulting on its obligations, a bigger disaster to the whole world.
As for our economy, shouldn’t be much impact for now since we are strong internally and granted this gets fixed soon. If the deadlock leads to more damages such as US default, then that’s another story.