800,000 public servants considered as “non-essential”, have just understood the meaning of unpaid leave. After six months of long deliberation in congress, both Republicans and Democrats did not get along with each other about the budget resolution for 2014. Actually, with a Republican House of Representatives and a democrat Senate, floor debates were so heated, that they did not succeed in. On the one hand, Senate introduced a resolution with a decrease of the deficit of $1,800 billions of dollars spread over ten years, with two thirds of cuts and one third of revenues. On the other hand, the House of Representatives appears completely opposed to any increasing of taxes. Moreover, Republicans threatened to not to vote for a higher debt ceiling if they were not heard about the reduction of expenditures. Therefore, the shutdown of 2013 questions how politicized is the budget resolution, and what could be the several consequences of this situation.
Here is a retrospective of the 2013 shutdown that highlights the different aspects of this typically American event. What is concretely a shutdown? Whose fault? What consequences?
What is a Shutdown?
A ‘shutdown’ is the cessation of the operation of most federal administrations and services in the United States. The ‘shutdown’ is provided by American law in cases in which the budget would not be passed by Congress prior to the beginning of the fiscal year, that is to say before October 1st. The White House is then obliged, in absence of budget, to furlough federal employees considered as “non essential”, without known payment dates. Employees considered as “vital”, approximately 5%, are the only ones who remain in activity and who will safely receive their income.
What happened in 2013?
From October 1st to 16th, 2013, the United States federal government entered a shutdown. The two chambers of Congress failed to agree neither on a legislation appropriating funds for the 2014 fiscal year nor on an appropriations continuing resolution. The Republican-led House of Representatives adopted on September 29th a budget bill delaying the implementation of Obamacare for one year. The White House strongly opposed this deferral and the Democratic-led Senate rejected the bill on September 30th. The most important part of the health insurance reform still entered into force the next day. A “funding-gap” was created and the American government shutdown on October 1st. Consequently, the fiscal year started without budget. The White house then curtailed most federal operations and indefinitely furloughed approximately 800,000 federal employees. On October 10th, House Speaker John Boehner proposed a six-week debt limit extension in exchange of Obama’s reviewing on spending cuts. It came to no agreement. From October 11th to 14th, a bipartisan group of senators discussed and worked on a bill to reopen the federal government and avoid default. After lots of proposals and refusals, the Senate came to a deal on October 16th. This proposal extended the debt limit until February 7th, 2014, and passed through both chambers. President Obama signed the deal into law and regular federal operations resumed on October 17th.
Obviously, the shutdown impacted the whole society. Concerning economic matters, the stock exchange listing was slowed. The SEC (Securities and Exchange Commission) only maintained about 250 employees (on 4149 usually).
Moreover, according to various rating agencies, the shutdown could represent a decrease from -0.3% to -0.6% of the GDP on the last quarter, and might cost around $8 billion a week. The financial department, for his part, counted 80% of his employees in a situation of unpaid leave. On the same way, the Internal Revenue Service (which handles taxes issues), kept less than 10% of their employees at work. The shutdown also spread to the judicial branch: only 15% of the federal workforce was in courts to continue their job.
Last, the impact on citizens: the Americans had to face with many federal institutions closed. What is more, deals with tourism. More than 400 national parks, nature reserves but also museums were temporary closed. For instance, the Statue of Liberty was inaccessible. Another picture that struck the Americans was a little boy costumed in bear, in front of the Washington Zoo, hung to the closed railings. Many tourists were there, powerless, and economic losses are clearly significant. Then, not only had the shutdown political consequences but also economic ones.
Un article d’Alice GIRON, Nina DRAPALA, Claire BRIEUSSEL