US Govt Begins Shutdown as Congress Fails to Reach Budget Deal
The US government has begun a partial shutdown after the Republican-led House of Representatives refused to approve a budget for next year.
A midnight deadline passed without agreement despite a last-gasp appeal by President Barack Obama.
More than 700,000 US government workers face unpaid leave with no guarantee of back pay once the deadlock is over.
Critical functions like air traffic control and military operations will continue. Social Security benefits will be paid. National parks and most federal offices will close.
Republicans insisted on delaying President Obama's health care reforms as a condition for passing the budget.
President Barack Obama issued a statement early Tuesday to military members and Department of Defense employees about the outcome of the shutdown.
"Those of you in uniform will remain on your normal duty status," the president said, as cited by CNN.
"Congress has passed, and I am signing into law, legislation to make sure you get your paychecks on time. And we'll continue working to address any impact this shutdown has on you and your families."
"To all our DOD civilians—I know the days ahead could mean more uncertainty, including possible furloughs," the president added. "And I know this comes on top of the furloughs that many of you already endured this summer. You and your families deserve better than the dysfunction we're seeing in Congress. ... That's why I'll keep working to get Congress to reopen our government and get you back to work as soon as possible."
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What is the debt ceiling? The debt ceiling is the federal borrowing limit, currently set by Congress at about $16.7 trillion. The Treasury has been operating a hair under the limit since May 19 by juggling funds among different accounts. The gimmicks won’t last past Oct. 17, Treasury Secretary Jacob Lew told Congress last week. At that point, the Treasury won’t be able to issue new debt without violating the law.
Instead, the U.S. will have to pay its bills with the cash it has on hand and any revenue from taxes and other income. Mr. Lew estimated that he’ll have about $30 billion in the vault by Oct. 17. The Congressional Budget Office forecasts those funds would be used up between Oct. 22 and Oct. 31 unless Congress raises the debt cap.
If Congress doesn’t raise the limit, that won’t change spending obligations already set in law. But the U.S. won’t be able to pay all of its bills. In fact, failure to pay some obligations would likely make things worse for the government by causing higher interest rates or incurring penalties.
Why do we have a debt ceiling? In the words of the Congressional Research Service: “The debt limit… provides Congress with the strings to control the federal purse, allowing Congress to assert its constitutional prerogatives to control spending. The debt limit also imposes a form of fiscal accountability that compels Congress and the President to take visible action to allow further federal borrowing when the federal government spends more than it collects in revenues.”
Americans are very strange creatures. They have no qualms at all about going into any number of countries to interfere and kill people and consequently waste trillions of dollars; but they shut down their own country because their government cannot agree on a healthcare bill and reforms for their own people.