What you need to know about US gov­ern­ment shut­down

Gulf Times Business - - BUSINESS - By Erik Was­son and Lau­rence Arnold

The im­passe over Pres­i­dent Don­ald Trump’s cam­paign prom­ise to build a wall along the US-Mex­ico bor­der has pro­duced the long­est US gov­ern­ment shut­down ever. Though some de­part­ments are op­er­at­ing, and oth­ers are staffed by “es­sen­tial” em­ploy­ees, the ef­fects of the shut­down are be­ing felt well be­yond Wash­ing­ton, with nei­ther Trump nor op­po­si­tion Democrats show­ing any signs of back­ing down.

1. Why is there a gov­ern­ment shut­down?

The US gov­ern­ment runs on 12 ap­pro­pri­a­tions bills passed each year by Congress and signed by the pres­i­dent. In fis­cal years like this one, when all 12 bills aren’t adopted by the Oc­to­ber 1 start of the fis­cal year (only five were com­pleted on time), Congress and the pres­i­dent keep the ma­chin­ery of gov­ern­ment hum­ming by pass­ing short-term ex­ten­sions. They fol­lowed that process this time, but then Trump de­manded that any fur­ther ex­ten­sion in­clude $5.7bn for his bor­der wall.

2. How much of the gov­ern­ment is closed?

Nine fed­eral de­part­ments and agen­cies such as the Fed­eral Avi­a­tion Ad­min­is­tra­tion, En­vi­ron­men­tal Pro­tec­tion Agency and Se­cu­ri­ties and Ex­change Com­mis­sion have been closed since De­cem­ber 22, when their fund­ing ran out. Other pieces of the gov­ern­ment, no­tably the De­fence De­part­ment, are funded be­cause Congress and Trump had man­aged to reach agree­ment on their 2019 ap­pro­pri­a­tions. Still oth­ers, like the US Postal Ser­vice and US Fed­eral Re­serve, have fund­ing streams sep­a­rate from what Congress pro­vides. In closed de­part­ments and agen­cies, only em­ploy­ees deemed “es­sen­tial” re­port to work, and they won’t be paid un­til the shut­down is over.

3. Who is es­sen­tial?

Gen­er­ally speak­ing, gov­ern­ment work­ers in law en­force­ment and pub­lic safety con­tinue to work - so air traf­fic con­trol, med­i­cal care of vet­er­ans and fed­eral crim­i­nal in­ves­ti­ga­tions are mov­ing for­ward dur­ing the shut­down. But defin­ing “es­sen­tial” is more art than sci­ence, with in­di­vid­ual de­part­ments – and the po­lit­i­cal ap­pointees who run them – hav­ing a say over who comes to work and who stays home. In the­ory at least, a fed­eral em­ployee who works dur­ing a shut­down, but isn’t sup­posed to, could face fines or a prison term un­der what’s called the An­tid­e­fi­ciency Act.

4. What’s been the im­pact so far?

The Food and Drug Ad­min­is­tra­tion isn’t do­ing some rou­tine food safety in­spec­tions and might run out of funds to re­view new drugs. The SEC can’t ap­prove ini­tial pub­lic of­fer­ings. Air­lines can’t get per­mis­sion to ex­pand fleets. With mort­gage lenders un­able to ver­ify bor­row­ers’ in­comes, home clos­ings are be­ing de­layed. Some fish­ing boats in Alaska are stuck in dock, in need of fed­eral per­mits and in­spec­tions. US air­port screen­ers, though de­clared es­sen­tial, won’t be get­ting pay­checks and are call­ing in sick in larger-than-nor­mal num­bers. Trash is pil­ing up in na­tional parks, which are open but un­staffed.

The Agri­cul­ture De­part­ment has found funds to pro­vide food stamp as­sis­tance through Fe­bru­ary but would run out af­ter that.

The Com­mod­ity Fu­tures Trad­ing Com­mis­sion has stopped re­leas­ing its weekly Com­mit­ments of Traders re­ports. Hun­dreds of thou­sands of fed­eral work­ers will have to make due with­out their pay­checks.

5. Will fed­eral em­ploy­ees even­tu­ally get paid?

Prob­a­bly. When a shut­down hap­pens, most fed­eral em­ploy­ees are placed on un­paid fur­lough. Though there “ap­pears to be no guar­an­tee” that they will even­tu­ally be paid, in prac­tice they al­ways have been, retroac­tively, via leg­is­la­tion passed by Congress, ac­cord­ing to the Con­gres­sional Re­search Ser­vice.

6. What will this mean for the US econ­omy?

That de­pends on how long a shut­down lasts. Kevin Has­sett, chair­man of the White House Coun­cil of Eco­nomic Ad­vis­ers, said the shut­down will cut US eco­nomic out­put by about 0.1% ev­ery two weeks. That’s about in line with an es­ti­mate by Bloomberg economists that a gov­ern­ment shut­down that lasted two and a half weeks in 2013 sub­tracted 0.30 per­cent­age point from quar­terly gross do­mes­tic prod­uct.

7. How might this end?

Trump could give in and agree to fund the gov­ern­ment with­out progress on his wall, or con­gres­sional Democrats could give in and pledge money for the project. There’s room for com­pro­mise be­tween the $1.6bn Democrats pre­vi­ously of­fered for bor­der se­cu­rity and the $5.7bn Trump wants specif­i­cally for a wall; plus, Trump seems will­ing to ex­pand his def­i­ni­tion of an ac­cept­able “wall.” Trump could try to sweeten the deal for Democrats, per­haps by of­fer­ing le­gal pro­tec­tions for the young, un­doc­u­mented im­mi­grants known as “Dream­ers.” Then there’s Trump’s talk of declar­ing a na­tional emer­gency un­der which he could shift mil­i­tary con­struc­tion funds to build the bor­der wall, re­mov­ing the is­sue from bud­get talks. That would be an ex­tra­or­di­nary use of a pres­i­den­tial pre­rog­a­tive usu­ally re­served for pros­e­cut­ing a war or re­strict­ing trade and trans­ac­tions with a for­eign ad­ver­sary, and would likely draw le­gal chal­lenges.

8. How many times has the US gov­ern­ment shut down?

There have been 13 shut­downs since 1981, rang­ing from one to 21 days, in­clud­ing a three-day one last Jan­uary. (Be­fore 1981, agen­cies op­er­ated mostly as nor­mal dur­ing fund­ing gaps, their ex­penses cov­ered retroac­tively once a deal was reached.) The 21day shut­down, in De­cem­ber 1995 and Jan­uary 1996, was a fa­mous bud­get im­passe that pit­ted Pres­i­dent Bill Clin­ton, a Demo­crat, and the Repub­li­can House speaker, Newt Gin­grich. Shut­downs over spend­ing dis­agree­ments are dif­fer­ent (and less grave) than what would hap­pen if the US breached its debt ceil­ing and de­faulted on some of its obli­ga­tions. That’s never hap­pened.

A demon­stra­tor holds a sign, sig­ni­fy­ing hun­dreds of thou­sands of fed­eral em­ploy­ees who won’t be re­ceiv­ing their pay­checks as a re­sult of the par­tial gov­ern­ment shut­down, dur­ing a “Rally to End the Shut­down” in Wash­ing­ton on Thurs­day. The im­passe over Pres­i­dent Don­ald Trump’s cam­paign prom­ise to build a wall along the US-Mex­ico bor­der has pro­duced the long­est US gov­ern­ment shut­down ever.

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