Reasons and effects about the U.S. government shutdown

Reasons: 

“All roads lead to Obamacare.” The Affordable Care Act is the center of the controversy this time, and it would take an army of angry, Republicans with brinkmanship tactics (i.e. shutting down the entire American government) attempt to defund the law. This initiative of using Obamacare as a bargaining chip to avoid a government shutdown is was spearheaded by Senator Ted Cruz (R-Texas). As of October 1, we officially entered a government shutdown for we have no planned budget for the new fiscal year. As President Obama and Speaker Boehner go at it with their respective rhetoric, many federal workers have been furloughed with no pay. 

As of right now, 800,000 federal employees were furloughed as non-essential members of the federal workforce. At the current rate of two weeks since the government shut down, this would lead to a 0.3% drop in the national GDP when the numbers are looked at annually, or a whopping $300 million in national GDP per day. Relatively, at first this doesn’t seem like much, but if the government is shut down for a greater period of time, theeconomic impact in the future gets worse.

 As mentioned before, and witnessed in the graph, federal spending has seen a tremendous surge in our national GDP since 1995. In fact many nations are looking at America with concern. Douglas Carswell, a member of the British Parliament, states the the U.S. has been living far beyond its means, and that such inequity in funds is a surefire way to ensure that “something’s going to give…and not in a philanthropic sort of way.” 

Chinese Vice Finance Minister Zhu Guangyao of China hopes that the U.S. settles its issues with the government shutdown by October 18 to ensure that the economy doesn’t default and that the investments are secured. 

While nations such as China naturally worry about their investments, nations such as Singapore cry out about “dented diplomacy.” Nations are uneasy with the idea of a president who can’t attend to his international duties because he’s too busy dealing with domestic affairs every time there is gridlock in the economy. 

Effect:

Social Security Payments

Finding for Social Security is considered mandatory, so beneficiaries should not worry about whether or not they are going to receive their checks in the mail. What is not guaranteed, though, are paychecks for Social Security employees who process benefits. Social Security checks went out during the 2011 shutdown, despite claims from President Barack Obama and Senate Majority Leader Harry Reid they would not. However, the employee shortage will likely result in processing delays.

Medicare/Veterans Affair Care

Much like Social Security, funding for Medicare and Veterans Affairs are mandatory and are not subjected to congressional appropriation. However, employees responsible for processing applications are not expected in a shutdown. The Department of Health and Human Services estimated 62 percent of its 76,000 employees would have stopped working by the second day of a shutdown in April 2011.

Federal Taxes

The Internal Revenue Service will continue to process payments through a government shutdown, according to its 2014 contingency plan. Individuals currently being audited by the IRS may get a momentary breath of fresh air as the agency suspends all audit functions. On the other hand, those looking for assistance in filing their tax reforms are not so lucky, as the IRS will suspend taxpayer services such as its call centers.

 

 

 

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