US begins shutdown: what does this mean for America?

Nearly 800,000 government workers face unpaid leave as United States is 'plunged into crisis'

THE US government has begun a partial shutdown after politicians failed to agree on a budget for next year. As a midnight deadline passed, the Democrat-dominated Senate and Republican-led House of Representatives refused to back down in a clash over President Barack Obama's controversial healthcare law, known as Obamacare. It is the US government's first shutdown in 17 years.

What happened last night?

In a series of late-night votes the House of Representatives refused to fund the federal government unless the Senate agreed to a one-year delay to Obamacare, key parts of which were due to come into force today. The Senate rejected the proposal with three hours to go before the deadline. Obama went on national television criticising Republicans for trying to refight the last election. "The idea of putting the American people's hard-earned progress at risk is the height of irresponsibility, and it doesn't have to happen," he said.

What causes a shutdown?

Under the US Constitution, both the Senate and the House of Representatives have to pass a law renewing the government's authority to spend money every year. If the bill isn't passed by the end of the fiscal year, which falls on 30 September, that authority elapses and many government services are suspended.

What does this mean for America?

The political deadlock means up to 800,000 US government workers today face unpaid leave with no guarantee of back pay once an agreement is made. This includes around half of the defence department's 800,000 civilian employees. Most Department of Energy facilities will close, along with the National Zoo in Washington, national parks and 19 museums and galleries.

What are political commentators saying?

The BBC's North America editor Mark Mardell describes the deadlock as a "bravado-fuelled game of dare". He says: "The ferocious Republican distaste for President Obama, and their hatred of his changes to America's healthcare system have plunged the United States into crisis." The Washington Post chastises politicians for their "disregard, even contempt" towards federal workers "in its irresponsible brinkmanship".

What is the financial impact for the US?

The dollar fell against several currencies today but economists appear relatively relaxed about the impact of a short-term shutdown. However, if it goes on for more than a few days it could have much more serious consequences. The shutdown is expected to reduce America's quarterly GDP growth by around 0.15 percentage points for every week it lasts, costing the US economy billions of dollars and denting consumer confidence, says the Daily Telegraph. The bigger risk is if the political deadlock continues and the US economy, the biggest in the world, is forced to default on its debt, says Linda Yueh, the BBC's chief business correspondent.

What happens next?

The Senate will meet again today. The shutdown can only end when the president signs a spending bill, agreed by both houses. Most of the 17 shutdowns since 1977 have lasted no more than three days but in December 1995, under President Clinton, it went on for 21 days. 

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