Mint Explainer: US government shutdowns – Unraveling causes and consequences
The US narrowly avoided a government shutdown last week following intense debates between the Democrats and Republicans over budget allocations. This confrontation follows a previous conflict concerning government expenditure, which earlier in the year had risked plunging the nation into a debt crisis. Mint looks at this latest saga and the consequences thereof.
Per the Antideficiency Act, US government entities cannot allocate funds without Congressional approval. David Wessel from the Brookings Institution has said, "When Congress fails to enact the 12 annual appropriation bills, federal agencies must cease all non-essential functions until Congress acts. This is known as a government shutdown.
If Congress enacts some but not all of the 12 appropriations bills, only agencies without appropriations have to shut down; this is known as a partial shutdown." Shutdowns result in numerous federal employees stopping work, albeit essential services remain operational. This leads to payment disruptions for these employees and potential delays in regular government services. Throughout 2023, Democrats and Republicans have repeatedly clashed over budgetary matters.
A consensus in June saw an increase in the US debt ceiling, balanced with limitations on government spending growth. Nevertheless, some hardliner Republicans expressed discontent with the accord. During discussions on appropriations for the ensuing fiscal period, they called for budgetary cutbacks and diminished support for Ukraine.
Subsequent negotiations culminated in a provisional bill, sustaining government funding until mid-November. Despite the temporary solution, challenging negotiations loom. Contrary to many constitutional democracies, the US has a history of
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