This Saturday, the United States faces the threat of a federal government shutdown, which can only be avoided if there is a last-minute deal before midnight. If the US Administration closes, this new crisis will coincide with a dangerous moment for the country’s economy and the strikes in a sector as important as the car.
The shutdown of the US federal government will occur whenever lawmakers in the House of Representatives and the Senate do not reach an agreement, before October 1, that guarantees the funding of public services for the following fiscal year. Without a solution, the US could enter this Sunday the fourth government shutdown in the last decade.
The impossibility of paying with public money forces public workers to be laid off, some to keep their jobs but unable to pay them, and essential services such as preventing food safety or closing national parks that stop. It is also estimated that more than 1.4 million soldiers and hundreds of thousands of civil servants will continue to work, but will not receive their salaries until an agreement is reached.
In this case, the lack of agreement between lawmakers has re-emerged in the Republican ranks, where an important group of representatives loyal to former President Donald Trump (2017-2021) expressed their rejection of concessions made by Kevin McCarthy last year. Month of May.
And while the Republicans, led by McCarthy, have a majority in the House, the Democrats outnumbered them by one vote in the Senate, so any solution to the government shutdown must have bipartisan support to continue and be successful. , Joe Biden, can be ratified.
The speaker of the House of Representatives agreed with Biden in the spring of a short-term plan to prevent the country from defaulting. However, this group of lawmakers used the trump card to shut down the government to pressure and achieve the repeal of health concessions, contraceptives, health coverage for trans people and more regulation of tobacco, etc.
Now that protest may cause a less serious problem, but not without economic impact. The world’s largest economy has already faced previous federal government shutdowns. It is estimated that what happened at the end of 2018, which lasted 35 days, cost the US between 0.1% and 0.2% of GDP, according to the Congressional Budget Office.
“The way the Government spends has been agreed upon in the Senate, with bipartisan agreement, House Republicans must accept it,” White House spokeswoman Karine Jean-Pierre said in a statement. . Treasury Secretary Janet Yellen also stated that “the lack of responsibility of House Republicans could harm American families and cause economic instability.”
The New York Stock Exchange has already shown signs of stress due to uncertainty and this Friday closed the month of September with the largest accumulated losses in the S&P 500 and Nasdaq indexes, while the Dow Jones Industrial Average, the leading indicator with this, the month also ends. with great loss.
According to Yellen, the damage caused by a possible shutdown would affect “core government functions” such as providing loans to farmers and small businesses, inspecting health and safety in the workplace. , as well as infrastructure work.
The impact may also be felt in the future interest rate decision. The agencies in charge of collecting and publishing the country’s main economic indicators, such as inflation, GDP, or employment data, will stop preparing their usual reports. The Federal Reserve, for example, is one of the institutions that needs this data to issue the next opinion on a possible rate increase in the US.
