US Government Shutdown - A state in disarray?

On October 1st in the United States senate, a funding bill set to extend funding for government enterprises and agencies failed to pass. This failure resulted in a government shutdown nationwide, suspending non-essential government services entirely and pausing payment towards those in essential roles. This stalemate was caused by a failure to compromise between the democrats and the republicans over a healthcare sector dispute and is a wake up call for the population that the US government is in a period of volatility.

This is not the first time that the republicans and Donald Trump have entered a stalemate in

the senate; seven years ago the US government entered the longest closure in history when funding was suspended over a dispute over funding for his proposed border wall. Historically the brunt of public blame for stalemates has been placed on the party that has refused to come to a compromise with the other. However, in today’s political climate, the people choose to just oppose the shutdown as a whole rather than blaming an individual party. Therefore, the blame for the recent shutdown is less placed upon the republicans or democrats, but more on the government system in its entirety. This significantly differs to the opinions about the stalemate seven years ago where the republicans faced backlash for the holdup in the senate.

While this shortage may seem like a major problem for the American government and people, Donald Trump has stated that the lack of workers caused by the shutdown will actually allow for him to seize an "opportunity" and framing it as a chance to "clear out dead wood, waste, and fraud". He intends to use this government freeze to figure out which areas of the government are overstaffed and can run efficiently without the non-essential labour and has threatened to layoff many of those he finds dispensable in an effort to save government money.

This is an interesting point of view, especially considering the fact that according to the Congressional Budget Office the shutdown is costing the United States $400 million in productivity and GDP loss daily. It has also lead to a political blame game between the democrats and the republicans that threatens to further bipartisan polarisation in the United States. With politicians from both sides going up against each other and partisan gridlock looking like it is inevitable that some form of compromise from both sides will be crucial to both resolve this shutdown and prevent future stalemates.

However, while the ideology is admirable, action looks unlikely especially as the republicans have already taken action against the democrats, suspending funding for projects in democrat states. Action against democrat states includes $18 billion in funding for transit projects in New York home to Congress's top two Democrats paused, and $8 billion for green-energy projects in sixteen Democratic-run states, including California and Illinois suspended all together.

The impact of the government freeze for the everyday American is not particularly major when it comes to absolutely necessary government services like emergency healthcare or defence systems but furloughed workers in government agencies may have an impact on the effectiveness of these services. Additionally, civilian services like national parks or

monuments will be shut temporarily. Roughly 40% or 750,000 non-essential government workers will face forced suspensions without pay due to the funding cut while the other 60% will be forced to continue without payment temporarily.

The impact on the rest of the world during government shutdowns is often negligible. Although, the shutdown does further concerns over US institutional credibility, fiscal position and dysfunction as a whole, according to Luke Bartholomew, deputy chief economist at Aberdeen. However, as a whole the idea that the shutdown could have an extreme impact on the markets is a misguided one and most experts advise investors to look past what will likely be a three day scare just like past shutdowns.

As a whole, the government freeze in the US has resulted in significant furloughing of government workers in non-essential agencies. The pause has increased public distrust in the US as rumours of dysfunction are rampant among possible investors. Bipartisanship threatens lack of compromise from both the democrats and republicans which could lengthen this shutdown and future gridlock. President Trump and the republicans believe that this shutdown is actually an opportunity to find and layoff those in government positions who are not productive as well as target democrat lead projects. The US government is in disarray, with government workers being furloughed and services being suspended, caused by a lack of compromise by both the republicans and democrats in the senate.