The US government shutdown is now entering its third week. All non-essential operations have been closed and hundreds of thousands of federal employees have been sent home. Despite the House of Representatives vote to pay these workers retroactively once the shutdown ends, many citizens are suffering mental and physical hardships due the impact of the prolonged financial impasse.
The latest shutdown has already had sweeping effects across the nation as tourist destinations are shut down and services including food assistance and IRS audits have been disrupted. Senators' offices have been closed to the public, more than 3,000 D.C. mall events have been canceled and national parks are turning people away.
Non-profit organizations and emergency services have been hit hard by the shutdown. Millions of dollars of federal and local grants have been frozen, creating tremendous stress and uncertainty about how these institutions will be funded in the future. The trickledown effect could result in the eventual closing of many of these nonprofits and creating a situation whereby millions of people, many poor, others abused, and some battered, will find themselves on the street without food or shelter.
On the global scene, a prolonged U.S. federal government shutdown could affect international commitments and delay needed military assistance to many American allies. Worldwide commerce and foreign businesses will begin to feel the slowdown when government subsidies and financial sponsorships are reduced. And if the situation is allowed to continue, U.S. security and defense programs will be have to be curtailed.
Other Shutdowns
This is the second government shutdown in the last 20 years. In late 1995 and early 1996, the government was shut down for 21 days and cost the country close to $1.4 billion. ($2.1 billion in today's dollars).
How do other countries handle these budgetary disagreements? Well, the truth of the matter is that no other country around the world ever had a total shutdown along the lines of the U.S. shutdown. According to a recent article in the Washington Post, in 2010 and 2011 when the political parties in Belgium were unable to agree on a coalition that would govern the country, the government dissolved and there was no elected government for 589 days. Despite the absence of a governing body, budgets were passed, government workers were paid and government services continued to be provided.
The Post article went on to say that countries like Pakistan and Colombia have engaged in civil wars, coups, fiscal crises, and financial defaults. But there was never a total government shutdown.
Why does the world's greatest democracy allow a situation like this to occur? It seems that the structure of the U.S. budget is built in such a way that if it is not approved by Congress and subsequently passed, the budget for the next year becomes zero. This makes no sense at all. In other countries, if a budget agreement is not reached, the budget reverts back to last year's numbers or to some other value. This creates some sort of check on the legislative body and allows the government to remain open and continue to function.
When threatening a shutdown is not a bargaining option, the inducements for all sides to cooperate are obvious. With this reasoning, it would seem logical that changing the core foundation of how the U.S. government budget is reached would be a good starting point to preventing a shutdown from ever happening again.