THE US AT ‘SHUTDOWN’

This week, Trump proved the assertion made in my column from last week! The world was taken aback by the announcement that the US, the world’s largest economy of USD 30+ trillion (with a debt of USD 37 trillion), has entered a shutdown.

- ANSHU JOSHI

While the nation has experienced several shutdowns in the past, this marks the first instance since 2018 that the country has been completely shut down.

The previous shutdown commenced on December 22, 2018, and continued for 35 days, concluding on January 25, 2019, during the first presidential term of the Trump. This shutdown was the most significant in the US in the last forty years, resulting in a loss of over USD 3 billion to the economy. Already embroiled in controversy over the imposition of substantial tariffs on countries such as India, Trump appears to be confronting a significant challenge at this time.

Essentially, the US government, similar to any other federal administration, requires financial resources to cover its expenditures. These financial resources are obtained through borrowing. A bill aimed at this purpose is presented in the US House of Representatives and is subsequently approved. However, this time, the funding bill did not secure Congressional endorsement, resulting in a nationwide shutdown. Each year, the US Congress formulates comprehensive spending legislation for the majority of government agencies. The process is completed usually before start of the new fiscal year.

However, to prevent interruptions, lawmakers enacted with the temporary spending bills for a limited duration, typically spanning a few weeks or months. The existing temporary bill lapsed on September 30 th. Both Republicans and Democrats failed to reach a consensus on an extension. This impasse culminated in a national shutdown, leaving numerous government departments without the necessary funds to sustain their operations.