US shutdown: How Yankee doodle is riding on a crisis.. The Yankees have done it again. Suddenly the entire media space has been taken by another provision of the US Constitution which is as incredulous as any oddity can be; and one which the rest of the world just fails to understand. Remember a previous prominent US constitutional quirk....the Florida recount and how Bush junior won the presidency without necessarily even having larger number of votes! And subsequently, how the world became a different place. This time, the US government has shutdown! Those not familiar with the parlance would wonder how a government ever shuts down without falling. But so it is. And while this may seem terribly peculiar and though such an incident has not happened in the last 17 years, the fact is that the US government has shutdown no less than 17 times since 1977. But we know too well that public memories are short and don’t have sufficient bandwidth to remember beyond yesterday, save a calamity here and there that may have blazoned in our memory due to intense media glare. What the shutdown does mean is that close to a million government employees would have to go on compulsory leave. Besides employees who will get hit because of no pay cheques, travellers may be in for a nasty surprise, as tours to famous spots like Statue of Liberty, Grand Canyon, Yellowstone National Park will all be abruptly called off. What will really raise the stench is that garbage collection in Washington will also be stopped! It appears that the government has no choice in the matter. The entire crisis was triggered by the Republicans opposition to the eponymous Obama Care Act that the President wants to push through. And while the US financial year ended on September 30, 2013, no agreement is in sight and so the Budget has not been passed. Meanwhile, a second crisis looms large. The US government is likely to reach its legal limit on borrowing, which is set at USD 16.7 trillion by October 17, after which it would need to be allowed to raise the debt ceiling. Knowing that they have the government cornered, the Republicans are hoping to force more concessions in Obamacare to even allow more credit to the government, leave alone agreeing to pass the budget. If the Tea Party and Democrats are unable to bridge their differences in time, then the government for the first time might default and US treasury bonds would lose value and markets could get jittery. The Congress has proposed a bipartisan committee to resolve the matter, but it may be few days before any headway is made. Apparently rattled by the fresh crisis, President Barack Obama took to television with a vengeance and slammed the Republicans because he believed the shutdown would “throw a wrench” into the country’s economic recovery. What is of essence now is the length of the impasse. Moody`s says anything over a two-week shutdown would cost 0.3% of the US GDP, while double that would whip off 1.4% growth. Goldman Sachs, meanwhile, has come up with an in between figure – estimating a 21 day shutdown to knock off 0.9% from US GDP in the quarter. This is bad news for the US, which is just about slowly recovering from the double dip. Also, what it exposes is the country’s intrinsic and systemic flaws, which series of governments have not been able to come around. And this certainly makes Uncle Sam cut a sorry figure. Meanwhile, one of the consequences of the shutdown is that the Centers for Disease Control and Prevention would work with skeletal staff and tracking and containment of diseases may be disrupted. While this may be an all-American affair, one can only hope that the shutdown isn’t contagious enough economically and we all don’t catch the flu.
Posted on: Wed, 02 Oct 2013 09:22:38 +0000
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