US begins government shutdown as budget deadline passes
What does shutdown mean for two million federal employees, agencies and tourist destinations?
The US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget.
The Republican-led House of Representatives insisted on
delaying President Barack Obama's healthcare reform - dubbed Obamacare -
as a condition for passing a bill.More than 700,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over.
It is the first shutdown in 17 years and the dollar fell early on Tuesday.
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The Republican leadership looks and feels trapped - they made demands that they knew wouldn't be met rather than be accused of weakness and betrayal by their own hardliners”
Goldman Sachs estimates a three-week shutdown could shave as much as 0.9% from US GDP this quarter.
On Tuesday, Mr Obama blamed the House of Representatives for
the stalemate and said he would "keep working to get Congress to reopen
the government [and] restart vital services"."This shutdown was completely preventable. It should not have happened," he wrote in a letter to federal government employees.
"And the House of Representatives can end it as soon as it follows the Senate's lead, and funds your work in the United States Government without trying to attach highly controversial and partisan measures in the process."
On Monday, House Speaker John Boehner told reporters he hoped the Senate would agree to a committee between the two chambers known as a conference "so we can resolve this for the American people".
"The House has voted to keep the government open but we also want basic fairness for all Americans under Obamacare," he said.
But on Tuesday morning, the Senate voted 54-46 to reject the request for formal negotiations to end the impasse.
Who is affected?
- State department will be able to operate for limited time
- Department of defence will continue military operations
- Department of education will still distribute $22bn (£13.6bn) to public schools, but staffing is expected to be severely hit
- Department of energy - 12,700 staff expected to be sent home, with 1,113 remaining to oversee nuclear arsenal
- Department of health and human services expected to send home more than half of staff
- The Federal Reserve, dept of homeland security, and justice dept will see little or no disruption
- US Postal Services continue as normal
- Smithsonian institutions, museums, zoos and many national parks will close
Timeline: US budget crisis
- 20 September: House votes to scrap funding for Affordable Care Act ("Obamacare")
- 30 September: Congress passes two budget bills coupled to Obamacare, both rejected by Senate
- 1 October: Key provisions of Obamacare come into force despite shutdown
- 17 October: Deadline for extending government borrowing limit, or debt ceiling
The BBC's Mark Mardell in Washington says the divide in US politics has grown so bitter that government itself cannot function.
Democrats were never likely to make concessions on healthcare
reform - Mr Obama's signature achievement and a central issue in last
year's presidential election, our correspondent says. But Republicans have made demands that they knew would not be met rather than be accused of weakness and betrayal by their own hardliners, he adds.
Engineers with the US Navy talk to the BBC about what they will do during a shutdown: Make skis
Major portions of the healthcare law, which passed in 2010 and has been validated by the US Supreme Court, took effect on Tuesday regardless of whether there is a shutdown.
President Obama went on national television to criticise Republicans for trying to refight the last election.
Obama accused Republicans of demanding ransom over Obamacare
"The idea of putting the American people's hard-earned progress at risk is the height of irresponsibility, and it doesn't have to happen."
As the shutdown neared, the Senate's Democratic majority leader blamed Republicans for the imminent halt to all non-essential government operations.
"It will be a Republican government shutdown, pure and simple," said Harry Reid, referring to the Republicans as "bullies".
The White House issued orders for government offices to start shutting down as the midnight deadline approached
Tourism revenues are expected to take a hit as attractions such as the Statue of Liberty close down
National parks, museums, federal buildings and government services have been shut down indefinitely
Some 700,000 federal workers have been sent home on unpaid leave
Some White House staff have been sent home, with all Smithsonian institutions in Washington closed
Mr Obama has signed legislation ensuring that military
personnel would be paid. The defence department had advised employees
that uniformed members of the military would continue on normal duty,
but that large numbers of civilian workers would be told to stay home.US media
Michael Gerson, Washington Post: We are no longer seeing a revolt against the Republican leadership, or even against the Republican "establishment"; this revolt is against anyone who accepts the constraints of political reality.Editorial, Chicago Tribune: Once Republicans and Democrats stop grandstanding... we think there's an easy solution to this impasse.
International media
Pierre-Yves Dugua, Le Figaro, France: The [US] is being humiliated by the inability of its political system to carry out its primary mission: to pass a budget.Patrick Welter, Frankfurter Allgemeine Zeitung, Germany: The failure to reach agreement casts a dark shadow on the next and more important forthcoming round in the fiscal row.
Andrew Coyne, National Post, Canada: The result of all this haggling, taken together, has been just the sort of balanced approach, mixing spending cuts and tax increases, that experts advise.
Under the shutdown, national
parks and Washington's Smithsonian museums will close, pension and
veterans' benefit cheques will be delayed, and visa and passport
applications will go unprocessed.
Programmes deemed essential, such as air traffic control and food inspections, will continue.The US government has not undergone a shutdown since 1995-96, when services were suspended for a record 21 days.
Republicans demanded then-President Bill Clinton agree to their version of a balanced budget.
As lawmakers grappled with the latest shutdown, the 17 October deadline for extending the government's borrowing limit looms even larger.
On that date, the US government will reach the limit at which it can borrow money to pay its bills, the so-called debt ceiling.
House Republicans have also demanded a series of policy concessions - including on the president's health law and on financial and environmental regulations - in exchange for raising the debt ceiling.
Guy Crundwell from Connecticut told the BBC that politicians should be solving the country's problems rather than engaging in a "charade".
"I am very fiscally conservative but for moral issues I lean towards the Democrats, but I'll be damned if I want to see either of them wasting my money on this sort of posturing."
US shutdown halts Barack Obama's Malaysia trip
Obama accused Republicans of demanding ransom over Obamacare
President
Barack Obama has called off his trip to Malaysia to tackle the US
government shutdown, the office of Malaysia's PM Najib Razak has said.
Secretary of State John Kerry will represent him next week instead, the office said.The US government has partially shut down after the two houses of Congress failed to agree a new budget.
More than 700,000 federal employees face unpaid leave, and national parks, museums and many buildings are closed.
Mr Obama earlier vowed not to allow Republicans to undermine his signature healthcare legislation as a condition to restart the US government.
"They demanded ransom," Mr Obama said.
Four-nation trip Mr Najib's office said Mr Obama had called the prime minister on Wednesday to inform him that Mr Kerry would address an entrepreneurship conference in Kuala Lumpur on 11 October in his place.
A group of military veterans who flew in from
Mississippi as part of an arranged tour bypassed the gates at the World
War II memorial.
Mr Obama had been scheduled to begin a four-nation Asian trip on Saturday to boost economic ties.
It would also have taken in Indonesia, Brunei and the Philippines.
There has been no confirmation yet of what Mr Obama intends to do with the rest of the itinerary.
Mr Obama has been forced to call off trips to Asia before.
In 2010, a vote on health care and the Gulf of Mexico oil spill forced separate cancellations in March and June, though he did make it to India, South Korea, Japan and Indonesia in November of that year.
'A lot of anxiety' The US government ceased operations deemed non-essential at midnight on Tuesday, when the previous budget expired.
National parks and Washington's Smithsonian museums are closed, pension and veterans' benefit cheques will be delayed, and visa and passport applications will go unprocessed.
However, members of the military will be paid.
One group of elderly military veterans managed to bypass the shutdown when the WWII Memorial in Washington DC - that they had travelled from Mississippi to see - was opened for them.
Treasury department employee Peter Gamba told the BBC he was worried by the turn of events.
"For whatever reason I cannot fathom, you're asking me to again give up my pay and give up service to the American public," he said.
"It's a nightmare for me financially, it causes me a lot of anxiety and stress and I don't sleep well at night."
- State department will be able to operate for limited time
- Department of defence will continue military operations
- Department of education will still distribute $22bn (£13.6bn) to public schools, but staffing is expected to be severely hit
- Department of energy - 12,700 staff expected to be sent home, with 1,113 remaining to oversee nuclear arsenal
- Department of health and human services expected to send home more than half of staff
- The Federal Reserve, dept of homeland security, and justice dept will see little or no disruption
- US Postal Services continue as normal
- Smithsonian institutions, museums, zoos and many national parks will close
President Obama has blamed
conservative Republicans in the House of Representatives for the
government shutdown, saying "one faction of one party" was responsible
because "they didn't like one law".
"They've shut down the government over an ideological crusade
to deny affordable health insurance to millions of Americans," Mr Obama
said.The White House rejected a Republican plan to fund only a few portions of the government - national parks, veterans' programmes and the budget of the District of Columbia.
The Republicans have called for more negotiations.
A spokesman for House Speaker John Boehner called the White House's position "unsustainably hypocritical".
What does shutdown mean for two million federal employees, agencies and tourist destinations?
An opinion poll released on Tuesday suggested the American public was inclined to fault the Republican strategy.
An estimated 72% of voters oppose Congress shutting down the federal government in order to block the health law, according a poll by Quinnipiac University.
The healthcare law passed in 2010, was subsequently validated by the US Supreme Court, and was a major issue in the 2012 presidential election.
The next key deadline in the US is 17 October, when the government reaches the limit at which it can borrow money to pay its bills, the so-called debt ceiling.
House Republicans have demanded a series of policy concessions - including on the health law and on financial and environmental regulations - in exchange for raising the debt ceiling.
President Obama is due to meet the heads of some of Wall Street's biggest banks - including JPMorgan Chase, Goldman Sachs and Bank of America - to discuss the debt ceiling and other economic issues.
The bankers are members of the Financial Services Forum, a lobbying group which has, along with 250 other businesses, sent a letter to Congress urging it to raise the debt ceiling.
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US government shutdown in 60 seconds
28 September 2013 Last updated at 00:22 BST
The US Congress has failed to agree a budget and a federal government shut down has begun.
Republican senators vow to block Obamacare
27 September 2013 Last updated at 20:00 BST
The
US government is bracing for a possible shutdown, as Republicans in
Congress demand that President Barack Obama's healthcare law be stripped
of funding in exchange for their passing a bill to keep the government
running past 1 October.The Democratic-controlled Senate has passed a bill to avoid a shutdown - without defunding the health law. But the bill's path in the House is unclear and the chamber is not expected to take a vote until the weekend.
After the Senate vote, three Republican senators told reporters they would not give up in their attempt to block the health law, sometimes known as "Obamacare".
US shutdown: Who will be affected
The US Congress
has failed to agree a budget by 1 October and a federal government
shutdown has begun, sending more than 700,000 federal workers home and
closing down national parks, museums, federal buildings and services.
Which key departments and agencies are affected?
Military personnel on duty will not be affected
The nation's 1.4 million active-duty uniformed military personnel will stay on duty.About half of the defence department's 800,000 civilian employees will have to stop work, but there is a blanket exception for activities that "provide for the national security".
But where employees are needed to work, they may have to do so without pay:
"Military and other civilians directed to work would be paid retroactively once the lapse of appropriation ends," according to Defence Department Comptroller Robert Hale.
President Barack Obama later told civilian employees that they deserved "better than the dysfunction we're seeing in Congress".
- Employees: 13,814 Due to work: 1,113 Staying at home: 12,701
Hydroelectric dams will be maintained
Most Department of Energy facilities will close, with only 1,113 out of 13,814 staff required to work.Exemptions include staff overseeing the safety of the nation's nuclear arsenal and operating dams and power lines across the country.
The National Nuclear Security Administration, which oversees the nation's nuclear weapons and naval reactor programmes, will have 343 employees on duty to "perform functions related to the safety of human life and the protection of property".
More than 400 employees will stay on to work at the Southwestern Power Administration and the Western Area Power Administration, which are in charge of overseeing hydroelectric power and power lines in the south and western US.
Some staff in other areas will remain at work to oversee "the protection of human life and property."
- Employees: 46,420 Due to work: 6,186 Staying at home: 40,234
Weather and shipping reports will still be provided
Most of the department's
staff will remain at home. However, staff at the National Oceanic and
Atmospheric Administration will continue to report for duty to ensure
weather, shipping and other reports are still provided for public
safety.Some of the workers at the Bureau of Industry and Security, which reviews exports, will also remain on duty.
- Employees: 55,468 Due to work: 36,987 Staying at home: 18,481
Most air traffic control roles will not shut down
Transport roles run by the department,
ranging from air traffic control to airport and hazardous materials
inspections, will continue and 36,987 out of 55,468 personnel will
remain at work.Staff involved in overseeing commercial space launches will also continue operations - as at least one of a succession of launches will occur between the end of September and the first week in October in support of the International Space Station, according to the department.
Suspended activities will include facility security inspections, routine personnel security background investigations and the employee drug testing program.
- Employees: 4,202 Due to work: 688 Staying at home: 3,514
Animals at the National Zoo will still be fed
The National Zoo and 19 museums and galleries, including the
Natural History Museum, the Portrait Gallery and the Air and Space
Museum, would close.Of the 4,202 employees, 688 will be retained to "protect life and property" - security guards, maintenance staff and people to care for and feed the animals at the National Zoo.
The Smithsonian Institution says: "During a shutdown, the Institution cannot legally accept voluntary services from federal employees to continue their regular duties."
- Employees: 24,645 Due to work: 3,266 Staying at home: 21,379
National Parks will be closed
Day-use visitors will be instructed to leave the park immediately and visitors using overnight facilities will be asked to make alternative arrangements and leave.
Where possible, park roads will be closed and access denied.
- Employees: 231,117 Due to work: 199,822 Staying at home: 31,295
Coast Guard operations will continue
About 86% of the Department of Homeland Security's
240,000 employees are expected to be exempt from the shutdown,
including uniformed agents and officers at the country's borders and
ports of entry.Most members of the Coast Guard, Transportation Security Administration, Secret Service and other law enforcement agencies are exempt.
US Citizenship and Immigration Services employees will continue to process green card applications.
- Employees: 114,486 Due to work: 96,744 Staying at home: 17,742
DEA agents will be exempt
Of 114,486 Department of Justice employees, an estimated 96,744 will be exempt from the shutdown.All Federal Bureau of Investigation (FBI) agents and support personnel in the field will be exempt as their operations are focused on national security and investigations involving protection of life and property.
Drug Enforcement Administration agents working on active counternarcotics investigations, agents in the Bureau of Alcohol, Tobacco, Firearms and Explosives, and US attorneys will be exempt.
Staff at federal prisons will also be expected to work.
- Employees: 78,198 Due to work: 37,686 Staying at home: 40,512
The annual flu programme will not be supported
The department will be sending home more than half its workers. The Centers for Disease Control and Prevention will continue "minimal support to protect the health and well-being of US citizens". However, fewer staff will mean reduced capacity to respond to outbreaks and the agency will be unable to support its annual flu program.
- Employees: 4,225 Due to work: 212 Staying at home: 4,013
Funding for schools, due this month, will be paid
About 212 of the department's
4,225 employees - both full and part-time - will be expected to work for
the first week. An additional 30 staff may be called in if the shutdown
lasts more than seven days.Some $22bn of funding to schools, due on the 1 October, will still be distributed. Among other things, this pays to help educate poor and disabled children.
- Employees: 16,205 Due to work: 1,069 Staying at home: 15,136
Q&A: 2013 US budget brawl
Budget resolutions at dawn: Congress flirts with more high-stakes deadlines
The
US government has begun a partial shutdown after Republicans refused to
approve a budget, saying they would only do so if funding for President
Barack Obama's healthcare reforms was delayed.
The stand-off follows what has become close to an annual budget fight in Washington.President Obama warned a shutdown would have "a very real economic impact on real people, right away", putting the fragile US economic recovery at risk.
Why was this allowed to happen?
It
is a matter of political wrangling between the Republicans, who control
the lower house - the House of Representatives - and the Democrats, who
have a majority in the upper house, the Senate.Due to disagreements between the two houses over federal government spending, the US Congress failed to pass a budget before the fiscal year ended on 30 September.
Since President Barack Obama's election, the parties have never come to a resolution on a US budget that extends further than a few months. They've just negotiated around the margins and come up with short-term fixes.
In recent times, the Republicans have started to use these budget deadlines to gain political leverage over contentious policies.
The central issue this time round was Mr Obama's healthcare reform programme, with the Republican-controlled House of Representatives approving budgets eliminating its funding or delaying its central provisions. These were later rejected by the Senate.
As a midnight deadline passed, no budget bill had been agreed by both houses, meaning the US faces its first partial shutdown in 17 years.
Global markets are worried about the prospect of a US default
How did it get so bad?
Since
the Democrats ceded control of the House of Representatives to the
Republicans in 2010, budget fighting between the two parties has become
commonplace. Republicans took their victory in the mid-term elections as a sign that Americans were revolting against Mr Obama's Democratic agenda, and specifically, that Americans were unhappy with the Patient Protection and Affordable Care Act, or "Obamacare" as Republicans label it.
Republicans vehemently rejected Mr Obama's efforts to overhaul completely the way healthcare is provided in the United States.
Although past budget fights have included larger questions about the size and scope of the US government, this one is very specifically about Mr Obama's healthcare law, substantial parts of which took effect on 1 October.
Republicans have been doing everything in their power to force Mr Obama to delay implementation of a bill they strongly believe was rejected by the American public.
Mr Obama and the Democrats, for their part, are keen to remind voters that the law was validated by the Supreme Court in June 2012 and was a central issue in the 2012 presidential election, which Mr Obama won decisively.
House Republicans have already voted 42 times since the legislation was passed either to repeal it or to strip its funding.
Who is affected?
Ten
minutes before midnight on 30 September, the White House budget office
issued orders for government offices to start shutting down, with
workers told to stay at home without pay.This affects all "non-essential staff", which by some estimates is more than 700,000 of the total 2.1 million-strong federal workforce.
National parks, museums, federal buildings and services will all be closed.
Pension and veterans' benefit cheques could be delayed.
Air-traffic controllers, active military personnel, and border security guards are to be told to report for work, but new passports will not be issued and tax offices will also close.
Even some of the White House staff might have to stay at home and all Smithsonian institutions in Washington are to close.
However, workers like teachers, firefighters and doctors will continue to be paid, as they are paid for by the state, not the federal government.
What is the likely economic impact?
It
depends on how long it takes for Congress to thrash out an agreement on
the budget, which could take days or weeks to play out.The US government has experienced 18 shutdowns in the past 30 years, with the latest one lasting 21 days under US President Bill Clinton in 1995, costing the economy over $1bn.
If the Democrats and Republicans reach a deal on the budget within a day or two, the negative effect on the recovery of the US economy will be fairly limited. According to IHS estimates, the daily cost in lost output will be just $300m, which is trivial for an economy whose annual output is 52,000 times greater.
However, the daily impact of the economic shutdown may accelerate if it affects confidence and consumer spending, especially with hundreds of thousands of workers left unpaid.
If the shutdown were to last about three weeks or so, Goldman Sachs estimates it could shave as much as 0.9% from US GDP this quarter.
There would also be an impact on tourism with difficulties renewing passports and driving licences, meaning the transport and travel industries would also take a hit.
It will also impact on government workers, who may have to dip into their savings or delay mortgage payments and any other spending until unpaid leave ends.
The real concern is if the shutdown spills over into mid-October, when the legislative branch has to agree on raising the federal government's borrowing authority.
What's next? How will it be resolved?
There
are a few ways out of the shutdown: Congress could pass a clean bill on
the budget that does not tamper with the Affordable Healthcare Act, the
Senate and Democrats could accept changes in the health law, or a
compromise could be reached.The Republican-led House has called for a conference - a bipartisan committee with the Senate - to try to thrash out a deal.
But for many, the 1 October deadline was less worrisome than what could happen come mid-October, which is when, once again, the US government could default on its debts.
Congress will need to meet a crucial deadline on 17 October to raise the government's $16.7 trillion debt ceiling - the limit at which it can borrow money to pay its bills.
Already, US Treasury Secretary Jack Lew has had to engage in what's known as "creative accounting" to keep paying the nation's bills after federal borrowing surpassed the $16.7 trillion limit in May.
Unfortunately the US government and Republicans are in stalemate over extending the credit limit needed to avoid default.
Over the past three years, the debt ceiling has been used as a negotiation point for House Republicans who have sought to extract budget concessions from Mr Obama.
The biggest drama came in August 2011, when last-minute posturing by both sides led ratings agency Standard & Poor's to downgrade the credit worthiness of US debt, a historic first.
Should the world care?
Global stock markets fell and the dollar dropped against major currencies with the prospect of a shutdown on 30 September. However, so far the markets have responded relatively mildly since the shutdown went into force. In any case, the impact of the shutdown will most likely be gradual and incremental.
In the event that it continues for several weeks, UK economic recovery may be impacted most as America is its single biggest export market.
But even if the House and Senate manage to pass a three-month federal funding bill, what happens when the nation hits its debt limit is anyone's guess.
The US has never defaulted on its debt before, and to do so would almost surely result in extreme global market volatility.
BBC Business editor Robert Peston says if the world's richest economy fails to pay its bills and US official and quasi-official debts are consequentially downgraded, it "would precipitate unthinkable turmoil in markets".
