U.S. economy teeters on brink of fiscal crisis as government shutdown looms


25th September 2023 – (Washington) The world’s largest economy is facing another potential fiscal crisis as Democrats and Republicans in Congress are locked in a bitter feud over spending bills, with a looming deadline for an agreement to avoid a government shutdown. If a resolution is not reached by midnight on 30th September, funding for government services will dry up, putting the finances of hundreds of thousands of workers at risk.

The disagreement stems from House Republicans’ failure to support the government spending levels agreed upon between President Joe Biden and Speaker Kevin McCarthy, the top Republican in Congress. This has left the White House frustrated, with Biden accusing a small group of extreme Republicans of jeopardizing the well-being of all Americans.

The potential shutdown also carries significant political implications for Biden, who is eyeing re-election in 2024. The situation is further compounded by mounting tensions surrounding additional aid for Ukraine, as some hardline Republicans in the House of Representatives are threatening to block a $24 billion aid bill. This stance reflects their opposition to funding a war in Ukraine, with lawmakers emphasising the need to prioritize American interests.

House Republican leader McCarthy finds himself in a difficult position, as some members of his party are urging him not to bring bipartisan bills to the floor in order to avert a shutdown. The budget vote in Congress often turns into a standoff, but this year’s deadlock is exacerbated by increasing polarization on Capitol Hill.

To avoid a shutdown, lawmakers may resort to a short-term funding measure known as a continuing resolution, which would provide temporary relief while they work towards a consensus. However, this prospect comes just months after the United States narrowly avoided a debt ceiling crisis that could have had severe consequences for the economy.

The potential ramifications of a government shutdown are significant. Low-income families may not receive essential food aid, air traffic could be disrupted, and national parks may be forced to close. Civil servants deemed “non-essential” would be asked to stay home without pay until the issue is resolved.

Although most lawmakers express opposition to a shutdown, the prevailing sentiment is that the country is heading towards one, necessitating preparations for the potential fallout. The United States has experienced four shutdowns since 1976, with the longest lasting five weeks and costing the economy billions of dollars.