US government shuts down as Trump, Congress fail to agree on spending

Washington: The US government has shut down after President Donald Trump and Congress failed to reach an agreement to keep government programs and services running by Wednesday’s deadline.

Roughly 750,000 federal workers are expected to be furloughed, and some potentially fired by the Trump administration. Many government offices will be closed, perhaps permanently, as Trump vows to “do things that are irreversible, that are bad” as retribution.

A last-minute Senate vote to extend funding on Tuesday failed by 55 to 45 votes, meaning US government agencies will now discontinue all but “essential” activities, potentially disrupting everything from air travel to monthly unemployment figures.

“We don’t want it to shut down,” Trump said at the White House before the midnight deadline (2pm AEST) expired. With no sign of compromise on either side, it is unclear how long the shutdown will last.

The president met privately with Democratic and Republican congressional leaders this week but appeared unable to negotiate a deal.

Speaking to reporters after the vote, Republican Senate leader John Thune accused the Democrats’ “far-left base and far-left senators” of seeking a showdown with the president.

“And apparently, the American people just have to suffer the consequences”, he said.

This is the third time Trump has presided over a federal funding lapse, the first since his return to the White House this year.

The latest shutdown underlines the polarising divide over budget priorities and a political climate that rewards hardline positions rather than more traditional compromises.

Budget stand-offs have become routine in the US as the nation’s politics have grown more dysfunctional. This time, Democrats have insisted that any spending bill must include additional healthcare subsidies, while Republicans say the two issues should be dealt with separately.

Trump has also added fuel to the fire. Ahead of the Senate vote, he threatened to cancel Democrat-backed programs and dismiss more federal workers if the government shuts down.

“We’ll be laying off a lot of people,” he said. “They’re going to be Democrats.”

That would lead to a further brain drain for the government. More than 150,000 workers are due to leave federal jobs this week after taking redundancy, the biggest exodus in 80 years. Tens of thousands more have already been fired this year.

Trump has also refused to spend billions of dollars approved by Congress, prompting some Democrats to question why they should vote for any spending bills at all.

In memos to soon-to-be-furloughed employees, several agencies, including the Justice Department and the Social Security Administration, blamed Democrats for the impending shutdown, violating long-standing norms that aim to shield government workers from partisan pressure.

Agencies also issued detailed shutdown plans that would close offices conducting scientific research, customer service and other “nonessential” activities, and send tens of thousands of workers home without pay.

Soldiers, border guards and others performing work deemed essential would stay on the job, but would not get paid until Congress resolves the stand-off.

The last government shutdown lasted 35 days in 2018–19, and was triggered by a dispute over immigration. It cost the US economy about $US3 billion ($4.5 billion), or 0.02 per cent of GDP, according to the nonpartisan Congressional Budget Office.

If the latest shutdown lasts three weeks, the unemployment rate could spike to 4.6–4.7 per cent from the 4.3 per cent in August as furloughed workers are counted as temporarily unemployed, according to Bloomberg Economics.

A trillion-dollar dispute

At issue now is $US1.7 trillion that funds agency operations, which amounts to roughly one-quarter of the government’s total $US7 trillion budget. Much of the remainder goes to health and retirement programs, as well as interest payments on the growing $US37.5 trillion debt.

Democrats say that any spending bill must also make permanent Affordable Care Act subsidies, which are set to expire at the end of the year.

Without a fix, healthcare costs for 24 million Americans will rise sharply, with a disproportionate impact in Republican-controlled states such as Florida and Texas that have refused to enact other aspects of the law that provide coverage to low-income people.

Democrats have also sought to ensure that Trump will not be able to undo those changes if they are signed into law. “It does nothing, absolutely nothing to solve the biggest healthcare crisis in America,” Senate Democratic Leader Chuck Schumer said in urging his colleagues to vote against the spending bill.

Republicans say they are open to a compromise, but accuse Democrats of holding the budget hostage to their demands.

Congress has shut down the government 15 times since 1981, with most lasting a day or two. The most recent, during Trump’s first term, was also the longest.

Airlines warned that a shutdown could slow flights, while the Labour Department said it would not issue its monthly unemployment report, a closely watched economic barometer. The Small Business Administration said it would stop issuing loans, while the Environmental Protection Agency said it would suspend some pollution clean-up efforts.

Meanwhile, two labour unions representing federal employees filed a lawsuit to block agencies from enacting mass lay-offs. Federal appeals courts considering similar lawsuits have allowed Trump to proceed with his firings while the cases play out.

Reuters, AP

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