Governments in 2013 have seen great issues as regards government funding. Raising taxes, and clamping down on tax evasion are seemingly easy compared to some issues over government funding. Whereas some governments (such as China and some UAE emirates) seem to like spending in defiance of such global trends, austerity measures have been implemented across Europe, resulting in Chancellor George Osborne having to make deep and unpopular cuts to most government departments. However, he probably considers himself lucky compared to his American counterpart Jacob Lew, who replaced long time Obama supporter Timothy Geithner early this year.
In the US, one of Congress’ main duties is to pass spending bills that fund the federal government, and its activities and agencies. Such bills can be debated and passed at any time of year- but the Capitol has to bear in mind that its financial year runs from October 1st to September 30th. It was one of those spending bills that nearly caused basic essential government services to grind to a halt late last year.
However, this time, America was not so lucky; a shutdown finally happened. The trigger was the Patient Protection and Affordable Care Act, the formal name for the President’s longstanding signature domestic policy bill, Obamacare. An incredibly devisive bill, it was utilised by a group of Republican Congressmen and Senators as a bargaining chip. Led by freshman Senator Tom Cruz (Texas), Republicans demand that any new finsncial legislation for government inludes measures that would erode Obamacare. Inevitably, Democrats have contested this. Effectively, the last few weeks saw the Republicans holding the f3ederal goverment to ransom by not agreeing to alternative measures, as the clock ticked down to the deadline by which financial bills to fund government had to be passed.
As the deadline expired, with no measures having beeen passed (except a last minute measure to pay the front line military in the event of a shutdown), there was effectively no money to pay the government to allow it to operate. Whilst the Eurozone is stagnating and in many member states are in unprecedented economic trouble- at least there is money available to allow the government to operate, in most cases.
The lead up to the shutdown was characterised by some bold, forceful politicians who stood absolutely by their convictions. Noteable amongst the architects was John Boehmer, tbe combative Republican Speaker of tbe House of Representatives who has been a long standing critic and thorn in the side of Obama’s government. Given his combative, uncompromising style, House of Commons Speaker John Bercow could learn a lot from him. Obama himself has been equally uncompromising, refusing to back down and to allow his personal project of a healthcare bill to be derailed. Both sides are resolutely sticking to their convictions, and although willing to negotiate across the aisle, are refusing to compromise their positions.
Although only positive that political leaders are standing up for convictions and principles, such determination, although praiseworthy, is causing great damage across the board. Science (including space probes), military, local government,veterans affairs, public parks, museums, libraries- the list goes on. all are effected, with many simply ceasing to operate, and government employees not being paid. As for the long term consequences- that could last for a very long time.
After nearly a week, Secretary Lew must envy Chancellor Osborne; Osborne may have to deal with severe budget cuts and limitations, but the British government can still operate. Mr. Lew would probably prefer to be dealing with a banking scandal such as the long running PPI mis-selling scandal as opposed to a shutdown. At this stage, is there an end in sight?
It is reassuring that the answer to that at least is yes. There is great pressure to come to a resolution. Indeed, many Republicans- even those who encouraged and supported the brinkmanship that led to the shutdown- are now critical of Boehmer’s continuing stalemate. Many want the crisis to be averted, and for bipartisan discussions, and see the need for concessions on both sides.
Throughout this, President Obama remains resolute. Resolute in his support of Obamacare, resolute in condemning the Republican brinkmanship that resulted in the shutdown, and resolute in his detetmination to end the domestic crisis. However, there are indications that, if the shutdown goes on for much longer, it is possible that the Republicans will cease using Obamacare as a bargaining chip in efforts to get a funding bill passed. Although unlikely, it is a possibility; only time will tell how the shutdown is resolved. If that does happen, it will be a victory for Obama- but at what cost?
Given how detrimental the shutdown will be to America and the average American, it is to be hoped that both parties are able to seek a resolution soon. At least Congress needs to only think of funding itself; the nature of the Eurozone means that all the EU nations need to actively think about funding (and in instances even bailing out) other member states, in addition to their own economic problems.