Government out-of-business

“Mr Speaker, It is now midnight. The Government will now shutdown”. That was two hours ago. The United States Congress failed to pass the bill, that would support the Unites States Federal Government coffer.

The New York post story:

Shutdowns: House officials say no more funding votes tonight

By  and , Published: September 30 | Updated: Tuesday, October 1, 1:07 PME-mail the writers

The U.S. government began to shut down for the first time in 17 years early Tuesday, after a Congress bitterly divided over President Obama’s signature health-care initiative failed to reach agreement to fund federal agencies.Hours before a midnight deadline, the Republican House passed its third proposal in two weeks to fund the government for a matter of weeks. Like the previous plans, the new one sought to undermine the Affordable Care Act, this time by delaying enforcement of the “individual mandate,” a cornerstone of the law that requires all Americans to obtain health insurance.

Government shutdown

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SEP 27

Get the latest news on the budget fight and a possible government shutdown in this daily newsletter.

SHUTDOWN BEGINS

SHUTDOWN BEGINS

Lori Montgomery and Paul Kane1:07 PM ET

After a stalemate in Congress over the health-care law, the federal government shuts down for the first time in 17 years.

United on who’s to blame for shutdown: The other side

United on who’s to blame for shutdown: The other side

Matea Gold, Philip Rucker and Ed O’Keefe12:01 PM ET

Democrats and Republicans, aware of what’s at stake in the coming messaging war, hone their strategies.

As government shuts down, Obamacare moves forward

As government shuts down, Obamacare moves forward

Karen Tumulty 12:01 PM ET

A key part of the health-care overhaul takes effect, but the law still faces challenges of historic proportions.

On Capitol’s last tour, visitors see a calm before the closure

On Capitol’s last tour, visitors see a calm before the closure

David A. Fahrenthold 8:55 AM ET

‘This is a great teaching moment in American democracy,’ says a guide, who faced being unable to work soon.

Obama: House GOP attempting to ‘extract a ransom’

Obama: House GOP attempting to 'extract a ransom'

5:25 AM ET

President Obama again reprimanded House Republicans as a government shutdown looms in the immediate future, saying they are trying to use the shutdown to “extract a ransom.”

Moderate Republicans may be key to resolving fiscal drama

Moderate Republicans may be key to resolving fiscal drama

Rosalind S. Helderman and Ed O’Keefe12:00 PM ET

They’re a few dozen lawmakers from swing districts and suburbs mostly in the Northeast and California.

The new measure also sought to strip lawmakers and their aides of long-standing government health benefits.The Democratic-led Senate quickly rejected that plan on a party-line vote. Senate Majority Leader Harry M. Reid (D-Nev.) urged House Speaker John A. Boehner (R-Ohio) to abandon the assault on the health-care law and pass a simple bill to keep the government open. Otherwise, Reid warned, “the responsibility for this Republican government shutdown will rest squarely on his shoulders.”Boehner refused to yield.He instead won approval, in a 1 a.m. largely party-line roll call, requesting a special House-Senate committee to meet in the coming days to resolve differences between the two parties, leaving in limbo the fate of millions of federal workers and the services they provide.Shortly before midnight, the White House budget office issued a memo instructing agencies to “execute plans for an orderly shutdown due to the absence of appropriations.

”The impasse means 800,000 federal workers will be furloughed Tuesday. National parks, monuments and museums, as well as most federal offices, will close. Tens of thousands of air-traffic controllers, prison guards and Border Patrol agents will be required to serve without pay. And many congressional hearings — including one scheduled for Tuesday on last month’s Washington Navy Yard shootings — will be postponed.In a last-minute ray of hope for active-duty troops, Congress on Monday approved and sent to the White House an agreement to keep issuing military paychecks. But Obama warned that the broader economy, which is finally starting to recover from the shocks of the past six years, would take a substantial hit if congressional gridlock shutters

“America’s largest employer.”

“Keeping the people’s government open is not a concession to me. Keeping vital services running and hundreds of thousands of Americans on the job is not something you ‘give’ to the other side. It’s our basic responsibility,” Obama said in a statement Monday evening at the White House.Privately, senior Republicans predicted that the closure would last at least a week.

A fraction of today’s House Republicans were on Capitol Hill in 1995 and 1996 when a Republican-led Congress last shut down the government in a dispute over the budget with a Democratic president. Younger lawmakers don’t remember the pain the shutdown caused constituents, senior Republicans said. And many of them now question the conventional wisdom that the closures weakened the GOP presidential candidate in 1996 and nearly cost the party control of the House.

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Democratic party President Barack H. Obama failed to convince Republican controlled Congress to support his budget. When the Congress did not support the bill brought by Obama’s administration, it created a stand off position.

The last time this happened was 17 years ago.

The Battle in Congress on Spending and Debt

By 
Published: September 29, 2013

WASHINGTON — If Republicans in Congress and the Obama White House fail to resolve their differences in time, the federal government will begin a partial shutdown at 12:01 a.m. Tuesday, with all but essential services curtailed or closed entirely.

A few weeks later, another deadline will arrive when the government bumps up against its legally authorized borrowing limit. If Congress does not vote to increase thedebt limit, it could set off severe financial problems for the government as it scrambles for the cash it needs to meet its commitments.

Q.So, what exactly is going on?

A. There are two distinct issues. First, the government could be forced to scale back operations beginning on Tuesday if Congress and the administration do not agree on extending federal spending authority; about 800,000 employees would be involuntarily furloughed, while others would possibly have to work without pay.

Then, a few weeks later, Congress and President Obama need to agree on terms for raising the federal debt ceiling so the Treasury Department can continue borrowing to meet all the government’s obligations, including interest payments on debt already issued.

Q.How have we reached this point?

A. Divided government always complicates governance, but growing political polarization and the erosion of any moderate center in Congress have made it even harder.

With Democrats controlling the White House and the Senate, the Republicans who control the House, tugged rightward by a vocal core of Tea Party conservatives, have begun using budget deadlines and the need for periodic debt limit increases as leverage to press for concessions. A favorite target, and the one at the center of the current dispute, is the health care overhaul passed by Congress and signed into law by Mr. Obama in 2010 over vigorous Tea Party opposition.

Given this poisoned political relationship, Congress has been unable to pass a budget in the normal way. To keep the government operating in March, it passed a temporary spending measure. But that expires at midnight Monday, and House Republicans say they will not vote for new spending unless the president’s health care law is delayed and its funding cut.

Democrats and the White House insist that they will not budge, and the first shutdown in 17 years is looking increasingly likely.

As for the debt limit, it was raised routinely in past years with bipartisan support. But Republicans say drastic measures are needed to keep the federal debt from continuing to rise.

On Thursday, Republicans laid out a list of demands in exchange for raising the debt limit, including a one-year delay of the health care law, the approval of the controversialKeystone XL oil pipeline, a tax overhaul and a rollback of environmental regulations.

Mr. Obama, saying the full faith and credit of the United States government should not be used as a political bargaining chip, has said he will not negotiate over it.

Q.What would be the concrete effects of a shutdown?

A. If past shutdowns are a guide, federal employees deemed essential, including uniformed service members and some diplomats, would continue working. Many civilian employees of the military would be furloughed.

Most federal workers providing medical care, air traffic control, airport security, border protection, prisoner custody and disaster assistance would continue working. Mail would be delivered. The new federal health care program would remain largely untouched, allowing people to sign up for insurance plans under the law starting on Tuesday.

But hundreds of thousands of workers would be sent home. Parks, museums and monuments would be closed. Medical research would be curtailed, and much federal loan processing halted. Social Security and Medicare checks would still go out — they come from a trust fund, not from discretionary payments — but new claims might be delayed.

Members of Congress, incidentally, are deemed essential and would continue to be paid.

Q.How would the American economy be affected?

A. According to Mark Zandi, the chief economist for Moody’s Analytics, a partial shutdown would trim annual economic growth by 0.2 percentage points in the fourth quarter, even if it ended within four days. An impasse of a month could cut growth by 1.4 percentage points, about half of that from the lost pay of government workers. An interruption longer than two months, he said, “would likely precipitate another recession.”

In the event that there is no shutdown, Mr. Zandi has projected fourth-quarter growth at an annualized rate of 2.5 percent, a relatively weak rate of recovery.

Q.How would a debt default be felt?

A. While a shutdown would be damaging, a default could be disastrous, many economists and officials say. Treasury Secretary Jacob J. Lew told Congressional leaders recently that a debt limit impasse in 2011 “caused significant harm to the economy and a downgrade to the credit rating of the United States.” A default at this time, he added, “could be catastrophic.”

While some conservatives say the potential harm is being exaggerated, many analysts say a default would rattle world markets, raising borrowing costs, slowing the recovery and causing lasting financial instability.

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Please also read the tweets of respective Congressmen.

The fact is that the US Federal Government borrowed more than USD16 trillion and all of it still in debt. That is not the worse of it. If the debt are being called, the US Federal Government could be officially bankrupt.

US government shutdown isn’t the worst of it

Capitol Hill

The US government may be forced to shut down at midnight for the first time in 17 years. Sounds ominous? That’s not the worst of it.

The bigger problem is, if the Democrats and Republicans continue to disagree, then the US would breach its “debt ceiling” – that means there’s a chance that the world’s biggest economy could default on its debt.

Firstly, coincidentally, the first government shutdown happened on this day in 1976. Since then, there have been 17 occasions when there was no agreement on the funding of government spending. The last time was 17 years ago during the Clinton administration, which also saw the House and Senate divided over spending priorities.

If the Democrat-controlled Senate sends back the Republican-controlled House version of the spending bill that delays the funding for Obamacare as expected, then 800,000 federal employees won’t come in tomorrow and, probably, also the next few days. The shutdowns in 1995 and 1996 lasted five and 21 days, respectively.

There would be a fairly big impact on the economy. Economists estimate that a two-week shutdown could cut GDP growth by 0.3 percentage points and one that lasted three-to-four weeks could cut growth by as much as 1.4 percentage points. That’s a pretty hefty hit as the US was projected to grow and an annualised rate of about 2.5% in the fourth quarter.

And then it could get worse – the US could default on its debt.

Technically, the $16.699 trillion debt ceiling was hit on 19 May. The US Treasury has been using extraordinary measures to keep going. If Congress doesn’t raise the so-called “debt ceiling”, then the Treasury estimates that it can only stretch out the money until 17 October. At which point, it could run out of money to pay the interest on US government debt, and the US defaults in a technical sense if it misses an interest payment.

That is what the debt ceiling is. It is the amount of debt the US can borrow. The problem is the ceiling could now prevent the US from borrowing to pay the interest on the money that it has already borrowed.

Until recently, it wasn’t a big issue. Since 1960, the debt ceiling has been raised 78 times. The real debate was always over the spending bills rather than using the debt ceiling as a bargaining chip of sorts.

However, it has become a bargaining point with a divided Congress. This is the third time that there’s been a showdown during the Obama administration.

And it has been damaging. In 2011, the US lost its top AAA credit rating for the first time. The rating company S&P made the historic downgrade partly on the basis of the fiscal impasse.

Two years later, the impasse has again reared its head. The timing couldn’t be worse as the US recovery is just gaining steam. And the fragile world economy doesn’t need the possibility of default by the world’s economic engine dangling over it.

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US stock markets already started dipping, hour before the impasse was made formal in the Capitol.

Forbes story.
10/01/2013 @ 1:29AM |17,279 views

Stocks Fall Before U.S. Government Begins Shutdown

U.S. stocks fell on Monday as the Federal Government moved towards a shutdown because Republicans and Democrats on Capitol Hill could not agree on an emergency short-term budget. The midnight deadline passed with no deal and Government agencies started to shut down.

Late night phone calls and arm twisting were not able to prevent a shutdown of the U.S. Government

Haggling and grandstanding went on into the night, with hope of a last-minute deal, but no agreement could be reached. With no deal on emergency funding for the Government, it was allowed to run out of money as the fiscal year ended.

The sticking point remained Republican opposition to the funding of the Affordable Care Act, President Barack Obama’s health care reform. The Republicans want the law amended and delayed.

President Obama said: “You don’t get to extract a ransom …  just because there’s a law there you don’t like.”

The Dow Jones industrial average fell about 0.84% to 15,129.70. The Standard & Poor’s 500 Index dipped about 0.60% to 1,681.55. The Nasdaq fell about 0.27% to 3,771.48. Stocks in Asia mostly held steady in early trading on Tuesday as investors awaited the outcome of last-minute dealing inWashington.

Before the jitters of the last few days over the Government funding crisis, U.S. stock markets had enjoyed a good September and the Dow Jones, the S&P and the Nasdaq held on to much of their gains to finish the month still in positive territory.

The stock market declines on Monday were broad based. Consumer goods giant Procter & GamblePG -2.1% fell more than 2%, AppleAAPL -1.23% declined about 1.25% and J.C. Penney fell about 2.7%.

Amid fears of how a shutdown would affect demand, energy stocks were among the first to fall, with Exxon Mobil and Occidental Petroleum both declining about 1%. Defense company stocks were also hit, with Lockheed Martin falling about 1.3%.

Stocks and other asset classes now have to negotiate a tricky few weeks of new territory. After Monday’s midnight deadline, Congress now has to agree to raise the United States’ $16.7 trillion debt ceiling by October 17 so America can avoid defaulting on its debt.

Analysts said that the failure to agree an emergency short-term budget does not augur well for the debt ceiling talks.

The government shutdown and threat of a default on the federal debt reminds many investors of 2011 when a similar stand-off in Washington led to the United States losing its AAA credit rating and helped prompt a stock market correction.

In a real sign that Wall Street is concerned about the Government funding crisis, the chief executives of the largest U.S. banks, including Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup are expected to meet President Obama in the next 48 hours  to discuss the funding crisis in Washington, according to news agency reports.

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How of of these could affect us?

For one, the Malaysian stock market has a co-relation to the  US stock and capital markets.

Two, if this impasse is not resolved within the next couple of days or even this two weeks, then President Obama might not attend the APEC Meeting in Indonesia 5-7 October and the tour around South East Asian nation. What is significant about this trip is that Malaysia has been said to be in high anticipation of President Obama coming to Kuala Lumpur 11-12 October and officiating the 4th Global Entrepreneurship Summit.

*Updated Wednesday 2 October 2013 1600hrs

Updated. As expected, President Barack H Obama will not be coming. Instead, Secretary of State John Kerry would attend on his behalf.

US shutdown: Barack Obama cancels Malaysia trip amid Obamacare standoff

President accuses Republicans of taking government hostage over health care law as debt ceiling impasse continues

Link to video: Obama chastises Republicans over government shutdownBarack Obama has scaled down a trip to Asia, as a US government shutdown entered a second day with no end in sight to the funding row in Congress that triggered it.

Obama told his counterparts in Malaysia and the Philippines he would not be able to meet them as planned. A White House official said the US president was also reconsidering whether to attend diplomatic summits in Indonesia and Brunei.

“We will continue to evaluate those trips based on how events develop throughout the course of the week,” said Caitlin Hayden, the spokeswoman for the National Security Council.

Obama was originally due to leave the US on Saturday and return a week later.

Not only must he deal with the budget impasse and its effects, but the potentially bigger problem of a congressional vote on raising the public debt ceiling. The Treasury secretary, Jack Lew, has said the US will exhaust its borrowing authority by 17 October, at which point it risks defaulting on its debts.

The fight between the Democrats and the Republicans over the government’s borrowing power is rapidly merging with the standoff over everyday funding, which has led to the first government shutdown in 17 years and forced hundreds of thousands of federal employees to take unpaid leave.

The White House announcement followed a fruitless day on Capitol Hill, with congressional Democrats and Republicans coming no closer to resolving their differences.

Obama accused Republicans of taking the government hostage to sabotage his healthcare law, the most ambitious US social programme in five decades, passed three years ago and upheld by the supreme court.

Republicans in the House of Representatives view the Affordable Care Act as a dangerous extension of government power, and have coupled their efforts to undermine it with continued efforts to block government funding. The Democrat-controlled Senate has repeatedly rejected those efforts.

The standoff has raised fresh concerns about Congress’s ability to perform its most basic duties and threatens to hamper a still fragile economic recovery.

“This is a mess. A royal screw-up,” said Louise Slaughter, a Democratic representative for New York.

Published in: on October 1, 2013 at 14:00  Comments (9)