Trump and the longest Shutdown of American history

Trump and the longest Shutdown of American history

Shutdown in the USA

Although its impulsive and stormy side has calmed down since its appointment, Donald Trump always embodies the most criticized president. Today, it is at the heart of the negotiations on the US budget that paralyzed the country's administration for more than 22 days.

What is GOVERNMENT SHUTDOWN (GOVERNMENT SHUTDOWN)? Why has no budgets have yet been voted? What are the economic consequences of this Shutdown?
Shutdown - What is it?

In the United States, all funding expenses for a government department must first be allowed by the Congress.

Thus, if there is no agreement with the Congress concerning the budget of the year, the country is found without a budget. If there is no budget, there is no money to pay for expenses, including wages, and the people concerned can not work, hence a Shutdown situation.

The US Shutdown is therefore the partial closure of the government for lack of agreement on the operating budget.

We are talking about partial closure because all services that are considered vital continue to operate as the army, air control and medical services.

On the other hand, officials of the administration, museums or monuments are judged as "non-essential" and are therefore technical unemployment, or work without being paid.

Since the 1970s, a Shutdown usually occurs when the congress can not agree on the budget. This is particularly the case when Republicans and Democrats can not get along.

But there is another way to arrive at a Shutdown: when the president affixes his veto even if the Congress approved and voted a budget.
The longest Shutdown of American history

When no budget is voted it is because there are disagreements, or on the amount of public expenditure, or on the types of expenses.

For example, the Republicans generally favor the expenses related to safety and defense. On their side, Democrats will be more inclined to spend for health and education.

The current Shutdown started Saturday, December 22, 2018 and today more than 800,000 civil servants find themselves without resources. Indeed, as only 75% of federal government spending is funded until September 2019, much of the US administration is currently paralyzed.

It is a historic record for the United States that currently undergo their longest Shutdown. It has been more than 22 days than Trump and democratic elected officials are trying to get along with the US budget.

The major disagreement concerns the financing of a wall at the Mexican border.

The House of Representatives categorically refuses to integrate the funds claimed for the construction of this wall in the next budget (the Republican President would claim $ 5.7 billion).

Trump on his side is determined to get out of this conflict head up - he wants to go to the end.

But if he fails to obtain the financing of this wall, Trump will consider that it is the fault of the Democrats. They will have prevented it from carrying out this campaign promise: building an anti-migrant wall between Mexico and the United States to combat clandestine immigration.

The President considers that this Shutdown could be settled in "15 minutes" if the Democrats decided to return to Washington to stop what he considers as a "horrible humanitarian crisis on the southern border".
What economic consequences for the United States?

The boss of the US Central Bank, Jerome Powell, explained last week that prolonged paralysis of the government would have "a significant effect" on the US economy:

    Airports are bottled,
    Tourist activities are down (restaurants and hotels that are emptied; national parks, museums and zoos mainly closed),
    The courts are blocked,
    Tax refunds are starting to delay,
    Farmers do not benefit from subsidized aids,
    Independent workers under-contracts with the government lose money.

Beth Ann Bovino, economist at S & P Global Ratings, says: "As the blockage is in the long term, suffering is growing. The partial closure of the administration would cost $ 1.2 billion a week to the US economy ".

Thus, if the shutdown continues for 2 weeks, its cost will exceed the price of the wall that Donald Trump claims.

The economists of J.P. Morgan and Bank of America stated that each shutdown generally translates into a temporary drop in growth from 0.1 to 0.2