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How will a governmental shutdown affect the American people - Research Proposal Example

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This research project investigates the consequences of a U.S. government shutdown by looking at the immediate, secondary, and peripheral effects related to the stoppage of Federal government services through the division of “essential” and “non-essential” services…
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How will a governmental shutdown affect the American people
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"How will a governmental shutdown affect the American people"

Download file to see previous pages This paper tells that in 2011, the U.S. Congress passed a last-minute compromise bill authorizing the raising of the national debt limit which narrowly escaped a shutdown of the Federal government and its associated agencies. The threat of a U.S. government shutdown has major significance for the international financial markets, the employees of the Federal government, and the people who rely on it for goods, services, and payments. A U.S. government shutdown may be temporary and limited in effect, as it was in 1995 during the Clinton administration when the Congress and White House became deadlocked in a budgetary impasse. The changing economic climate of the 21st Century, following the global meltdown of the financial system in 2008, means that another occurrence of this event could lead to new and unintended consequences. The global economy is weak currently and emerging from a period of recession in the USA and Europe, largely caused by the consequences of years of wasteful government spending and debt. The U.S. national debt now stands at over $14.5 trillion, a total greater than the complete Gross Domestic Product (GDP) of the entire country and all of its annual economic activity combined. While Congress and the White House negotiated in 2011 and failed to come to concrete terms on real cuts in spending and debt reduction, the Standard & Poor’s rating agency for the first time downgraded the U.S. credit rating, citing the political impasse as a major reason. (Detrixhe, 2011) Consequently, a U.S. government shutdown in the current political and economic climate could have significantly different or more severe effects in the contemporary milieu than it did in the 1990’s when it last occurred, and these consequences would likely not be contained solely in the United States due to the complex interrelationships present in the global economy. The most immediate and obvious effects of a U.S. government shutdown would be seen for Federal government employees, who would be essentially laid off without payment until the impasse is resolved. The government in this situation makes a determination as to which Federal employees are considered “essential” to national security and keeping the U.S. Congress running, and which are to be considered “non-essential” employees, to be suspended from work without payment. As Ewen MacAskill (2011) of the Guardian Newspaper reported, “The US Congress has begun sending out letters warning staff they will be suspended from this weekend along with hundreds of thousands of other workers as part of a looming federal government shutdown. The letters inform staff whether they are regarded as essential – necessary to maintain security and keep Congress running – or non-essential.” (MacAskill, 2011) MacAskill (2011) and other analysts suggest that approximately 800,000 “non-essential” employees of the Federal government would lose their jobs and salaries at least temporarily until the budgetary issues are resolved. (MacAskill, 2011) Yet, this immediate economic effect of placing nearly 1 million people out of work would have an inherently restrictive or contractive effect on the U.S. economy. Dean Praetorius (2011) listed nine possible effects of a U.S. government shutdown that shows the ripple effects of this outcome in the domestic environment and larger global economy: 1. Lost Money: “The last shutdown cost taxpayers $800 million, including $400 million in wages to federal workers who did not report to ...Download file to see next pagesRead More
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