The US government is facing shutdown tomorrow unless Congress and the White House can agree on a continuing resolution that allows it to keep spending. Such an outcome is likely to be narrowly averted, but this alarming situation will arise regularly until they can settle on a budget. They haven’t been able to since this fiscal year began on 1st October 2010, and have since skirted the issue with a series of short-term budget fixes.
What actually happens when government shuts down? Firstly, non-essential federal employees have to go home. The last time it happened, in 1995, around 800,000 people had to stop turning up for work. Secondly, government services that people rely on, Medicare, Medicaid, social security and many others, cease. Thirdly, and perhaps most dangerously, the US flirts with defaulting on its debt. In 1995, treasury secretary Robert Rubin had to borrow $91bn from pension funds just to try and make sure this didn’t happen.
Why does the government of the largest economy in the world have to countenance a fate more commonly associated with somewhere like Greece? Comparing the respective political systems of the UK and the US in The English Constitution (1867), the constitutional theorist Walter Bagehot pointed out that in the US system, the problem is that the people who decide spending are not the same as those who raise the taxes. “The tax imposers,” he wrote, “are sure to quarrel with the tax givers.” This is particularly true at times when the White House faces a hostile opposition party with a majority in the House of Representatives as it does now, and did in 1995. Bagehot, also pointed out that in the UK, the Cabinet gets to go vote on the budget they ask for in parliament. Many here might wish that the government had to work harder to get the budget they wanted, but in terms of government’s efficiency, there is no contest.
The continuing resolution being voted on today, which allows for another three weeks spending with $6bn of cuts, will definitely pass the Senate. The hard work was done on Tuesday when the House of Representatives passed the bill. Fifty-four Republicans from the right wing of their party voted against…