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What will be the consequence of the US shutdown?

According to experts, that depends on how long it continues, and whether it leads to US default on government debt repayments.



The partial US government shutdown came into effect after the Republican-controlled House of Representatives refused to pass a new budget.


The main point of contention has been President Barack Obama’s healthcare law, popularly known as Obamacare.


David Smith is a lecturer in American politics at the United States Studies Centre at the University of Sydney.


“This is the first time in American history that there is going to be something approaching universal health coverage. Now to Democrats this is fantastic, but Republicans see this as a precursor to a government takeover of medicine and a government takeover of the healthcare system and even though in most other advanced industrial democracies the government does actually play a very major role in the health care system as it does in ours. This is not traditionally the way that its been done in the United States where everything is being done privately often with government money, but through private medical providers and private insurance providers and a lot of people in the conservative part of the Republican party actually see this as an entree into socialism and they see it as completely un-American and destructive of American capitalism.”


President Obama has condemned the blockage of the legislation by the Republicans.


“But I want every American to understand why it did happen. Republicans in the House of Representatives refused to fund the government unless we defunded or dismantled the Affordable Care Act. They’ve shut down the government over an ideological crusade to deny affordable health insurance to millions of Americans. In other words, they demanded ransom just for doing their job.”


However, House Speaker John Boehner accused the President and the Democrats of an unwillingness to negotiate.


“The bill we passed last night would have funded the government through December 15th and provide fairness to the American people under Obamacare – no exemptions, no exceptions, let’s treat everyone the same. Last night they not only rejected that, but they also rejected our call to sit down and resolve our differences under the Constitution which makes it clear that if the two Houses disagree we should sit down and discuss and try to resolve those matters.”


US government bodies seen as doing work regarded as essential, like the military, are continuing to function.


But the partial closure of the government means that many non-essential federal services have been closed, and up to 800,000 public servants have been told to stay at home or left working without pay.


This man was angry over the inability of veterans to visit the now-closed National War Memorial in Washington.


“These guys they’ve flown three or four hours today. They got up at 4 o’clock in the morning to get here, they’re 80 and 90 years old. The Germans and the Japanese couldn’t stop them and now the God damn politicians in Washington are. This is ridiculous and these guys are paying the price.”


David Smith from Sydney University says the shutdown won’t have an immediate impact on the US economy.


“If it’s only a few days, then it’s an inconvenience and it’s unpleasant. But if it goes on for say, a week or more, then that is a lot of money that doesn’t go into the economy, so that’s a lot of employees who can’t do grocery shopping, who can’t fill up their cars with petrol and not only is it just incredibly inconvenient for them it means that their communities suffer a lot economically.”


And Mr Smith says that could also have a significant impact on the rest of the world.


r”The real problem is that in two or three weeks time, the United States is going to reach its debt ceiling again and there’s actually a serious possibility this time that the US could default on its debt. Now if this government shut down is a precursor to a debt default, then that is going to have a really serious effect on global financial markets, because a government default would signal to investors that the United States is actually too politically dysfunctional to be trusted to pay back its debts and this would lead to a massive downgrade in United States credit, which would mean a huge interest rate rise right across the United States, right through out the American financial system and it would cause massive insecurity within the global financial system because there is so much United States debt sloshing around in the system.”


Barack Obama says he’s worried about the possibility of default.


“If they go through with it this time, and force the United States to default on its obligations default for the first time in history, it would be far more dangerous than a government shutdown, as bad as a shutdown is. It would be an economic shutdown. So I’ll speak more on this in the coming days. Let me repeat: I will not negotiate over Congress’ responsibility to pay bills it’s already racked up. I’m not going allow anybody to drag the good name of the United States of America through the mud just to refight a settled election or extract ideological demands. Nobody gets to hurt our economy and millions of hard-working families over a law you don’t like.”


Despite the partial government shutdown, the Obamacare health policy has actually been launched.





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