U.S. Government Shutdown Begins

From Reuters:

The U.S. government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.

Federal agencies were directed to cut back services after lawmakers could not break a political stalemate that sparked new questions about the ability of a deeply divided Congress to perform its most basic functions.

After House Republicans floated a late offer to break the logjam, Senate Majority Leader Harry Reid rejected the idea, saying Democrats would not enter into formal negotiations on spending “with a gun to our head” in the form of government shutdowns.

The political dysfunction at the Capitol also raised fresh concerns about whether Congress can meet a crucial mid-October deadline to raise the government’s $16.7 trillion debt ceiling.

 

*** Here’s the memo that the Office of Management and Budget released instructing agencies to “now execute plans for an orderly shutdown due to the absence of appropriations.”

A Government Shutdown: By the Numbers

The New York Times takes a look at the costs, closures and other ramifications of a government shutdown:

 

For more videos from the NYT, click here.

Government Shutdown vs U.S. Debt Ceiling Crisis

With time running short on a budget compromise, the likelihood of a U.S. government shutdown continues to increase as the U.S. federal government’s appropriations are set to lapse on October 1, 2013. Adding insult to injury, the secretary of the Treasury has informed Congress that, no later than October 17, 2013, the federal government will exhaust its borrowing capacity under the statutory debt ceiling.

While a government shutdown seems to go hand in hand with the U.S.’s debt ceiling crisis, it should be emphasized that both problems pose distinct challenges for government operations. Having said that, it is important to understand the differences between a government shutdown and the debt ceiling crisis. For that, Boris Bershteyn, of counsel at the law firm Skadden, Arps, Slate, Meagher & Flom LLP, provides this great summary of the relevant distinctions:

Although the government shutdown and the debt ceiling crisis are occasionally conflated, they have distinct effects on government operations and on parties interacting and transacting with the government. A government shutdown occurs when federal agencies experience a lapse in their legal authority to incur financial obligations. For that reason, many federal employees cannot continue working during a shutdown and many contracts and grants are not awarded. By contrast, in a debt ceiling crisis, the government generally retains the authority to incur obligations, but may lack the cash to liquidate all of its obligations on time.

Government operations during a shutdown are controlled by rules that, albeit complex, are well-established and elaborated by past practice. The debt ceiling crisis, however, is unprecedented and little is known about the way the federal government would operate in it.

For a more in depth discussion on this topic, see Bershteyn’s informative memorandum that details government operations during a government shutdown and a debt ceiling crisis.

 

See also:

Question and answers about government shutdown (USA Today)

Shutdown looms larger after GOP move on Obamacare (Politico)