did the government shut down

did the government shut down

The Impact of Government Shutdowns on Society: A Comprehensive Analysis

1. Introduction to Government Shutdowns

Government shutdowns are relatively ill-defined and rare occurrences in a government budget process that draws a great deal of media attention due to the profound effect on government services and personnel. The original use of a government shutdown for political purposes was quite limited since a “confronter” always assumed that this action would be seen as a weapon and employed it carefully. Threat effects would be undercut if shutdowns became common because only inexperienced opponents would be subject to the deception. Statisticians sometimes study rare events to gain insights into their causes, and they frequently examine policy changes as rare events to determine their effects. This article utilizes many elements from both perspectives.

It is without a doubt that any political fights between different political groups may lead to a government shutdown, resulting in the furlough of the vast majority of government employees with exceptions only in positions providing vital emergency and essential operations, as well as causing numerous government activities to be ceased. As a general fact, politics is sometimes quite similar to the principles of business. There is the expectation to have a quid pro quo exchange between the members of civil society (business interest groups), like organizational managers who represent stockholders, instead of presenting the individual interests of civil servants. However, disappointed expectations frequently lead to confrontations and ultimately to government shutdowns.

2. Causes and Triggers of Government Shutdowns

The trigger and initiation of a government shutdown can be a result of various sources of friction and institutional discord among government branches, most notably among the co-equal branches of the U.S. system of separation of powers and checks and balances. Since the federal government’s spending process occurs most prominently through the legislative branch and must be done through joint action with the executive branch, such discord can place individual political actors and political parties at a loggerhead. Government operations, including those services and programs deemed as mandated (or directly funded), may come to a halt. Other disputes not related to the spending process, such as reauthorization of the nation’s debt, can also result in a shutdown procedure. Over 80 federal shutdown scenarios have occurred in the U.S. since the mid-1970s; these and earlier shutdown events primarily resulted in discretionary and non-exempt program outages, and occasionally in total government spending and operations stoppages.

3. Economic and Social Consequences of Government Shutdowns

Additional possible economic consequences for the global economy may derive from the choice of U.S. policies shaping future macroeconomic dynamics on the global stage. Social Security benefits, veterans’ benefits, and M+M payments both constitute a significant part of all U.S. federal payments, between U.S. fiscal scheduling inflection points government shutdown, debt ceiling, and finally, sequestration. Individual States have diverse dependence on such payments, and it is especially higher in poorer states. The most vulnerable population to government shutdowns has been found to include federal workers and retirees, travel-related industries, and industrial concerns under the control of federal regulation. For federal employees themselves and for their dependents, private schools and care providers feel the brunt of a government shutdown as federal employees with schooling and care needs can no longer pay for the services and are reliant on a very tight household budget. High unwanted job termination entails losing the abilities to pay for expenses and long-term damage to the accumulation of human capital, with unwelcome educational effects for dependents. Federal conditional agreements made with the private health sector are also at risk during a government shutdown.

The realization of government shutdowns has significant consequences for society and the economy. In an economic analysis of the short- and long-term consequences of the last U.S. government shutdown on the rest of the world, it is observed that GDP growth unveiling is motivated by the anticipation of a government shutdown. Those publicly held businesses that obtain high income from government spending see their prices decreasing by a moderate decrease in federal spending. An attempt to forecast the effects on the U.S. and on the rest of the world, including the identification of channels through which these effects may work, such as stock prices, and whether such economic consequences are temporary, unbending or permanent, motivated by negative effects of government shutdowns on business and consumer sentiments, and on export-driven channels between the U.S. and the rest of the world.

4. Mitigation Strategies and Policy Recommendations

The comprehensive literature review indicated that the costs of a government shutdown can be significant and long-lasting. These costs include economic, human, ethical, and political ones. Generally, shutdowns have demonstrated that short-term political gains can translate into long-term social losses. It is therefore imperative that solutions be found to this issue. These have been scarce in the literature regarding how to address short-term gains and long-term losses. Those who suffer from a government shutdown are those who are made more vulnerable by it: those least able to afford it and prevent it, mainly cancer patients, minorities, disabled workers, actors who do not have regular income, are in permanent non-standard positions or are contract workers, and others who experience poverty at the beginning of their transition to adulthood. Addressing the vulnerable groups in every society would help to build a more just, way to help stem off populism as addressed by policy prescriptions by the International Monetary Fund.

In this section, we present a set of potential policy options or steps that can help mitigate the likelihood of future shutdowns, reduce the economic and social costs of the current shutdown on affected stakeholders, including cancer patients, reduce political polarization, and enhance public policy making. These options are suggested, diverse, multi-faceted, and may not ensure an immediate solution to several deep-seated problems involved; however, our hope is that they can act as a starting point for further, action-oriented elaborations and policy stepping stones.

5. Case Studies and Historical Analysis

In 1980, for example, the government shutdown for five days, and the impact on interest rates was negligible. In 1981 and 1984, the government shutdown and the impact on interest rates was in the correct direction, but it was somewhat exaggerated and delayed. Yet from October 5, 1984, when the shutdown began, to November 20, 1984, when it ended, the Treasury bond’s “discount rate” rose most significantly since that of 1966. On the other hand, from December 17, 1981, when the three-day shutdown began, until January 6, 1982, when it ended, the Treasury bond’s “discount rate” climbed less than usual. During December 29, 1982, when the three-day shutdown began, until January 3, 1983, when it ended, the rate did not budge. When the federal shutdown occurred on November 23, 1983, the bond’s “discount rate” decline had little to do with it.

We can only begin to understand the impact of a governmental shutdown from analyzing historical examples. Since 1975, there have been 22 prior government shutdowns. During this brief time span, the Office of Management and Budget (OMB) has kept detailed, albeit somewhat inconsistent records. They include the number of full-time employees furloughed and the number of days they were furloughed. Other shutdown information includes the Services Shutdown Plans (law enforcement, regulatory, and public service activities). From 1975-1993, the annual number of government shutdowns averaged 0.5 and had no relation with the party in control, the deficit, or the tax burden.