The U.S. started a new fiscal year Tuesday without a budget, a political failure that will put hundreds of thousands of non-essential federal workers on unpaid furlough; close parks, museums and offices; and impede basic services such as delivery of government payments.
Congress had until midnight Monday to resolve their differences over how to keep the government open. It failed to do so, as Republicans insisted on measures that would undermine President Barack Obama’s signature healthcare overhaul, and Democrats refused to consider anything other than a clean extension of existing spending authority.
Since Friday, the Republican-led House of Representatives and the Democratic-led Senate traded bills that technically would have avoided a shutdown – technically, because every proposal was politically unacceptable to the other side.
The final attempt was made about an hour before deadline when Republicans floated the idea of a negotiating panel with the Senate. Harry Reid, the Senate’s majority leader, refused. “We’re not going to go to conference with a gun to the head,” Mr. Reid said on the Senate floor.
As midnight approached, Office of Management and Budget Director Sylvia Mathews Burwell told the heads of government agencies to commence an “orderly shutdown” of the federal government.
“Unfortunately, we do not have a clear indication that Congress will act in time for the president to sign a continuing resolution before the end of day tomorrow,” Ms. Mathews Burwell said in the memorandum. “Agencies should now execute plans for an orderly shutdown due to the absence of appropriations.”
Lawmakers now have failed to keep the government open 18 times since the late 1970s, although the last one occurred 17 years ago in a showdown between Bill Clinton and former Republican House speaker Newt Gingrich.
The latest manifestation of Washington’s political dysfunction will test the patience of international investors, who watched with trepidation in recent days as lawmakers once again lurched toward a fiscal precipice.
North American financial markets drifted lower on Monday. The Standard & Poor’s 500 Index slipped 0.3 per cent, and the Dow Jones industrial average 0.8 per cent. In Toronto, the S&P/TSX Index slipped 0.4 per cent. Asian stock markets were mixed Tuesday as a new trading resumed in Sydney, Tokyo, Shanghai and elsewhere.
As negotiations ossified, Mr. Obama sought to pin the blame of a government shutdown on House Speaker John Boehner’s inability to control his Tea Party faction.
The president went to the White House press room late Monday and said that he believed there still was time to find an agreement. The White House said Mr. Obama called Democratic and Republican leaders in the Senate and House of Representatives Monday evening to urge a resolution.
“My hope and expectation is that in the eleventh hour, once again, that Congress will choose to do the right thing and that House of Representatives, in particular, will choose to do the right thing,” he said.
But with all signs pointing to a shutdown, Mr. Obama also used the opportunity to single out his opponents as the cause of the deadlock. “One faction of one party, in one house of Congress, in one branch of government doesn’t get to shut down the entire government just to refight the results of an election,” he said.
Mr. Boehner, who has been unable to convince the hard-line members of his caucus to pass clean legislation that would extend the federal government’s spending authority beyond the end of the current fiscal year at midnight.
Those members, elected with the backing of the Tea Party movement, insist on using the prospect of a government shutdown as leverage in an attack on “Obamacare,” which the president signed into law more than three years ago.
A shutdown won’t necessarily be disastrous, provided a resolution was found in a matter of days. IHS Global Insight, a research firm, estimates that a week-long shutdown would reduce gross domestic product by two-tenths of a percentage point.
“I expect a shutdown, and I expect it to be measured in weeks, not days,” Tony Fratto, a partner at Washington-based consultancy Hamilton Place Strategies and a former spokesman in George W. Bush’s White House, said Monday afternoon.