The shutdown lasted 16 days, but the economy has been falling apart since 2008.
When the US stock markets collapsed in 2008 they destroyed America’s economy and those of half the globe. Since then the government has racked up, at last count, a debt of nearly $17 trillion.
Washington may have broken the deadlock and come to an agreement over the debt ceiling but it’s only a stopgap. The measure to fund the country until January 15 simply moves the fiscal cliff to February 7, 2014.
The real cause for the shutdown was a “disagreement” between Barrack Obama’s Democrat Administration and the Republican opposition. The two parties are arguing over the government’s healthcare act, Obamacare, which was passed in 2010, making it easier for American citizens to gain private health cover. The Republican-controlled House of Representatives is attempting to delay central provisions, believing it was rejected by the American public.
The second major part of the current crisis is that the Republicans are essentially holding the act hostage, using it to get their way over the budget.
According to financial services company Standard & Poor the 16-day shutdown cost the country’s economy $24 billion and could affect this quarter’s GDP by 3 per cent. In the past 30 years the country has had 17 shutdowns, the last during Clinton’s presidency, in 1995, when government shut for 21 days. That cost the US economy $1 billion.
Following the successful negotiations this week, President Barack Obama said: “The way business is done in this town needs to be changed.” – Sam Ottley
Photo courtesy of Rich Renomeron’s Flickr photostream.