Joe Biden: 'Something is up' with President says commentator
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The White House is preparing for a potential shutdown of the federal government over the USA’s debt obligations. A shutdown could happen as soon as next week if an appropriations bill does not pass through before government funding collapses.
The White House has ordered federal agencies to prepare for a shutdown late next week.
White House press secretary Jen Psaki told reporters the advice is standard practice.
She told reporters: ”It’s just a reminder, we’re seven days out and we need to be prepared of course in any event of any contingencies, so we see this as a routine step, and one just to be prepared in any event of what could happen.”
But the chances of a government shutdown actually taking place are dangerously high – and the ramifications will be felt across America and likely other parts of the world.
READ MORE: Dire warning for Biden as the US risks running out of cash
What is a government shutdown?
A government shutdown is what happens when Congress fails to enact the annual spending bills on time and government agencies run out of money to pay their employees and perform duties for the American people.
Congress approves money to allow most of the federal government to operate, part of the “power of the purse” they were given in the Constitution.
Thus, the federal government can only perform many of its functions – like food safety inspections or tax refunds – when Congress has authorised money for it to do so.
The fiscal year for the government ends September 30, which means Congress needs to approve new government funds by then or the government will shut down.
Why is the USA risking government shutdown?
The issue stems from the President’s spending plans for the US.
The Democrats are vying to raise the debt limit to drag through spending plans to the tune of £3.5 trillion, which will pay for Covid relief and infrastructure, among other things.
The debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the US Treasury, thus limiting how much money the federal government can borrow.
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Republicans are refusing to vote alongside the Democrats to raise the debt limit as it currently stands.
Normally each year when the debt ceiling is voted on it is a bipartisan vote, and raising it now will actually pay for spending in the Trump administration, which added trillions to the national debt.
But Republicans want the Democrats to pass the bill on their own due to Mr Biden’s spending plans.
In an attempt to get Senate Republicans to break rank, the Democrats have tied the debt ceiling vote into a spending bill, which also includes billions for hurricane and other natural disaster relief.
What will happen if the government shuts down?
The ramifications are huge if the US defaults on its debts and shuts down.
The US will likely be plunged into an immediate recession, and the multiple services supplied to the American people by the federal government will become unavailable or be severely impacted.
Law enforcement, national security air traffic controllers, airport security officials and the military will all most likely still work, but they will not be paid.
For Americans, it will become difficult to do a number of things, such as process home or small business loan applications, apply for passports, and food safety inspections could all stop.
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