Shutdown showdown: not over yet

The federal government may be back up and running, but the country is not out of the woods yet.

Looming ahead is the next set of deadlines.

The next possible shutdown date is Jan. 15 and by Feb. 7 the Treasury will once again have to ask Congress to raise the debt ceiling and the next phase of the sequester will begin.

When the 2013 fiscal year ended on Sept. 30, the government temporarily shutdown for 16 days, resulting in 800,000 government workers being furloughed as well as a delay in payment to military veterans among other repercussions.

During the 16-day partial federal government shutdown, which began Oct. 1, Republican tea party members in the House of Representatives remained committed to defunding the Affordable Care Act. The House passed bills to repeal or defund Obamacare, which the Democratic-controlled Senate refused to consider.

Struggles over government spending and the deadline to raise the debt ceiling unnerved the global community.

Due to the lack of a bipartisan resolution the end result was a partial government shutdown.

By Oct. 16, Congress was faced with the decision to raise the national debt ceiling and end the government shutdown or default on national debt.

On Oct. 17 President Obama signed a bill, passed by Congress the night before, raising the debt ceiling and reopening the federal government. However, the shutdown cost the country $24 billion.

If the government spends more money than it receives in tax revenues for the fiscal year, the U.S. accumulates a deficit.

The government must borrow money in order to pay interest and principle. Borrowing money to pay back what Congress has already spent then leads to an increase in debt.

Government deficit is at its lowest since 2008 at less than $1 trillion. The deficit reduction has resulted from the expiration of stimulus measures, tax increases on high income households and across-the-board budget cuts, known as the sequester.

“Enacting a temporary solution instead of resolving the debt ceiling issue causes great uncertainty for the economy as a whole,” Christina Styles, Citrus College professor of economics said.

“Businesses realize that the government could undergo a second or a third sequester, which would mean another round of furloughed government workers, government contractors not being paid and national parks and museums shutdown.”

“The goal of the sequester was to reduce government spending over the next 10 years in exchange for raising the debt ceiling,” Dennis Bent, Citrus College professor of economics said.

“Because our government is running deficits, there is a trade-off between incurring debt today in order to spend money on programs that the current government deems worthy, versus obligating future governments to pay back that debt,” Bent said.

Sequestration is a part of the Budget Control Act of 2011, known as the debt ceiling compromise. The possible threat of a sequester was meant to push the Joint Select Committee on Deficit Reduction (aka, the “super committee”) to create a “grand bargain” that would cut $1.2 trillion over 10 years.

If the committee had reached a deal and Congress had passed it by Dec. 23, 2011, then sequestration would have been avoided.

“The idea had been that across-the-board cuts were supposed to be so terrible that it would be an incentive for this super committee to make the actual cuts through their negotiations,” Congresswoman Judy Chu said. “Well, you know what? This super committee failed.”

Budget sequestration limits the size of the federal budget therefore placing a cap on government spending.

The 2011 sequester was put into effect March 1, 2013 and the result was $85 billion in automatic reductions.

“It’s like taking a hatchet rather than a scalpel. You know, with a scalpel you look for the bad things and you cut them out,” Chu said. “But with a hatchet you are just cutting like crazy even if that’s the most important program.”

Across-the-board budget cuts have had a large impact on academic research and scientific advancements. The reduction in federal grants has cause delays for research projects.

When the sequester first went into effect in March 2013, $3 billion was cut from federal education funds. This was felt by school districts across the U.S. Services provided by schools that aid students living in poverty will begin to suffer due to a lack in funding. College students will experience the effects of the sequester cuts with federal loans and Pell Grants. “[Grants and loans are] what has made college affordable,” Chu said.

The decrease in funding will limit the availability for low income students to receive higher education.

A bipartisan budget committee made up of members of both the Senate and the House are planning to reconvene with the intention of reaching a settlement that will end the sequester.

Congress has until Jan. 15 to reach an agreement.



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