White House orders federal agencies shutdown

White House orders federal agencies shutdown
Tue Oct 1, 2013 08:50:46

The White House budget director has ordered federal agencies to begin closing down after Congress failed to pass a budget to avert a government shutdown.

"Agencies should now execute plans for an orderly shutdown due to the absence of appropriations," said Sylvia Mathews Burwell, director Of the White House Office of Management and Budget in a memo on Monday.

The order was issued 10 minutes before the US government officially ran out of money after a day of angry brinkmanship between the Republican-controlled House of Representatives and the Senate, where Democrats have the majority.

Burwell urged Congress to pass a temporary operating budget as soon as possible to allow departments to reopen.

"We urge Congress to act quickly to pass a Continuing Resolution to provide a short-term bridge that ensures sufficient time to pass a budget for the remainder of the fiscal year, and to restore the operation of critical public services and programs that will be impacted by a lapse in appropriations."

Mark Zandi of Moody's Analytics said a month-long shutdown could take up to 1.4 percentage points from growth.

The impact will be scattered. National parks and museums will close, hurting tourism in some areas. Various permit services, such as the issuing of passports, would halt, hurting businesses and travelers.

Possibly 400,000 civilian defense workers would stay at home, slowing down contracts with private suppliers.

The largest impact would be in the federal hub Washington, which could lose $200 million a day, Stephen Fuller of George Mason University told the Washington Post.

The government spends around $60 billion a month more than it brings in. The money that is already committed and so funding must be found or something else must give.

The Treasury says it will run out of cash and flexibility from October 17, and if the statutory cap on borrowing is not increased, it will have to withhold some cheques.

That could mean missing payments for salaries, retirement and health benefits, or even debt service - though that might not show up until the end of October.


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