Wednesday, November 29, 2023

A budget paralysis in the United States would weigh on the economy

(Washington) A Biden administration official warned Monday that a federal administration paralysis, or “shutdown,” would cause damage to the U.S. economy if Republicans and Democrats in Congress do not agree on the government budget, object of a political battle.

Posted at 14:39

“We haven’t seen closure in a while. I hope we don’t have one now, because one of the things that encourages us all is the fact that the American economy is doing much better than many people expected,” said Deputy Secretary of State Treasury Wally Adeyemo. speaking at the Economic Club of New York.

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The “shutdown” differs from the default that threatened the US economy in the spring and was linked to the debt ceiling, which Congress had to raise.

The frozen expenses in the event of a “shutdown” are less than in the case of default, details a memo from the Committee for a Responsible Federal Budget, a bipartisan organization.

In the event of a “closure,” for example, officials would temporarily not be paid, certain health systems could be affected, as well as air transportation, and air traffic controllers would not receive salaries.

The last paralysis of the federal administration dates back to 2018. According to the committee, around 850,000 officials were left partially unemployed.

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“The last thing we need is the difficulties of a closure,” Adeyemo warned.

The next fiscal year begins on the 1stis October, but the elected representatives of Congress, who must vote on the financing, have so far reached no agreement.

The ball, he stressed, is in the court of the Republican elected representatives of the House of Representatives.

“Democrats in the Senate (and) House and Republicans in the Senate agree on the need to respect the terms of the agreement we just reached this summer,” he said.

This agreement, which made it possible to avoid defaults, suspends the United States public debt ceiling until January 2025 and sets budget objectives, including, in particular, a limitation on spending.

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“Our goal is really to try to get to a point where Congress agrees to continue funding the government, because the last thing we need is headlines about the government shutting down,” Wally Adeyemo said.

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