US Debit Crisis
The deal reached on 16 October, 2013 has provided some breathing room for the next potential clash. It come just a day before the deadline to raise the $16.7tn limit.
The agreement reopens and funds the government up until Jan. 15. It also permits the treasury to borrow normally through Feb. 7 treasury official will also be able to use the "extraordinary Measures" accounting procedures as they have done in the past, which could push past that debt ceiling deadline by several weeks.
Politicians, bankers ans economists have warned of dire global economic consequences unless an agreement to raise the US government's borrowing limit can be reached. the US treasury has been using what is has called "extraordinary measures" to pay its bill since the nation reached its current debt limit in May.
An estimated 700,000 of the 2.1 million-strong federal workforce were initially told to stay home, having been deemed, "non-essential" staff. Most national parks, museums, federal building and services were closed, while pension and military veterans benefit cheques were delayed.
WHY DID THIS HAPPEN
There has been repeated political wrangling between the Republicans, who control the lower house-the house of Republicans- and the Democrats, who have a majority in the Upper house, the Senate. Due to disagreements between the two house over federal government spendign, the Us congress failde to pass a budget the fiscal year ended on 30 September.
Since President Obama's election, the parties have never come to a resolution on a US budget that extends further than a few months. They've just negotiated around the margins and come up with short-term fixes. Republicans have used these budget deadlines to gain political leverage over contentious policies. The central issue this time round was Obama's healthcare overhaul, with the Republican-controlled house of Representative approving budgets eliminating it funding or delaying its central provisions. these were later rejected by the senate.
This was the first partial shutdown the US has faced in 17 Years.
HOW DID IT GET SO BAD
Paying back US creditors has been a central part of US governance since the time of the nation's founding. In 1790, US treasury secretary Alexander Hamilton said, "there can be no time, no state of things, in which credit is not essential to a Nation."
But since the Democrats ceded control of the House of Representative to the Republicans in 2010, Budget fighting between the two parties has become commonplace.
One big drama came in August 2011, When last-minute posturing by both sides led ratings agency Standard &Poor's to downgrade the credit worthiness of US debt, a historic first. The debt ceiling has been used as a negotiation point for house Republicans who have sought to extract budget concessions from Obama.
Republicans took their victory in the 2010 House of Representative elections as a sign that Americans were revolting against Obama's Democratic agenda- and, Specifically, that Americans were unhappy with the patient Protection and Affordable care Act. or "Obamacare" as Republicans label it. Republicans vehemently rejected Obama's efforts to overhaul the way healthcare is provided in the united States.
Although past budget fights have included larger question about the size and scope of the US government, law substantial parts of which took effect on 1 October.
Republicans have been doing everything in their power to face Obama to delay implementation of a bill they strogly believe was rejected by the American public.
Obama and democrats, for their part, are keen to remind voters that the law was validated by the Supreme count in june 2012 abd was a central issue in the 2012 presidential election, which obama won decisively.
House Republicans have already voted more than 40 time since the legislation was passed, either to repeal it or strip its funding.
Senate debt deal
- Fund US government until 15 January 2014.
- Suspends debt limit to 7 February 2014
- Established conference committee of house and senate to broker logier-time budget deal.
- Guarantees back-pay for furloughed federal workers.
- Income verification for those receiving issuance subsidies through healthcare law.