The cost of downtime: The United States is facing a shutdown again

Washington is once again on the verge of a partial shutdown. The reason for the disagreement is the vote on the budget of the Ministry of Internal Security. Disputes between Republicans and Democrats arose after Immigration and Customs Enforcement (ICE) officers, which is part of the Interior Ministry, shot dead two people in Minneapolis. What the next budget crisis will mean for the United States is in the Izvestia article.

Another shutdown

A partial shutdown may begin in the United States on Saturday. The Senate was unable to overcome the procedural hurdle on the budget of the Ministry of Internal Security (DHS) — 52 in favor of the required 60, which prevented a vote on the essence of the bill.

Now the Ministry of Internal Affairs and its divisions are under threat of shutdown: the Federal Emergency Management Agency, the Coast Guard and the Transport Security Agency. Their employees risk being left without payments or being sent on unpaid leave.

The disagreement is related to immigration policy. Some Democrats insist on strengthening control over the actions of the Immigration and Customs Police (ICE) after a series of high-profile incidents, including in Minnesota. Among their demands are mandatory court orders to enter private homes, a ban on racial profiling, the use of chest cameras and the abandonment of masks during operations. Republicans oppose the introduction of additional restrictions for law enforcement agencies.

This episode may be the third since Donald Trump's return to the White House. The longest shutdown of federal agencies occurred from October 1 to November 12 last year and became a record. Then the reason was the disagreement of the senators on health issues.

At the same time, experts are increasingly talking about the systemic problems of the budget process in the second Trump administration. According to Olga Veretennikova, vice president of the Borsell analytical company, one of the key reasons is the increasing political polarization and a decrease in the willingness of the parties to compromise.

"Moreover, Donald Trump has repeatedly stated his readiness to use the suspension of government work as a tool of pressure to reduce the state apparatus and revise programs that Republicans do not like,— the analyst explains to Izvestia. — The high budget deficit and the growth of public debt create additional tension: the tax reforms of previous years have increased the burden on the budget, which intensifies the conflict over the allocation of resources.

Economic consequences

The economic impact of a possible shutdown will depend primarily on its duration. If a compromise is not found promptly in the Senate, a temporary suspension of funding for individual departments is quite real, investment adviser Yulia Kuznetsova said in an interview with Izvestia.

— The market traditionally perceives the shutdown as a political episode, not as a financial disaster. Investors understand that we are not talking about a default on the national debt, but about a temporary pause in federal spending," she emphasizes.

However, as the crisis drags on, the risks increase. According to analysts, every day of downtime of federal structures can cost the economy hundreds of millions of dollars due to reduced government spending, delays in contracts and a decrease in consumer activity.

— A prolonged shutdown can lead to a cooling of business activity. Companies that depend on government contracts or regulatory approvals face disruptions and falling revenues. In previous periods of government shutdown, air transportation suffered, for example, due to a shortage of dispatchers and disruptions in the work of control services. The general uncertainty is also holding back consumer spending," says Olga Veretennikova, vice president of the Borsell analytical company.

At the same time, the direct impact on the Ministry of Internal Affairs itself, according to experts, may be less noticeable. The department has a "cushion" of $75 billion, which Trump allocated to this service last year.

— The rest of the government will have to face difficulties. Moreover, the tax season will coincide with the shutdown: millions of Americans will not receive refunds on their declarations, and citizen service centers will close. The Coast Guard, TSA, and FEMA will partially shut down operations or operate without salaries. In numbers, these are GDP losses of about $1.2 billion per day, and if the shutdown drags on for two weeks, the economy will miss $17 billion," Veretennikova explains.

A blow to the ratings

The political consequences of a possible shutdown may be no less sensitive than the economic ones. Against the background of the upcoming midterm elections, the budget crisis is becoming a factor of internal party competition and media pressure.

— The shutdown reinforces the rhetoric about inefficiency of management and can be used by opponents as an argument in the campaign. However, its electoral effect directly depends on the duration and public perception of the causes of the crisis," notes Yulia Kuznetsova. — If the markets remain stable and disruptions in the work of departments are short-term, the impact on the ratings will be limited. But as the conflict drags on, the economic background will inevitably begin to influence the mood of voters.

According to Ahmed Yusupov, a partner at the Goldman communications agency, this situation is a "time bomb under the Republican bench" for the election agenda. Moreover, polls are already recording a 4-5-point advantage for the Democrats ahead of the midterm congressional elections.

— The ruling party will be responsible for the "paralysis" of power. And it looks especially cynical against the background of upcoming high—profile events - the 250th anniversary of the United States and the World Cup, where security should be provided by the very agents who will stop being paid salaries. The Trump administration relies on strength and unwillingness to concede, but the price of such stubbornness can be high: the irritation of voters due to the chaos in the work of public services can deprive Republicans of control over the House of Representatives, the economist believes.

At the same time, Irina Sozdatel, vice president of the Association of Exporters and Importers, points out that the American electorate has already become accustomed to budget crises as an element of political struggle.

— In conditions of high polarization and a saturated information agenda, a short-term shutdown is unlikely to be a turning point. Voters evaluate a broader set of factors, from inflation to foreign policy. Therefore, much will depend not on the very fact of the suspension of the department's work, but on its duration and the accompanying economic effect," she emphasizes.