US govt shutdown & the state of its Budget, Pg26

Key Highlights:

• US President Donald Trump signed a stopgap bill on Wednesday to end the 43-day US government shutdown, the longest in history.
• A government "shutdown" occurs when government agencies lack funds, halting many services and impacting the economy.
• The US government has experienced 11 shutdowns since 1976, with the recent one surpassing the 34-day shutdown in 2018-19.
• In FY2025, the US budget deficit reached $1.8 trillion, with receipts at $5.2 trillion and outlays at $7 trillion.

Detailed Insights:

• A US government shutdown arises not from a lack of funds, but from a lack of congressional authorization to tax and spend.
• The US fiscal year runs from October 1 to September 30, and the shutdown began after the failure to pass the budget by October 1.
• The US budget process starts in February with the President's proposals, followed by congressional deliberation, often leading to debates over taxation and spending.
• The FY2025 US budget deficit was 5.9% of GDP, exceeding the 1975-2025 average of 3.8%, leading to increased government borrowing and debt.
• Interest payments on past loans constitute the second-largest expenditure item for the US government, highlighting the impact of accumulated deficits.
• The article suggests that a Presidential system is vulnerable to governance breakdowns, unlike India's Parliamentary system, which ensures continuous government function.

Key Concepts Involved:

• Government Shutdown: A situation where government agencies lack funding, leading to a halt in services.
• Fiscal Year: A 12-month period used for government accounting, budgeting, and financial reporting.
• Budget Deficit: The amount by which a government's expenditures exceed its receipts during a fiscal year.