Who is to blame for the shutdown of Uncle Sam?

John Carlin answers all the questions you wanted to ask about the crisis
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The Independent Online
Q: Who is shutting the US government and why?

A: The Republicans in the House of Representatives. The Republicans in the Senate, a more venerable and judicious bunch, voted with the Democrats on Tuesday to reopen the government. On Wednesday their House colleagues voted the measure down. The shutdown occurred in the first place because Congress, contrary to past practice when budget negotiations with the White House become deadlocked, has refused to provide the money to keep the government running. The idea of Newt Gingrich, the House Speaker, was to use the shutdown to press President Clinton into accepting the Republicans' holy grail: a balanced budget by the year 2002.

Q: But wasn't the deficit created by that great fiscal conservative Ronald Reagan? Why are the Republicans suddenly so concerned about it?

A: The deficit rose spectacularly during the Reagan years: he cut taxes but not, overall, spending. The Gingrich Republicans hold two contradictory ideas in their heads: they sanctify Ronald Reagan but quietly acknowledge he presided over a period of great budgetary recklessness (which they also blame on the then Democrat-controlled Congress). The Republicans also thought they had identified a vote-winner - selling the idea during the 1994 congressional elections that it was morally and economically wrong for the country, as a family, to be in debt. Republicans also argue, more soundly, that the country's long-term economic health depends on the lower interest rates and increased investment which a reduced, or eliminated, deficit will bring.

Q: How serious is the US budget deficit anyway?

A: Compared with many other countries in the world there is no immediate cause for concern. This year's federal deficit will be around $160bn or 2.7 per cent of GDP. When Mr Clinton became President in 1992, it was 4.1 per cent of GDP and heading upwards. (Some of the improvement is due to Clinton; more to the economy). At the height of the Reaganomic experiment in 1983, the deficit was 6.3 per cent of GDP. The present figure compares with a 3.9 per cent deficit in Japan, 5 per cent in Britain and France, 7.4 per cent in Italy.

Q: Is the seven-year target for a balanced budget of any real importance?

A: President Clinton believes that it is not but, for fear of being seen to lack resolution and good husbandry, has been browbeaten by the Republicans into buying the idea. The seven-year target is of no greater or lesser significance than a six-, an eight- or a nine-year target. It reflects more the Republicans' belief that a line must be drawn somewhere.

Q: What is shut down?

A: Nine government departments have been partially shut down. Among the departments affected are State, Labour, Interior and Health and Human Services. More than 280,000 government employees deemed "non-essential" from the nine departments have been off work since the crisis began on 16 December. They, plus another 480,000, have not received their wages.

Q: What is not shut?

A: All of the above departments are partially open. Fully open for business are the FBI and other federal police agencies; the Defence Department, the Congress, the White House and all state, as opposed to federal, government agencies.

Q: Does the US public care that its government is partially shut down?

A: Most Americans seem to care in the sense that the goings-on in Washington of the last three weeks deepen their cynicism about the motives and seriousness of the people who lead them. An ABC television poll showed that 12 per cent of Americans were directly, personally affected by the shut-down; 88 per cent were not.

Q: What kind of things do the Republicans want to cut to hit the target?

A: They seek to cut welfare costs: notably Medicare, the government programme of health assistance for the elderly; cash benefits for single, teenage mothers; food stamps for the poor; housing and disability programmes. They also seek to reduce spending on student loans and environmental protection.

Q: And the Democrats?

A: We don't know exactly what the Democrats want to do. The Republicans legitimately complain that, while Mr Clinton has said he shares their goal for a balanced budget, he has yet to provide a detailed proposal.

Q: What is the actual difference between them?

A: What the Democrats most object to in the Republican plan is that it aims to balance the budget both by slashing welfare and reducing taxes, including those on capital gains. The benefits of the tax cuts proposed by the Republicans would be enjoyed more by the rich - those in the $200,000- plus bracket and those who have a stake in Wall Street. It is by successfully communicating this contradiction to the public that the Democrats have managed to end the year better than they began.

Q: Who is winning the propaganda battle?

A: Everybody is losing it. All sides look bad. Talk to ordinary people on the streets, watch them deliver their sound bites on TV, and you'll hear expressions like "They're all a bunch of idiots!" and "Don't they realise how foolish they're making America look?" Wednesday night's ABC poll, however, has shown, like other polls, that nearly twice as many people blame the Republicans as President Clinton.

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