The U.S Shutdown: Populist Obstacle to be Economist

In a video of around 50-minute duration broadcasted on whitehouse.gov; president Barack Obama spoke in Maryland about `the Affordable Care Act`. The marvellous speech had occurred on September 26th 2013 – just several days before September 30th midnight; as imminent shutdown officially swept the United States government. On the video, Obama confidently presented what-so-called by Republicans as Obama Care to be solution for middle class health insurance. To him, health care is a fundamental thing to the economy security; without it, burdens in business and economic obstacles might occur. However, the 16-day U.S shutdown obviously explained different view; the particular subsidies for Obama Care even triggerred the wealthiest nation on earth in a big trouble.

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On October 1st 2013 – afternoon time at a press conference in Washington D.C, Obama open with a statement of emphasis, “the Republicans and Congress decided to shutdown the Federal government just because they do not like one law on the Affordable Care Act”. He always believed on the importance to support health care of middle class Americans through the programme implementation, while at the same time, the Federal government had no option to support it. September 30th was the end for U.S financial year; in which the Republicans party that control the House of Representatives extremely opposed to Obamacare – they cut and delayed it on the budget legislation. In overall condition, that midnight sudden decision appeared also as a result of failure of the lawmakers to confirm agreement on the Federal government funding.

“Supporting Obamacare means that the Americans would lose `I did everything I could` mindset” – The Republicans

It can be categorised as a fight between Democrats and Republicans; they had been blaming each other. Obama as Democrats was seen to make the Affordable Care Act as the most ambitious health insurance system ever, while Republicans who won in the House of Representatives seemed to use this chance to have their political leverage. To the Republicans, Obamacare is a kind-hearted look programme that will internally hurt the Americans later; they thought of giving good payment to all aspects in the country rather than funding Obamacare. They even assumed on how the country is spoiled by Obamacare boomerang goodness.

Nevertheless, the shutdown impacted to the life of hundreds of thousands of Americans Federal employees. 16 days of not getting paid released other problems, such as less spending at the shops and delay of certain financial commitments like credit card or mortgage payments.

“Analysts at IHS Global Insight have calculated that it will knock $300m a day off U.S economic output (total U.S nominal GDP, or output, was around $16 trillion last year). The key issue is how long it lasts. Moody`s Analytics reckons that a two-week shutdown would cut 0.3% off U.S GDP, while a month-long outage would knock a whole 1.4% off growth.” – Graeme Wearden, theguardian.com, on October 1st 2013.

It can be seen clearly that the shutdown surely had declining influence to the U.S economy, until fear came upon the debt ceiling; even though it was separared matter with the shutdown trigger. In this case, a legal limitation to have only $16.7tn dollars was predicted to reach its edge by the midth of October if no deal prevailed on the budget legislation; while Republicans kept arguing toward the Obamacare was unaffordable.

“What can be done? In the short term, House Republicans need to get their priorities straight. They should pass a clean budget resolution without trying to refight old battles over Obamacare. They should also vote to raise the debt ceiling.” – The Economist, October 5th-11th 2013.

Finally the epic political drama met a finish line on October 16th 2013, U.S Senate Democratic and Republicans leaders, announced about both parties striking a deal and agreed to raise the debt limit; plus reopening the government. The agreement helped to stop the country`s loss of $24 billion dollars, as a result of the 16-day partial shutdown. However, problem had not ended there yet. President Barack Obama proposed to have a rise of $1tn dollars on the debt ceiling, so that he can save the budget until his governance ends in 2016. Unfortunately, it was not approved as the agreed increase is only valid until February 7th 2014 and fear of uncertainty might still occur as an implication. It has attracted the Republicans to bring up the budget matter again by early next year. On the other hand, Obama emphasised to make Congress and the White House to be able to cooperate positively and avoid the tense political situation. To keep the market trust and reach global economy recovery, working together is urgently necessary. No response from the Republicans toward this endorsement.

This political soap opera then obviously made impact; sharpen to be inevitable negative market assumption. Based on the information given by the United States Central Bank, they will postpone the decision about stopping money supply that goes into the market; noted in amount of $85 billion dollars per month. It means that financial support is still around to help the United States potential economy drop after the shutdown, even though this way could be fragile for long term as well.

“As a president, becoming the populist is not a guarantee to secure the economy”

Obama seemed to gain popularity from several middle class help programmes; the Affordable Care Act is just one of them. As a president, people have looked at him as a helpful, sincere and solution giver one – without noticing on how in the country`s macro economy side, such idea could also be a boomerang to the government. Actually, there is nothing wrong with the idea of the programme, it is more about how Obama should have ensured all financial aspects before deciding.

Better policy making might be the solution, but the most important thing is; as a president, becoming the populist does not mean a guarantee to secure the economy. Balanced portion to be both well decision maker and be fair enough to the people is, perhaps, one of the ways to save this wealthiest nation on earth from any crisis in further.