The US economy is inching towards a shutdown as the American Senate has refused to pass the budget. The US House of Representatives Republicans, to break the logjam over the spending bill, are expected to demand a bipartisan negotiating panel with the Senate. But even then, the panel would not be able to meet in time, thereby ensuring that government agencies will have to curtail operations on Tuesday.
Earlier on Monday, competing spending proposals shuttled between the Republican-controlled House of Representatives and Democratic-led Senate with no sign of any compromise. With the law which funds routine government activities expiring at midnight, Obama's ambitious health-care bill looks delayed. A shutdown would leave some essential functions like national security intact but would sharply cut many regulatory agencies, sending home up to 10 lakh government staffers. A shutdown would continue until the Congress resolves its differences which could imply several days or weeks.
It does not bode well for the next political battle, a bill to raise the federal government's borrowing authority. A failure to raise the $16.7 trillion debt ceiling by mid-October would force the USA to default on some payment obligations. Should it happen, it could cripple its economy and send tremors across the global economy.