Inside America’s Government Shutdown: Budget Deadlock Explained

US Government Shutdown Oil Latest News

• US President Donald Trump signed a stopgap bill recently, ending the longest government shutdown in US history. 
• A shutdown occurs when the government runs out of funds, forcing federal agencies to halt operations and hurting the economy. 
• Since the budget system began in 1976, the US has faced 11 shutdowns, with the latest lasting 43 days — surpassing the previous record of 34 days during Trump’s earlier term.

Why Government Shutdowns Happen in the US but Not in India

• A US government shutdown occurs not because the country runs out of money, but because the government loses legislative permission to tax and spend. 
• Unlike India — where the Executive is part of Parliament and a budget failure forces the government to resign — the US President is separate from Congress. 
• This separation means the President cannot ensure passage of the budget and need not resign if it fails. 
• When Congress, divided along party lines, cannot agree on the budget, the federal government shuts down. 
• In the recent shutdown, Republicans lacked the 60 Senate votes needed, and the deadlock ended only when eight Democrats supported the resolution.

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How the US Budget Cycle Works

• The US fiscal year runs from October 1 to September 30. The shutdown began on October 1 because the Trump administration could not get its budget approved by Congress in time.

Budget Preparation Begins in February

• The budget process starts much earlier. By the first Monday of February, the President must submit the budget proposal to Congress. 
• Both chambers — the House and the Senate — then engage in months of deliberations, debates, and amendments on taxation and spending priorities. 
• These discussions often become contentious.

Source of Conflict in the Recent Budget Debate

• A key point of disagreement during this shutdown was the scope and funding of the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamps programme. 
• Such policy disagreements create delays in approving appropriations.

October 1: The Hard Deadline

• According to the Congressional Research Service, October 1 is a strict deadline for Congress to pass appropriations. 
• When the fiscal year ends, previous funding expires, and by law, the government cannot spend money without new appropriations.

Why a Shutdown Happens

• If Congress does not approve funding by October 1 — creating a “funding gap” — federal agencies must begin shutting down affected programmes and activities. 
• This legal requirement triggers a government shutdown until a new budget or stopgap bill is passed.

Rising US Budget Deficit

• According to the Congressional Budget Office, the US recorded a $1.8 trillion budget deficit in FY2025. 
• Government receipts were $5.2 trillion, while spending reached $7 trillion, creating a large fiscal gap.
  • For comparison, the entire Indian GDP is under $4 trillion, and the central government’s total budget expenditure is about $0.6 trillion.
  • This highlights the massive scale of US finances and deficits.
• The FY2025 deficit equalled 5.9% of US GDP, much higher than the long-term average of 3.8% (1975–2025). 
  • A deficit means the government must borrow more to sustain its expenditure.
• Larger deficits add to the rising mountain of public debt. One consequence is rising interest payments, which have now become the second-largest expenditure item for the US government, as shown in official data.

Presidential vs Parliamentary System: A Warning for India

• The US shutdown illustrates how a presidential system can suffer severe governance breakdowns when the executive and legislature disagree. 
• In contrast, India’s parliamentary system ensures continuity of government, even with its own limitations. 
• While system choice depends on many factors, this episode highlights why a developing country like India may struggle to withstand long, disruptive shutdowns that a presidential model can trigger.

Source: IE | AJ | BBC