The Philippine Online Chronicles

The United States Congress has reached a budget deal, averting a government shutdown at the last minute.

U.S. House Speaker John Boehner said a deal to fund the government through the rest of the fiscal year has been reached between Republicans and Democrats.

"The government will be open for business," President Barack Obama said.

In joint statement issued after the agreement, Boehner and Senate Majority Floor Leader Harry Reid said “we will cut USD78.5 billion below the President’s 2011 budget proposal, and we have reached an agreement on the policy riders. In the meantime, we will pass a short-term resolution to keep the government running through Thursday. That short-term bridge will cut the first $2 billion of the total savings.”

Congress passed the bill adopting a stop-gap measure by a 247-181 vote. It would fund the federal government through April 15, while providing funds for the Pentagon through the end of the fiscal year on Sept. 30.

A shutdown countdown started Friday, as the White House and Congress engaged in last minute negotiations over the 2011 U.S. national budget. Affected offices and agencies already sent notices to its employees that they will be on leave in case of a shutdown.

What is a shutdown?

The US government Info stated that under a government shutdown, some 800,000 non-essential federal government employees will be furloughed, national parks will be closed, paychecks for the U.S. military will be delayed and numerous services administered by the federal government will come to a halt including processing of  tax returns and issuance of regular passports or visas. (List of affected services.)

“A shutdown would have idled hundreds of thousands of workers, potentially put a crimp on the U.S. economic recovery, and carry political risks for Obama and his fellow Democrats as well as opposition Republicans, who would be seen by voters as failing to make compromises,” Reuters.com posted.

The U.S. government has imposed 17 shutdowns since 1976. The last shutdown was in December 15, 1995 to Januay 6, 1996.

Four of the last five government shutdowns went largely unnoticed the public except for the federal employees affected. In the last one, however, the American people shared the burden, according to About.com.

• 1981: President Ronald Reagan vetoed a continuing resolution and 400,000 Federal employees were sent home at lunch and told not to come back. A few hours later, President Reagan signed a new version of the continuing resolution and the workers were back at work the next morning.
• 1984: With no approved budget, 500,000 federal workers were sent home. An emergency spending bill has them all back at work the next day.
• 1990: With no budget or continuing resolution, the government shuts down during the entire three-day Columbus Day weekend. Most workers were off anyway and an emergency spending bill signed by President Bush over the weekend has them back at work Tuesday morning.
• 1995-1996: Two government shutdowns beginning on November 14, 1995, idled different functions of the federal government for various lengths of time until April of 1996. The most serious government shutdowns in the nation's history resulted from a budget impasse between Democratic President Bill Clinton and the Republican-controlled Congress over funding for Medicare, education, the environment and public health.

Impacts of threat

Wall Street plunged with the threat while other markets also reacted negatively on the possibility of a shutdown. As of Friday closing, Nasdaq shed 0.6% of its value to close at 2,780. The S&P 500 closed down 0.4% to 1,328 while the Dow fell 0.2% to 12,380. Crude oil futures prices finished above 112 dollars per barrel.

The budget predicament happened days after Obama opened his 2012 political campaign with a gathering of his supporters. Obama aims to raise a massive $750 million campaign fund.