The most powerful nation on Earth began shutting down its government on October 1. A funding bill that would have allowed the government to keep discretionary spending, but would have removed key aspects of the Affordable Care Act (Obamacare), was voted down in the Senate. Without approval for new spending, the government was forced to begin furloughing people and programs. If an agreement is not reached soon, the impacts could multiply.

Jobs

Of the over 2 million federal employees, excluding military personnel, over 800,000 have received non-essential status and are now out of work for the duration of the shutdown. That means 40 percent of the government workforce is now idle. There is no escaping the economic consequences of so many people not receiving paychecks—and not working. These employees will probably receive back-pay, but even then America will have to shell out billions of dollars for work not done. Then there are all the people who may soon be out of work if the shutdown drags on. Many vendors and private companies depend on government work that is now shelved.

Stock Market

The day before the government shutdown, the Dow Jones Industrial Average fell over 120 points at the opening bell. If the shutdown continues it could impact consumer confidence and thus spending. Some analysts are already predicting a reduction in gross domestic product. This may affect corporate earnings and thus share prices.

Government Programs

Non-essential government facilities, like national parks and museums, are now closed. Washington, d.c., is taking a huge hit with the national monuments closed. Tourism is already feeling the impact. The Department of Veterans Affairs says it has enough money to continue providing aid until late October, but if the shutdown does not end by that point, it may run out of money. Many of America’s elderly will feel the impact. Medical research by the Center for Disease Control and Prevention (cdc) will halt. The Department of Homeland Security will suspend its E-verify program, which allows employers to identify the legal immigration status of its employees. Social Security says it will still continue to issue checks, but most likely will not accept any new applicants. Huffington Post reports that there is the possibility that waste management will soon be discontinued in the nation’s capital.

What It Means

Amazingly, as bad as a government shutdown may be for the economy, some analysts, such as Mike Shedlock of Global Economic Trend Analysis, say it may be the best thing for America right now because it may be the only way to stop the U.S. from spending money it doesn’t have.

The most powerful nation on Earth is being embarrassed on the world scene because of its inability to manage its finances and settle its squabbles.

As the national debt approaches $17 trillion, the world sees the economic basket case America is becoming. As Telegraph writer Con Coughlin says:

For a country that is supposed to be the most powerful in the world, the fact that Americans have today woken up to find large swathes of their nation closed for business is humiliating. …There was a time not so long ago when the world looked to America for both political and economic leadership. But now that can no longer be taken for granted ….

America used to be the richest nation on Earth. Today, much of its “wealth” should be called something else: debt. Even the wealth it still has is quickly diminishing. As America’s financial problems continue to worsen, expect money fights to escalate in Washington. This immediate crisis may be resolved, but expect more to come. As the money fights continue, political bickering will get worse.

Washington’s financial and political woes are an embarrassment in full view of the world. What will be next? Fights over raising the debt ceiling? Expect that to begin around mid-October.

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