US shutdown: Impact on visas from UAE?

The US Congress failed to break the impasse on Tuesday and, technically, the US government plunged into a partial shutdown this morning (8am UAE time) for the first time in 17 years.

While the shutdown impacts up to 1 million US workers by forcing them to proceed on unpaid leave, and US residents are impacted by a closure of non-essential services – national parks, public libraries and a reduction in healthcare and medical research projects – people across the world will be affected by this default.

Here’s how:

Consulates/Embassies: Sorry, we’re closed

While embassies and consulates in foreign countries will continue to operate, at least for the day today unless they’re already out of cash, the US State Department might not be able to process visa applications, which means that if you’ve applied for and are awaiting the issuing of a US visa, you might be in for, at best, delays and, at worst, rejection.

According to US media sources, during the previous shutdown in 1995-1996, between 20,000 and 30,000 US visa applications by foreigners were stalled per day.

While the US State Department is in a much better state of readiness this time around – they’re planning to continue processing visas through the shutdown since those operations are largely funded by fees collected – if the shutdown enters into a protracted period, salaries of consulate staff that need to be issued by the US government will be impacted, so expect further delays.

Tourist attractions: Out of money, out of luck

Even if you already have the visa and are set to travel imminently, remember that at least some of the attractions that you intended to visit will be locked down and therefore inaccessible to tourists and visitors.

Yes, the Statue of Liberty too will be shut down, along with other national parks, and of 24,645 staff that man these parks, only 3,266 essential ones (fire management, security personnel, emergency responders, etc.) will remain on duty. 

The Smithsonian Institution, which oversees the National Zoo and 19 museums and galleries, including the Natural History Museum, the Portrait Gallery and the Air and Space Museum, will close. It will send home more than 3,500 of its 4,200 staff members, with the rest remaining to protect life and property. Yes, the zoo animals will still be fed, but no such luck for visitors.

Click to read: Obama tweets: Who did it?

Visitors from US: We’ll get back to you

In addition to us not being able to potentially get our US visas, visitors and tourists from the US might not arrive either as they don’t get their salaries (if they belong to the non-essential payroll in America) and, therefore, decide to postpone or cancel their visits.

According to a Standard Chartered report, a US government shutdown affects discretionary federal spending and leads to the closure of non-essential government services. A large proportion of federal employees are likely to be furloughed. Between 800,000 and 1,000,000 federal employees, out of 2.1 million, could be put on unpaid leave, according to media reports.

Mandatory spending (including entitlement spending) that is not subject to annual funding – e.g., Social Security, Medicare and Medicaid payments – will continue. The Department of Defense is protected from the shutdown, as both chambers approved a separate bill just yesterday (on September 30) to ensure that the military and defence contractors are paid.

Government statistical agencies may partially close, affecting the gathering and release of data. The previous government shutdown happened between December 16, 1995, and January 5, 1996, lasting 21 days; at the time, federal employees received some retroactive pay, the StanChart report states.

Trade winds: Expect delays

In addition to the delays in visitors from and to the US, trade, especially of non-essential goods and where government spending is involved, will get affected.

“In our view, a shutdown lasting a few days would shave only a few decimal points off Q4 GDP growth,” says Standard Chartered. “The hit to growth would come mainly from the impact of the furloughs on consumption – an effect similar to what happened over the summer with sequester-related furloughs of federal employees – and a potential hit to business confidence.

The main risk to this expectation is that the shutdown continues for longer, potentially until or beyond the October 17 debt ceiling deadline,” the banks states in its report.

“The government is likely to remain shut as long as the two chambers do not agree on the government funding bill. The bill would also require the president’s sign-off. US politics are notoriously unpredictable, and the situation is currently fluid. With this caveat in mind, we see several possible outcomes,” it notes.

Economy: Wrench in the recovery

US President Barack Obama was spot-on when he said the government shutdown will “throw a wrench into the gears” of a recovering economy. “It would throw a wrench into the gears of our economy at a time when those gears have gained some traction,” he said. According to White House estimates, a one-week shutdown will cost the US economy $10 billion. Considering the US economy has just began taking baby steps to recovery, a $40bn per month hurdle may be enough to make it stall again. 

Indeed, as Obama put it: “Office buildings would close. Paychecks would be delayed. Vital services that seniors and veterans, women and children, businesses and our economy depend on would be hamstrung. Business owners would see delays in raising capital, seeking infrastructure permits, or rebuilding after Hurricane Sandy. Veterans who’ve sacrificed for their country will find their support centers unstaffed. Tourists will find every one of America’s national parks and monuments, from Yosemite to the Smithsonian to the Statue of Liberty, immediately closed. And of course, the communities and small businesses that rely on these national treasures for their livelihoods will be out of customers and out of luck.”

Communication seems to have emerged as the first casualty of the US government shutdown, with the official Twitter account of the US Capitol giving up on any further communications, citing “a lapse in government funding”. Seriously?

Yes, this is what US Capitol (‏@uscapitol) tweeted at about 8am UAE time today: “Due to a lapse in government funding, this account will not be active until further notice.” So there you go. 

Government Shutdown: White House Blackout

A message on the White House website reads: "Because Congress did not fulfill its responsibility to pass a budget, much of the federal government will shut down." Ouch.

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