US government back to work after fiscal deal

Hundreds of thousands of furloughed federal workers have begun returning to work across the US after 16 days of partial government shutdown following the passing of a fiscal deal by the Congress.

The White House budget director, Sylvia Mathews Burwell, issued a directive on Thursday to employees minutes after the US President, Barack Obama, signed legislation that ended the shutdown and raised the US debt ceiling.

But Obama, speaking from the White House hours after signing the legislation, said while “these twin threats to our economy have now been lifted”, the shutdown slowed economic growth.

Congress reopened the US government on Thursday and signed off on more borrowing so America could pay its bills, quelling a deep political and fiscal crisis.

But the deal only pushed the unsolved and bitter ideological battle a few months into the future.

Obama called on warring politicians to come together to pass a long term budget and to give up the “brinksmanship” that threatened the economy and squandered the trust of the American people.

He called for a budget that lowers deficits, invests in education and infrastructure, cuts unnecessary spending and closes corporate loopholes.

The US president said the government shutdown damaged America’s credibility around the world.

The deal was welcomed around the world, but anxiety persisted about America’s long-term stability.

The fiscal feud could resume as new deadlines in January and February near, though Republicans might not be so eager for another fight after seeing the party’s approval plummet to record lows.

Shaky US economy

The impasse, fought over government spending in general and Obama’s new health care programme in particular, had shuttered national parks and monuments, and mostly closed down agencies such as NASA and the Environmental Protection Agency.

Critical functions of government went on as usual, but the closure and potential default weighed on the economy and spooked the financial markets.

Credit rating agency, Standard & Poor’s, estimated the shutdown has taken $24bon out of the economy.

Obama hailed the legislation – which adhered strictly to the terms he laid down when the twin crises erupted more than three weeks ago.

“We’ll begin reopening our government immediately and we can begin to lift this cloud of uncertainty from our businesses and the American people,” he earlier said.

Republican House of Representatives Speaker John Boehner said: “We fought the good fight. We just didn’t win.”

As the deal came together earlier on Wednesday, the stock market surged on the prospect of an end to the crisis that had threatened to shake confidence in the US economy both at home and abroad.

IMF managing director Christine Lagarde welcomed the deal but said the shaky American economy needs more stable long-term finances.

“It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner,” Lagarde said in a statement.

The Republican-controlled House of Representatives voted 285-144 in favour of the bill, even though most Republicans voted against it. In the Democrat-controlled Senate, approval was even more lopsided, 81-18.

House Republicans sparked the crisis on October 1 when they refused to fund the government unless Obama agreed to defund or delay his health care law, known as “Obamacare.”

The government shutdown was soon overshadowed when House Republicans also refused to up the government’s borrowing authority so the US could pay its bills, raising the specter of a catastrophic default.