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A looming government shutdown in the United States.
The impact could be huge.
The shutdown turns away about a million park visitors every day.
So you're talking a huge economic impact.
Morale will be at its all-time low during shutdowns and stress will be at its all-time high.
It's World Business Report from the BBC World Service.
I'm Gideon Longman.
The US is just hours away from a federal government shutdown.
And yes, I know we've been here before, but this time it really does look like it's going to happen.
We assess the impact it could have, not just in the US, but as far away as sub-Saharan Africa.
And we look at a very different shutdown of the internet in Afghanistan.
We're starting the programme in the US today because it looks like the federal government there will shut down in around six and a half hours time, at one minute past midnight eastern time in the United States.
If it does, it will be the first such closure in six years.
The US Congressional Budget Office, which is non-partisan, says up to 750000 federal employees could be furloughed as a result, and the cost of compensating them could run to 400 million a day.
Julia Manchester is a reporter for The Hill in Washington.
Julia, thanks for joining us.
Just explain for our listeners why this is happening.
What's the issue at stake?
Well, this goes back to March originally, when we saw the government narrowly avoided a shutdown because you had Senate Minority Leader Chuck Schumer, a Democrat, and a handful of other Democrats in the House and Senate vote along with Republicans to fund the government up until this point, September 30th.
Now that we're at this point, you are seeing Democrats stand much firmer and much more united against Republicans.
You know Schumer and Democrats.
Back in March, those Democrats that voted to avoid the shutdown, I should say, faced a lot of backlash from progressives within their party for accusing them of caving to President Trump.
This time around you're seeing Schumer as well as House Minority Leader Hakeem Jeffries team up together.
Demand from the Trump administration and Republicans in Congress to to roll back Obamacare or, excuse me, extend Obamacare subsidies as well as roll back cuts to Medicaid in President Trump's reconciliation bill that was passed earlier in the summer.
The Trump administration and Republicans predictably, are saying you know, you have both sides accusing each other of shutting down the government.
There doesn't appear to be a deal in sight at this point.
There are some Democrats, like Senator John Fetterman from Pennsylvania, who has sided with the Trump administration on a number of issues, who could vote in favor, but it likely won't be enough to keep the government open.
And Julia talk us through the maths, because the Republicans do have a majority in the Senate right.
So why can't they get this bill through?
They do have a majority.
However, they need 60 votes.
They essentially need a super majority to get that through.
They need, I want to say, six or seven more Democrats.
And it's unclear whether they have those Democrats or independents that tend to caucus with Democrats in the Senate, like Senator Angus King from Maine or Senator Bernie Sanders from Vermont.
Sanders likely – very likely will not vote for this.
So they don't have the numbers at this point.
I would be surprised if they did.
We might see a few Democrats jump over.
New Hampshire Senator Jeanne Shaheen, for example, has suggested that she's trying.
She would be open to a deal.
However, it just doesn't seem likely at this point.
Julia, thanks for spelling that out for us.
We'll let you get back to following this story, which is still unfolding.
Here's what Donald Trump had to say about this issue a few hours ago.
I told you we have 17 trillion dollars being invested.
So the last person that wants to shut down is us.
Now, with that being said, we can do things during the shutdown that are irreversible, that are bad for them and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programs that they like.
I'm joined by two men from two sides of the political divide in the United States.
Andrew Gounardis is a Democrat senator from New York State and chairman of the Senate Committee on Budget and Revenue.
And Matthew Bartlett is a Republican strategist who's worked in the State Department under Donald Trump.
Gentlemen, welcome to World Business Report.
If I can start with you Andrew, what did you make of that comment from the president that this will cause irreversible job cuts, not just temporary layoffs?
Well, this is nothing new that we've heard from this president, who has made a living on disregarding all of the norms and bounds and laws that the president should be, should adhere to.
You know, I think a lot of this is bluster, frankly.
Like all of these critical government agencies, that we should do so with being held hostage by an imperial president who said it's either my way or the highway.
And so.
But during the Biden administration the Democrats were always complaining that shutdowns were destructive.
They were being caused by the Republican opposition.
And yet now the boots on the other foot.
Here you are forcing a shutdown.
Well, look at what's happened over the last eight months.
We've had the president and Republicans in Congress just disregard previously agreed to spending limits.
Congress has authorized spending for programs that the president has refused to disperse money from.
That's all in violation of federal law and the Constitution.
The circumstances are very, very different, I think, this time around than they were in past shutdown scenarios.
Yeah.
And Matthew, if I can bring you in, politics is always about compromise, isn't it?
So why can't the Republicans accept some of the demands at least some of the demands that the Democrats are making?
You know, it's interesting.
I think some of the reporting that we're getting from the leadership meeting yesterday with the president is that they are open to some of these ideas.
But in order to resolve them, you need the government to be open.
So again, it seems as if you know, we Republicans have been on the opposite end of this many, many times and happy to shut down the government.
Now it is the Democrats that are saying here's our list of demands, even though we're in the minority.
And if you don't like it, we'll shut the government down.
I'm not sure how this gives them more leverage or solves any problem.
I know that they are getting tremendous heat from the progressive base on a litany of issues.
That is understandable.
What is not understandable to me is the notion that they will now shut down the government.
I'd like you both to listen to this.
This is David J. Dimas, a correctional officer at a high security prison in Pennsylvania.
It's a big stressor for us, as correctional officers and law enforcement officers, knowing that you still have to come to work and do your job the way that you've always done it.
And at the end of the week, at the end of the pay period, you may not be getting a paycheck.
Morale will be at its all-time low during shutdowns and stress will be at its all-time high.
It's a stressful time every year.
We have to become a bargaining chip for the politicians in DC to say well, if you don't do this or if you don't do that, we're going to shut down the government.
It's getting frustrating as a law enforcement officer that you have to sit there and do the work for no pay.
Last week, the agency also terminated our union contract.
So now we're literally going to work with no pay and no safeguards.
This is kind of sticking it to us saying well, you're going to have to wait until Washington DC figures out the budget.
Andrew, people having to work for no pay, people having to take out loans to get by this just shouldn't be happening in the United States, should it?
Absolutely not.
And this is the consequence of when you have an imperial political party that refuses to compromise and just says our way or the highway.
You know, the reason why Democrats are trying to fight for a compromise here to extend health care coverage is because the budget bill that the congressional Republicans passed in June decimates, absolutely decimates, the healthcare safety net in this country.
In my state in New York, we're looking at losing.
Up to 500000 people will lose their health insurance coverage because of the one big beautiful bill that Trump and the Republicans passed in June.
That's real people's lives at stake.
And that's what Democrats are trying to fight for to restore some of those subsidies so that we don't kick people off their health insurance.
How could it be so hard to compromise on something so simple and human as that?
Matthew, the last time this happened when there was a shutdown.
I know there have been lots of threats of shutdown, but when there was an actual shutdown it was six years ago, also under a Trump government.
So hasn't he learned?
You know again.
You know we tend to be a party that is much happier with the government shutdown than the alternative party.
And as the senator said, there are some very important issues to be discussed.
And the only notion is if you shut down the government, it makes it far, far worse for everybody.
So, again, it seems as if a few months ago, seven Democrats joined with Republicans to avoid this.
They are now effectively voting against themselves.
And now that same deal they are not taking and they're going to shut the government down.
This is the first time in my lifetime where I believe Republicans may be on the winning end of a shutdown.
I don't understand the Democrats.
I understand the Democrats points to a degree.
I do not understand their strategy.
It seems preposterous to want to shut down the government at this point.
Well, it's not only prisons that could feel the impact of a government shutdown.
This is Teresa Pierno, president of the National Parks Association, which manages places like the renowned Yosemite and Joshua Tree National Parks.
Unfortunately, the last time there was a shutdown, it was the longest shutdown, and they tried to keep the parks open.
And what happened was we had parks vandalized, petroglyphs that were prehistoric.
We had Joshua trees.
Also, they just can't keep up the services.
Things like restrooms are closed and vehicles that start off-roading, many, many issues.
But a shutdown turns away about a million park visitors every day.
So you're talking a huge economic impact.
Matthew, how much of this is about the Affordable Care Act Obamacare, the benefits of which are due to expire later this year?
That seems to be the actual crux of this is that there are some very key subsidies around health care Obamacare, including many red states that need to be addressed.
They could expire and you could see a spike of prices starting as early as November.
Interestingly enough, you've heard many Republican senators willing to even address this.
Senator Marshall said, Senator Tuberville, Senator Rounds floated a one-year extension just today.
So again, these are legitimate problems that need legitimate answers, but shutting down the government is just not that.
And there's going to be a lot more pain other than, again, ACA or healthcare subsidies.
We're talking about pay for military.
The federal government is vast.
I certainly don't want to diminish the notion of the park services, but it is far less larger nationwide and the economic impacts are unimaginable.
So again, I think cooler heads need to prevail.
The House has passed a clean CR months ago.
The Senate did the same thing.
I would think that hopefully people would come to their senses and rather soon.
And a question for both of you.
This kind of thing seems to be a peculiarly American phenomenon these days.
We're always having these threats of shutdown, even if they don't always materialise.
I'm sitting here in the UK and our government never shuts down like this, and it doesn't happen in Germany.
It doesn't happen in most countries in the world.
So, beyond what's happening today, this dispute, isn't there something just fundamentally wrong about the system in the US that allows this to happen?
Matthew.
Yes, democracy is messy at best, yet it is the greatest system we have.
And it is contentious right now.
And that will hopefully force the hand of our leaders to somehow find a way out of this.
You know...
This is not easy.
We're a polarized country.
We've talked, there are vast issues.
But again, hopefully the notion of governing, which is very, very difficult, is a far better alternative than shutting the government down.
And Andrew?
I guess the notion that we are we're so bad at this.
This, I think, is a symptom of a broken political system that is hijacked by extremism in both political parties that gerrymanders districts so that you don't have any competitive elections.
And it leads to results where you have 70 or 80 percent of the country in support of a political policy.
But the leaders they elect to Congress in gerrymandered districts are beholden to their political donors on either side of the aisle and don't respond to the vast majority of what their constituents are asking for.
This is why America is so polarized, because our system has become fundamentally broken and corrupted, with gerrymandering and the influence of money in our politics.
With big economic implications as well.
Andrew Gunades, Matthew Bartlett, thank you so much for joining us here on this very significant evening in the United States.
Thank you.
Well, how are the markets reacting to a potential shutdown?
Kwe Unwen is Chief Investment Officer for Equity Strategies at Research Affiliates in New York.
Kwe, they don't seem to be too bothered at all, do they?
The Dow ending at a record high today.
Kwe, can you hear me?
It seems we don't have our market guests for now, so we'll move on and we'll come back to Quay, hopefully later.
The impact of a US shutdown would go well beyond the United States.
In Africa.
A trade deal that's been the cornerstone of US-African economic relations for 25 years is set to expire.
It's called the African Growth and Opportunity Act, AGOA for short, and it's allowed dozens of sub-Saharan countries to export to the US duty-free.
But if the Americans don't have a government, they won't be able to extend the deal.
So because of a stalemate in Washington, thousands of jobs now hang in the balance in Africa.
Akisa Wendera reports from Kenya.
In Nairobi, the helm of sewing machines fills the air.
29-year-old Joanne Mamboy, an operator at this factory, moves her hands and feet in rhythm on the sewing machine, stitching together pieces of fabric.
A single mother, she supports her four-year-old daughter, two sisters in college, and her mother.
I'm a breadwinner in my family.
It's going to hit me hard, like starting to look for new job opportunities.
This Kenya is hard to find a job, like very hard.
On this factory floor, hundreds of workers are stitching clothes meant for the American market.
For them, a goa is not just an agreement, it means steady jobs.
But with the act expiring today, they're worried for their livelihoods and what it would mean for their families.
Joanne understands the expiry won't just affect her.
It could disrupt the livelihoods of hundreds of her colleagues.
In 2024, Kenya exported 470 million worth of apparel to the US, supporting more than 66000 direct jobs, three-quarters of them women.
Isaac Maluki, director at Shona EPZ, says his factory has the capacity to produce nearly half a million garments each month.
But this year output has fallen to almost a third of that.
After all these years of investments, it may just come down to having to close down, because if we can't get enough work to sustain the people here, then we will have no choice.
The stakes are high.
Isaac Maluki explains just how much has been invested over the years.
If the extension doesn't happen, we are looking at for our facility north of 10 million of investment going down the drain.
African leaders have been lobbying Washington for a GORS extension, pressing their case at the United Nations General Assembly.
Kenya's Trade Minister, Lee Kenyanjui, says the government is seeking an extension, while exploring new markets.
An ideal situation would be the extension of the AGOA, maybe for one year or two years, so that some of these transition mechanisms can be done.
Across the continent governments, businesses and workers remain hopeful that what has been built for the past 25 years through this agreement can be preserved.
Akisa Wandera there in Kenya.
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You're with World Business Report from the BBC World Service.
Well, I'm pleased to say that we can now speak to Kwe Unwen, Chief Investment Officer for Equity Strategies at Research Affiliates in New York.
And Kwe the markets I was saying, they don't seem at all bothered by this prospect of a government shutdown, do they?
The Dow ending at a record high today.
Yes, that's absolutely right.
Markets are choosing to see through this situation because that's what markets have been paid to do in the past.
And it's not just the Dow, is it?
The Nasdaq as well ended with gains, sixth straight month of gains.
Yes.
I mean, there's a lot of enthusiasm right now around AI and technology, and that continues to be the case.
Americans are very optimistic, and they are optimistic that this shutdown is not going to affect the private sector too much.
And why is that?
I mean, if you said to most people your government is about to shut down, most people would think that that would weigh on stock markets.
So why isn't it?
I think that was what happened in prior shutdowns, when people said wow, this is a bad, bad situation and the market sold off.
And it turned out that what happened was, the politicians came back, they struck a deal and then they ended up just going back to new highs.
And so at this point, people are looking at it and saying, why should I bother?
Things will work itself out.
It just takes a little bit of time, and I'm not going to be caught out at the moment.
Yeah, so the Dow, which tracks 30 of the biggest companies in the US, that registered its biggest increase in a September since 2019.
And the S&P 500, which is a broader index of US stocks, its biggest third quarter gain since 2020.
Nothing, it seems, can hold back US stock markets at the moment.
That's right.
And I think this is one of the things that's emboldening Donald Trump.
He looks at the stock market as a little bit of a report card, how he's doing economically.
And the fact that it's hitting new highs makes him fairly confident that he's going to pull through this in a rosy way.
Good day for pharmaceutical stocks as well today, and particularly for Pfizer.
Why is that?
Well, Pfizer and many pharmaceutical companies were facing these tariffs in terms of imported drugs.
And today they basically struck a deal with Donald Trump to sell drugs at a discount on TrumpRx.com.
And by doing so, they're escaping a lot of the pressures of the tariffs.
So this is Donald Trump's way of saying, I'm going to make pharma cheaper for regular Americans.
And pharma is basically saying well, this is a win-win, because we get to keep on doing business as we've always done it.
So I think some of this is just the pressures come off a bit in terms of pressure on pharma.
And it's not just Pfizer.
It's a bunch of other companies as well in the pharmaceutical space that are also negotiating and seeing the share prices pop, which suggests that maybe there'll be more deals to come, like the one that the government has agreed with Pfizer.
Yes.
I mean, I think this is the playbook that the government has demonstrated, right?
They pick on something, they apply pressure, then they strike a deal and they get to announce a win.
Businesses get to go on largely as they've done in the past.
Kwe, thank you very much for joining us.
Now, we've been talking about a government shutdown.
Now we're going to look at an internet shutdown in Afghanistan.
Yeah, that's right.
The ruling Taliban government have disconnected the internet across the country in an apparent crackdown on what they see as immoral activities.
Here's one businessman from Afghanistan speaking from neighbouring Pakistan.
At the moment, I work in the Gemstone business in Jalalabad city.
Gemstone is an international business and we sell online across the world.
Our business has stopped because of the internet shutdown.
Since last night, I couldn't contact my online customers.
Therefore, I am worried about what will happen in the future.
Due to this difficulty, I travelled to Pakistan to keep my online business afloat.
My view is we need to look where the world is moving.
Look at our neighbours.
They are ahead but we are going backwards every day.
Efforts should be made to activate the internet so we can do our business as usual.
Earlier I spoke to Hafiz Marouf from the BBC's Afghan service in London.
Since yesterday, I barely managed to speak to only seven people in across the country, and they were connected by Starlink.
But it is so difficult.
Every day in the morning, when I wake up here in London, I receive hundreds and hundreds of messages in WhatsApp.
But this morning, when I woke up, I was anticipating that there wouldn't be anything, and there was nothing from Afghanistan.
This is a total blockade.
This is the first time in the last 25 years that we have seen such kind of things happening in Afghanistan, where nobody from outside the world and nobody from inside the country can communicate with one another.
People who are living inside Afghanistan, they cannot communicate with one another at all.
So no internet connection at all.
How about phone services?
Phone services is also banned.
This is also blocked.
There is no phone services at all.
That's why it's very, very difficult to get someone.
Even my own family in Afghanistan, I don't know.
And there are millions of Afghans outside Afghanistan who are facing the same problem that we face as a journalist that cannot speak to our family.
So no phone, no internet at all.
So as far as you can work out, what impact is this having on businesses, on banks, on airlines?
Any business that was run or relied on internet is completely plunged now because since yesterday, all the flights that were coming in and out from Afghanistan that are suspended now, all the flights are cancelled.
Most banks, apart from few in Kabul, they do not distribute to customers.
Hawala system, which is an informal system in Afghanistan that Afghans who are working abroad they're sending money to their families in Afghanistan.
They call it Hawala.
They send it by Hawala system.
That Hawala system is completely shut down.
Distribution of passport, it's completely shut down.
And also businesses are massively impacted.
And I was speaking to one of the guy who has a GPS system in Afghanistan.
Since yesterday, he said, I'm connected with hundreds of cars across the country.
I have to locate them every day, every hour, where they are, what they are doing.
Since yesterday, I have lost connection with all of them.
So everything that was run or relied on internet, it's badly and massively impacted now.
And Havis, there are quite a few people in Afghanistan who work informally.
They're self-employed.
They own a living, for example, on YouTube.
Presumably they can't work either.
Of course.
Anything, as I said, that are run by internet is completely banned.
They are suffering tremendously.
And particularly since 2021, when the Taliban imposed ban on girls' education.
There were dozens of classes where online classes were there.
They were providing online education to girls and women.
That is also banned now.
There is nothing, no hope for them.
And in normal times, who runs the internet in Afghanistan?
Is it the Taliban directly?
Is it a state-owned internet company?
Or are there private internet providers?
So basically Afghanistan is connected through fiber optic through the world by five point connecting point with Pakistan, also with Tajikistan Uzbekistan, in the region.
So all of them are providing internet.
But at the same time all this telecommunication system is basically run by IP internet providing system.
If the fiber optic system is banned, is closed, it means the whole system is shut down.
And it is basically run by the government, because there is a company called Afghan Telecommunication, Afghan Telecom, that run all the internet system.
And that is run by the Taliban government.
And why has the Taliban done this?
Why have they shut down the internet?
So there is not clear clarification from the Taliban, because the process has started two weeks ago from one of the provinces in the north of the country, from Balkh, where they started, then slowly, slowly expanded to 13 14, 15 provinces.
And yesterday it was announced by the telecommunication minister that after 5pm local time in Afghanistan, the whole internet would be shut down, because this order has come from the Taliban Supreme Leader.
And he's saying that they are trying to avoid immoral content from the internet.
That's why he ordered to ban all the internet.
Hafiz Maroof there, bringing us to the end of this edition of World Business Report.
Stay tuned to the World Service for more on that US shutdown.
From me though, thanks for listening.
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