Jokowi’s homework list

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I’ve actually been trying to publish this post since yesterday, but, blame the remnants of writer’s block still lingering in my mind after a year or so having not written any thousand-word articles, the draft ended up as a messily-written timeline about the rivalries between Joko Widodo and Prabowo Subianto. Forget that, now the media anywhere has taken everything out of it.

The victory of Joko Widodo, a commoner-looking, an everyday-like-us can-do person, is not something to underestimate with. Many have doubted his real capabilities, given his ‘appearance’ (feel free to interpret the picture above), in leading the world’s fourth most populous nation. He’s been doing great as Mayor of Surakarta (Solo) from 2005 up to 2012, gaining nearly absolute support from the 500,000 people, and he’s dared himself against corrupt bureaucrats as governor of Jakarta, Indonesia’s capital, and also a sprawling capital with 10 million people packed in an area no larger than Singapore, for a 2-year stint from 2012 up to 2014. And sooner or later, despite the opposite side’s accusations of ‘massive, systemic electoral fraud’ and pressure for the cancellation, which sound paradoxical (note: Prabowo relied heavily on a fragile coalition of political parties, extremists, thug-like organizations, and business elites representing Suharto’s past, while Jokowi, albeit a PDIP cadre, relied mostly on middle-class, villagers, moderates, and volunteers working day-and-night on social media to tackle black campaigns launched against him), Jokowi, as he is always referred to, will soon lead 250 million people, placing stakes at where Indonesia’s future is going to.

Okay, congratulations, Pak Jokowi, I truly believe you have had great experiences, and pioneered numerous innovative methods, in solving urban problems in both Solo and Jakarta. We must be honest, however, that many underlying problems haven’t been fully solved. They’re not gonna die down in a year, nor in the five-year tenure Jokowi and his running mate, experienced statesman Jusuf Kalla, will be trusted with, nor even in decades, not even in this generation. Problems, until the doomsday comes, will never cease to exist. Nonetheless, say the least, we should also appreciate all the attempts he had made in improving the lives of these two cities.

So, what are the problems Jokowi, Indonesia’s new president, will have to tackle within this period? Here they are:

 

1. Bitter pills for a long-term stability

Fuel subsidies, anywhere in any countries long hinged on it, remain a huge limbo for macroeconomic stability. Like a candy to a 5-year-old kid, it’s so addictive that the old wisdom says ‘too much candy causes your teeth rotten’. Okay, let’s not debate dentistry, but it’s definitely true that fuel subsidies have caused a huge ‘hole’ in state budgets, and many countries suffer when governments attempt to end fuel subsidies. There are protests everywhere associated with ‘fuel price increase’, and ironically, it happens in a lot of oil-rich countries, particularly Indonesia (it’s not so oil-rich anymore today). Jokowi’s foremost challenge, right now, is to make a courageous breakthrough to end fuel subsidies now costing the country nearly 30 billion US$ a year, and allocating the money instead to more investment in education and infrastructure.

2. Place the right people at the right posts, and be no Obama

No other people have been as risk-taking as Jokowi in terms of political consensus. Unlike his predecessor, the outgoing Susilo Bambang Yudhoyono, whose cabinet is mostly filled with persons from his political parties after some power-sharing is agreed upon, he enforces every political party willing to support him to sign ‘no-lion’s-shares-attached’ treaty. That means no parties are gonna support him only to gain ministerial posts should he win the election. But, as political dynamism follows soon, Prabowo’s fragile coalition, which occupies more than 60% parliamentary seats, may at all times be ready to impose obstacles and blockades for any proposed policies by Jokowi. Two headaches for him: in an interview on Reuters, Jokowi eventually relegated that ‘at most 20% of the cabinet should be reserved to professionals from political parties’. Professionals from political parties? Hmm, I think Yudhoyono had said that five years prior. But that may be a good alternative, given that Yudhoyono’s cabinet, 80-90 percent of which I bet, is only reserved for those affiliated with political parties. And they’re disappointing, much or less. But what about Prabowo’s coalition? Well, it just kinda reminds me of Obama. He’s a great visionary, a breakthrough-maker compared to past presidents, but he always fails against the Republicans in a lot of proposed policies, most disappointingly gun control. Jokowi should be proud as Indonesia’s Obama, but he must remind himself that he can possibly fall into the same loophole Obama has been in right now. You won’t expect a government shutdown in Jakarta, and that will be really messy.

3. Make these political dynasties escape to Mars (or Moon, at least)

Massive protests in 1998, despite a huge anti-Chinese bloodshed which saw thousand lives perish, eventually brought democracy to Indonesia. Elections have been held, not only on national level, but also in every practical level you can imagine. Cities, regencies, and provinces, all of which sum up to 500 in Indonesia right now, have held direct elections, the costs of which, if calculated, may surpass tens of billions of US$. Democracy is expensive, truth be told, and any nation-state experimenting with that on early stages will find it highly formidable. Egypt is now shaken, and is still slightly shaken (despite Sisi’s rise to power), Thailand has now kept it on bay thanks to a series of military coups, and dozens of countries recount tales of democracy and the rise of political dynasties. And so is Indonesia. Elections become an economy in necessity, regardless of how paradoxical it sounds, and local dynasties rise up. Corruption used to be centralized in Jakarta, and as decentralization is massively implemented, it spreads like mushroom. Although new cities, regencies, and provinces have been carved up, people remain severely in abject poverty. It’s not to say that democracy is bad, but an emerging democracy, willingly or reluctantly, can’t avoid itself from being faced with such troubles. Now the time’s up for these dynasties; Jokowi will have to clean them up soon, and most importantly, we will need more local leaders who are clean, professional, and if preferably, technocrats. Meritocracy must always be the main priority (should it succeed).

4. You won’t ever eliminate poverty, but you can limit it

Everyone seated in Davos, Boao, New York City, what have you, never stops talking about the needs to eliminate poverty. But even Nobel-winning economist Amartya Sen questions our limited perspective of what ‘poverty’ actually is. Is it an economical one, or rather a psychological one? Or simply a social label? Rich people may feel ‘poor’ if they haven’t purchased a mansion, and poor people may feel ‘blessed’ if they have enough meals to eat everyday, at least. Standards to measure poverty, in addition, remain unchanged since 1980s: a person is considered poor if he or she earns less than 1.25 US$ a day. Taking that into account (forget our government’s incredulously low statistics), as many as 100 million Indonesians are struggling to deal with life with that daily amount. Okay, we’ve got the praises from World Bank and IMF, we now have another 100 million Indonesians now entering middle class (lower-middle included). But a lot outside are getting hungry, starved with limited food provisions, something you will never expect under Suharto’s rule, despite his chronic corruption and widespread brutality. Jokowi, hailing from a lower-class family, will certainly have to deal with it, but one thing for sure: poverty, as long as humanity exists, always follows suit. At the least he should make sure that the poor get enough to eat, houses to live in, jobs to obtain, and most importantly, schools.

5. Make the fundamentalists either go to Middle East or end up in Venus

Religious tensions continue to hamper interfaith relations up to this moment, and minorities are severely affected by what a handful of extremists are doing. But we should be thankful that Indonesia, having been the world’s largest Muslim country, can successfully maintain such fragile equilibrium, by which Muslims (85%), Protestants (7%), Catholics (3%), Hindus (2%), Buddhists (1%), and hundreds of folk religions (2%) live side-by-side in peace (sorry, the statistics may not be pretty accurate). Again, though, Indonesia continues to be a spotlight, to the level of UN Human Rights Commission. Some churches remain blockaded, Ahmadiyya and Shi’ite sects (as Sunnis always claim to be ‘idiosyncratic’) continuously persecuted, and a few Buddhist temples should remove some deities’ status under pressure from a few Muslim extremists. Again, I stress out, majority of Indonesians are moderate and tolerant of each other, and it’s only this ‘few’, having been brainwashed by some dubious Saudi-based unemployed extremists supported implicitly by the kingdom, who dare to do so. Jokowi, having been dubbed ‘Chinese’, ‘Christian’, ‘Jewish’ (that’s absurd), and even ‘Communist’, will certainly have to stand up against them, something Yudhoyono right now has not pretty succeeded.

6. Research, research, research!

Truth be told, we have millions of talented, brilliant individuals with so much potential to make Indonesia a progressive state. But our current educational system, tainted with Suharto’s decades-old militarist patterns (revenge is good, seniors must wound the juniors to teach them how life is ‘pain-in-the-ass’), has been obviously a fiasco, failing to improve the lives of these millions. Exacerbate that with our chronic lack of funds for R&D. Okay, don’t compare ourselves to either United States, China, or Japan (the governments, respectively, have allocated 500, 300, and 150 billion US$ each); nor can even Indonesia match itself with neighboring countries, say, Malaysia or Singapore (each of which provides 5 and 9 billion US$ respectively for research). Economists, meanwhile, have calculated that a country should invest, at least, 2 to 3% of its GDP towards R&D to achieve long-term economic prosperity, and how much has Indonesian government allocated so far? Given its GDP of 1 trillion US$ this year, it only invests 0.2%, equivalent to approximately 2 billion US$. Will Jokowi afford to increase an astronomical spending on R&D to the level of 20 or even 30 billion US$ before the end of 2019? That will take decades. Firstly, education should continue to be reformed (given our current quality is not that supportive, frankly speaking), and to make it realistic, it would have been a spectacular momentum if Jokowi can increase R&D budget manifold, at most, into 10-15 billion US$ by the end of his tenure (make sure nobody corrupts the money though!).

7. Infrastructure please!!

Indonesia has its own ‘cholesterol problem’; like a human body with blood veins blockaded by fats or other substances, our country’s infrastructure remains in poor shape, most of which was built during Suharto’s time (thanks for an influx of easy foreign loans which burst out in 1997 crisis). Now, with our economy rapidly booming, more people are buying cars, motorcycles, using ships and airplanes than ever. Production has increasingly skyrocketed, and delivery becomes more sophisticating than ever, yielding in a huge flow of cargo movements between islands. Nonetheless, deadlocks still happen in seaports, with trucks, spanning kilometers wide, tucked in highways, oftentimes for days. Air travel becomes busier than ever, and most airports surveyed have encountered this problem known as ‘over-capacity’. Excluding ongoing power outages still imposed, even in major cities like Medan. Yudhoyono’s administration, at least we must acknowledge, has been ambitious enough to prep out investment in infrastructure systems through a 15-year economic package known as MP3EI (not some sort of MP3 product, mind you; it’s ‘Masterplan for Acceleration and Expansion of Indonesia’s Economic Development), with estimated costs between 450 and 600 billion US$. It has been partially successful, but structural problems continue unabated. Corruption, red-tapes, licensing problems, land disputes, and logistics problems, these are all problems Yudhoyono has ineffectively managed. Now, it’s time for Jokowi, and now I mention Jusuf Kalla (he’s also a national businessman engaged in infrastructure building), to continue supporting this program by eliminating obstacles related to its implementation.

8. Promote ‘Indonesia, Inc.’ abroad, be a global player, and engage the diaspora

Indonesia is the world’s fourth most populous nation, but the problem is, many foreigners, aside of those who know this country much better than we do, do not even know if there’s a country named Indonesia. Some of my friends in Hong Kong even think if Indonesia is part of India, that Indonesia is part of Bali, that Bali is in South Africa, or even just know that there is a country surrounding Malaysia or Singapore. Okay, it’s unfair to simply blame them, but many of our diplomats abroad, given limited funding from state budgets, have ineffectively promoted Indonesia’s image to international public. Our roles in facilitating international crises have been particularly limited, aside of those attributed to the end of decades-old conflicts in Cambodia and limited mediation for Israeli-Palestinian conflict. In addition, with the ongoing conflicts between China and ASEAN regarding South China Sea disputes, Indonesia, as ASEAN’s largest member and unofficial ‘big brother’, hasn’t completely attempted to mediate the conflicts effectively. Right now, with Indonesia’s image gradually rising as its economy now actively grows, Jokowi’s new government should use this opportunity to increase its roles in international diplomacy, most importantly through its active participation in South-South cooperation. But, for me personally, there are several regions that Jokowi’s government must prioritize in its foreign policy: Middle East (solve the Israeli-Palestinian conflict, as he promises to support full independence for the latter), Southeast Asia (be an active player in formulating peace deals between China and ASEAN in regard to South China Seas), Africa (there’s so much potential Indonesian businesses can afford more to invest in), and Pacific region (Pacific island states usually refer to Indonesia in learning about environmental protection, and Australia must solve its own bilateral problems as well). Indonesian diaspora, in addition, is also a great potential for Jokowi to improve Indonesia’s image internationally. Estimated that between 5 and 10 million people living overseas are either Indonesians or have its ancestry line, it has unfortunately been relatively neglected by current government nowadays. Majority of them are informal workers in Middle East, Southeast and East Asia, but quite many of them are talented professionals in world-class universities. This is where Jokowi’s new government should engage them, regardless of their status, to promote Indonesia, Inc. to the world stage. Don’t ever let people outside think that Bali is in Hawaii anymore, or that Indonesians are an African tribe.

 

I’m getting enough with this list, but if you have more priorities you haven’t mentioned, just comment it below.

 

NB: Jokowi is now making efforts on crowd-sourcing; it starts with his volunteer team publishing a Google doc, by which people are persuaded to recommend experts and professionals suited for a ministerial post. Fill the document here (only in Indonesian, sorry!) if you want to, and time’s now to supervise his new government to come!

People’s Republic of Offshore

people's republic of offshore

 

An in-depth report about one of China’s most notorious, ongoing trends nowadays, as a by-product of its combined decades-old economic growth, the growing social inequality, political rivalries, and corruption: the capital flight, mainly led by government officials, their close relatives, and their surrounding cronies, which ends up in numerous offshore financial centers worldwide.

Read the full coverage in International Consortium of Investigative Journalists.

 

Excerpt:

 

China’s Politburo Standing Committee is the all-powerful group of seven (formerly nine) men who run the Communist Party and the country. The records obtained by ICIJ show that relatives of at least five current or former members of this small circle have incorporated companies in the Cook Islands or British Virgin Islands.

China’s “red nobility” — elites tied by blood or marriage to the current leadership or Party elders — are also popularly known as “princelings.” Ordinary Chinese have grown increasingly angry over their vast wealth and what many see as the hypocrisy of officials who tout “people-first” ideals but look the other way while their families peddle power and influence for personal gain.

The leaked offshore records include details of a BVI company 50 percent owned by President Xi’s brother-in-law Deng Jiagui. The husband of Xi’s older sister, Deng is a multimillionaire real estate developer and an investor in metals used in cell phones and other electronics. The records show the other half of Excellence Effort Property Development was owned by yet another BVI company belonging to Li Wa and Li Xiaoping, property tycoons who made news in July bywinning a $2 billion bid to purchase commercial real estate in Shenzhen.

Since taking over as the Communist Party’s top official in 2012, Xi has sought to burnish his image with an aggressive anti-graft campaign, promising to go after official corruption involving both low-level “flies” and high-level “tigers.” Yet he has crushed a grassroots movement that called for government officials to publicly declare their assets. Wen Jiabao, who stepped down as premier in 2013 after a decade-long tenure, also styled himself as a reformer, cultivating an image of grandfatherly concern for China’s poor.

Inside Nauru

nauru

Nauru, one of the world’s smallest countries with a population hardly surpassing 10,000 people, has experienced what people, having gained enough of its history, would obviously dub a ‘wheel of fortune’. Once when its phosphate reserves were among the largest on the planet, the nation could easily afford all the affinities provided. Investment was made globally, in numerous businesses, real estate projects, and even a huge musical production in United States (which later ended up in a similarly huge flop as well).

Then came the reversal of fortune, near the closing end of 20th century.

At the moment, with the reserves almost completely used up, and with very little savings, excluding their gone-wrong businesses’ bad debts, the tiny Pacific nation is hopelessly putting its final hope on Australia, one of its largest, and most influential, foreign donors. The country, as part of an agreement with the latter to accommodate illegal migrants detained in Australia, has for years received, in turn, over hundred million dollars in terms of foreign aid, mostly used for their annual expenditure. With things going upside down, in less than a generation, the whole nation has suffered from financial difficulties.

A former Australian financial adviser for Nauruan government described his half-year experience dealing with the people, and in particular, how he helped them reforming the country’s already dilapidated financial and budgetary sectors.

Read his full article on Australian Financial Review.

Excerpt:

One of my responsibilities was signing every spending receipt in the whole government. This was a big reform that had stopped money leaking out of the Nauru budget. Every cent of expenditure was confirmed by the Budget Adviser. It made sense, but it was an enormous pain.

Hundreds of complex spending receipts came over my desk every week. And then there was public sector pay.

Nauru had thousands of public servants, and every pay cheque had to be signed, by me or the head of the department. The Secretary of Finance did exactly what I would have done in his shoes, and delegated.

I saw and signed everyone’s pay cheque, from the president down to the gardeners who controlled weeds near the airstrip. The lowest pay was $180 a fortnight; the highest only about $350 – even for the president.

Saving dying Kiribati

kiribati

 

 

Many little countries, as a consequence of global warming, are dying. Maldives, a country populated by no more than 350,000 people, and bulk of which is scattered in atolls and small isles vulnerable to every slight bit of rise in sea level, is one example. Tuvalu, a smaller one, populated by only 10,000 people, is a similar case: their area stretches no larger than 10 sq km, and depends mostly on foreign aid to sustain the livelihood.

This time, Bloomberg Businessweek picks up Kiribati, another island country in South Pacific Ocean inhabited by only 100,000 people, as their case study. What happens as with the global warming? A whole nation is being put at perils of extinction. Or indirectly speaking, a ‘genocide’ is being triggered out. Unless the world reaches a hardly-won consensus among developed and Third-World nations, more countries like Kiribati will face their own imminent destruction.

Read the full article here.

Excerpt:

Kiribati is a flyspeck of a United Nations member state, a collection of 33 islands necklaced across the central Pacific. Thirty-two of the islands are low-lying atolls; the 33rd, called Banaba, is a raised coral island that long ago was strip-mined for its seabird-guano-derived phosphates. If scientists are correct, the ocean will swallow most of Kiribati before the end of the century, and perhaps much sooner than that. Water expands as it warms, and the oceans have lately received colossal quantities of melted ice. A recent study found that the oceans are absorbing heat 15 times faster than they have at any point during the past 10,000 years. Before the rising Pacific drowns these atolls, though, it will infiltrate, and irreversibly poison, their already inadequate supply of fresh water. The apocalypse could come even sooner for Kiribati if violent storms, of the sort that recently destroyed parts of the Philippines, strike its islands.

For all of these reasons, the 103,000 citizens of Kiribati may soon become refugees, perhaps the first mass movement of people fleeing the consequences of global warming rather than war or famine.

Analyzing Gita Wirjawan

Gita Wirjawan - World Economic Forum on East Asia 2010

 

 

Gita Irawan Wirjawan, as his full name sounds, has nearly everything you may deem damn perfect: educated in Harvard, well-experienced in international banking giants (JP Morgan Indonesia and Goldman Sachs being his notable ones), speaks greatly, and fluently, native English (he claims his TOEFL paper-based test scores were 650), becomes a highly successful entrepreneur who predicted the 2008 financial crisis (he established Ancora Group as an anticipation to the recession by buying out shares in companies he believes will be impacted by the crisis), and contributes significantly to the massive increase of foreign direct investment in Indonesia. And, well, he’s also immensely talented in badminton and music, and develops huge connections worldwide, which easily enable him to lobby world leaders to advance Indonesia’s economic agenda on a global scale.

C’est parfait, n’est pas?

Well, I guess we have to balance the pros and cons of everybody. Not that he’s a God-like prowess, though.

We have to acknowledge that without him, Indonesia’s investment climate would have never been this bustling, despite all the commotion and rambunctiousness taking place around our country. Nevertheless, just as everybody does, he also has his Achilles’ heel: he’s no good in handling kitchen stuff.

Serving as Minister of Trade, he has – several other ministers are also actually to blame – indirectly contributed to the massive increase of garlic prices, and of other commodities altogether, that millions of people must tighten up their expenditure, at great pains, to afford the amenities. Should we deny the facts? Nationwide, television news reports – despite their oftentimes politically distorted views – displayed to us, with all the double-digit, and to a lesser extent, triple-digit, increase in percentage of the prices of commodities, only to be solved, in short term, by allowing unlimited imports from neighboring countries like India.

This scenario takes place in a totally tropical country where garlic should have grown damn easy.

Okay, forgive his mistake, though: he owns numerous philanthropic foundations, all of which aggregated under Ancora Foundation, which award scholarship for visionary, like-minded, and ambitious graduate students to world-class universities like Harvard, Oxford, Cambridge, Sciences Po, Stanford, or Singapore’s beloved NTU. Now taking lead, also, as president of Indonesia’s badminton association, he has groomed many successful players, and he’s now ready to prepare locally-trained world-class golfers, using his personal wealth. Must be a good brief entertainment at times where commodity prices run high, eh?

And now he’s a presidential nominee for upcoming election in 2014. His vision: a technocrat-driven government. This is one I particularly very endorse. About our current leader? Without mentioning his name (you know what I mean), he’s been too much consensus-driven. Other political parties are claiming a bigger stake in governance, for the parties’ own sake. Were he elected, could he endorse technocrats to take seats in the state apparatus? This country, now with all its golden opportunities, should have been led by a government based on meritocracy, not one solely dependent on uneasy coalition.

Okay, let’s forgive our current president for the mistakes he made regarding the cabinet structure, which derives mainly from proportion of political parties included in his coalition; maybe this was his Hobson’s choice, given the relatively fragile political situation at that time. Now, with GDP surpassing 1 trillion US$, with more than 100 million people now entering middle-class status, Indonesia should have been ready to embrace for a merit-based regime. Where a ministerial seat should have been occupied by one really well-experienced in that field, not a leader of a certain political party showing superficial loyalty to the president.

Gita Wirjawan has a bonus for that. He only lacks another finesse, though: most of those who have heard his name are solely based on major cities. And those living on countryside? I doubt if many of them are well acquainted with him.

Will you support him on upcoming election? You decide.

 

Read his profile in Wikipedia.

Listen to his interview on Wharton School of University of Pennsylvania (UPenn), back in 2010, when he was serving Head of Indonesia’s Investment Coordinating Board, the one tasked with persuading foreign businesses to invest in the country.

And this is his main vision as a presidential hopeful. Read it at The Jakarta Globe.

Infographics: how China’s investment is starting to grab the world

china overseas projects

 

 

Think of these questions: who is now building the highways in a lower-middle-income African country? Who is now building oil terminals in a country long imposed with economic sanctions by United States and its allies? Who is now assembling satellites, or any high-tech paraphernalia, for a resource-rich country with limited well-trained manpower? And who is now buying up companies back in Western countries, when in fact no developed countries are adequate of cash, struggling with their own debt ceilings and increasingly heavy social-security burdens?

The recent research conducted by The Heritage Foundation, an American conservative think-tank based in Washington D.C., has revealed one surprising fact about the current superpower’s largest rival: China is now the answer for all the questions above. And, as we can see in the image, the total amount of money Chinese enterprises, either government- or private-owned, has poured in the last 8 years, is now soaring to nearly 700 billion US$, practically tantamount to the sums by which then-President George W. Bush budgeted to rescue the ailing US economy back in 2008.

The presence of ‘Chinese money’ itself has been significantly heartfelt everywhere, whether it is under the well-asphalted wide-lane highway network in African countries, petrochemical industrial zones in any Middle Eastern or any oil-rich countries elsewhere, or even within the huge rows of apartment towers being constructed in emerging markets’ major cities. And what can the US government learn from this brand-new phenomenon?

 

Read the full reports on The Heritage Foundation.

Bonus: you can find out the full list of Chinese business projects overseas – all in all up to 800, scattered in hundreds of countries, and compiled from 2005 to 2013 – by downloading the Excel file here: China-Global-Investment-Tracker2013

 

Note: the file itself is created by The Heritage Foundation.

The big shutdown

US Capitol building

 

 

So the recent big news is that the US government has partially ‘ceased’ to operate.

Now we all know the dysfunction going on with the authorities. The Republican-controlled House of Representatives has, for umpteenth times, engaged in debates with Democrat-controlled House of Senate, and things show no signs of abating. And it does still involve the same ‘huge’ thing already reiterated in past debates: Obamacare. And thanks to each side’s persistent cantankerousness, nearly 800,000 state employees are now put on unpaid holiday, leaving their fate in the future deeply insecure.

But do we, particularly non-Americans (and I’m an Indonesian, indeed, with as yet so little background about all these falling-outs), actually have even the foggiest ideas about the recent shutdown?

The Guardian has recently released a guideline for non-American readers (especially me) to gain clear insight about this recent occurrence. Be ready for slight confusion.

Here are a bit excerpts you may want to preview:

 

Why couldn’t they agree a deal?

Under the US constitution, the president cannot unilaterally bring in legislation. And despite weeks of talks, Republicans continue to include cuts and delays to Barack Obama’s Affordable Care Act in the budget legislation they sent up to the Senate.

The House of Representatives is controlled by the Republican Party, whose Tea Party movement remain deeply opposed to Obamacare. They tried to use the budget as leverage to crowbar changes to the Act. The Senate, which is under the control of Obama’s Democrats, has stood firm.

Will the shutdown mean the entire US government grinds to a halt?

No, it’s not an anarchist’s (or libertarian’s?) dream. Essential services, such as social security and Medicare payments, will continue. 
The US military service will keep operating, and Obama signed emergency legislation on Monday night to keep paying staff. But hundreds of thousands of workers at non-essential services, from Pentagon employees to rangers in national parks, will be told to take an unpaid holiday.