NEW YORK: US stocks on Monday retreated as a partial US government shutdown loomed due to Washington political gridlock over a new budget.
The Dow Jones Industrial Average was down 128.57 points (0.84 percent) to 15,129.67. The broad-based S&P 500 dropped 10.20 points (0.60 percent) to 1,681.55, while the tech-rich Nasdaq Composite Index gave up 10.12 points (0.27 percent) at 3,771.48.
Stocks were in the red all day, but losses moderated as some investors hoped a last-minute compromise might avert the shutdown, slated for midnight Monday.
"We've seen this movie before and we know it ends," said Alan Skrainka, chief investment officer for Cornerstone Wealth Management. "Lots of drama, lots of excitement, and at the end, they kick the can down the road once again."
Several leading consumer-goods equities fell after European peer Unilever warned of weakening sales in "many" emerging market countries. Dow component Procter & Gamble lost 2.1 percent, Colgate-Palmolive fell 1.1 percent and Kimberly-Clark dipped 0.7 percent.
Some technology stocks faltered, including Oracle (-1.8 percent), Facebook (-2.0 percent) and Apple (-1.2 percent).
But Microsoft was flat and Cisco gained 0.4 percent.
Regeneron Pharmaceuticals rose 2.4 percent after Bank of America Merrill Lynch raised its valuation target following a favorable presentation regarding its eylea drug at this weekend's Retina Society meeting. Eylea treats diabetic macular edema. -- AFP
WASHINGTON — It's been 17 years since the federal government last faced a partial shutdown because Congress and the president couldn't agree on a spending bill. A lot has changed in that time, leaving federal employees, citizens and even government decision-makers confused about what a shutdown would mean.
Every shutdown is different. The politics that cause them are different. Because of technology and structural overhauls, the way the government functions has changed since 1996. Much of what will happen is unknown.
Here's what we do know about Tuesday's looming shutdown:
THE BASICS
1. What causes a shutdown? Under the Constitution, Congress must pass laws to spend money. If Congress can't agree on a spending bill — or if, in the case of the Clinton-era shutdowns, the president vetoes it — the government does not have the legal authority to spend money.
2. What's a continuing resolution? Congress used to spend money by passing a budget first, then 12 separate appropriations bills. That process has broken down, and Congress uses a stopgap continuing resolution, or CR, that maintains spending at current levels for all or part of the year.
3. Why can't Congress agree? The Republican-controlled House has passed a spending bill that maintains spending levels but does not provide funding to implement the Affordable Care Act, or Obamacare. The Democratic Senate insists that the program be fully funded and that Congress pass what they call a "clean" CR.
4. What is a "clean" CR? A continuing resolution without policy changes.
5. Why is this happening now? The government runs on a fiscal year from Oct. 1 to Sept. 30. Shutdowns can happen at other times of the year when Congress passes a partial-year spending bill.
6. Could government agencies ignore the shutdown? Under a federal law known as the Anti-Deficiency Act, it can be a felony to spend taxpayer money without an appropriation from Congress.
7. When would a shutdown begin? When the fiscal year ends at midnight Monday. Most federal workers would report to work Tuesday, but unless they're deemed "essential," they would work no more than four hours on shutdown-related activities before being furloughed.
8. When would the shutdown end? Immediately after the president signs a spending bill. As a practical matter, it could be noon the following day before most government offices that were shut down would reopen their doors.
10. How long do shutdowns usually last? Most last no more than three days. Some last less than a day.
11. When was the longest shutdown in history? The longest was also the most recent: from Dec. 16, 1995, through Jan. 5, 1996. That's 21 days.
12. Would this shutdown be different from those in the 1990s? Yes. When the 1995 shutdown started, Congress had already passed three of 13 appropriations bills. (They funded military construction, agriculture, and energy and water projects.) Also, more government services are automated.
THE DEBT LIMIT
13. What's the difference between a shutdown and a debt crisis? In a shutdown, the government lacks the legal authority to spend money on non-essential services. In a debt crisis, the government is mandated to spend money — but doesn't have the legal authority to borrow the money to spend it.
14. Are the two related? Only by timing, which is somewhat coincidental.
15. When will the government run out of borrowing authority? Secretary of the Treasury Jacob Lew says it could come as soon as Oct. 17.
16. Has the United States ever defaulted on its debt before? No.
17. If the nation hits the debt limit, will government shut down? That's a big unknown question. The Treasury Department has said the most likely scenario is that it would delay payments, paying only those bills it can afford, using daily tax revenue.
GOVERNMENT SERVICES
18. Will I still get my mail? Yes. The U.S. Postal Service functions as an independent business unit.
19. Can I get a passport? Maybe, but hurry. The Department of State says it has some funds outside the annual congressional appropriation. "Consular operations domestically and overseas will remain 100% operational as long as there are sufficient fees to support operations," the department says.
20. Can I visit national parks? No. The National Park Service says day visitors will be told to leave immediately, and entrances will be closed.
21. What about campers already in the parks? They will be given two days to leave.
22. Will Washington museums be open? The Smithsonian, the National Zoo and the Holocaust Museum would all be closed. Private museums, such as the Newseum, the Spy Museum and Mount Vernon, would remain open. Rule of thumb: If it's usually free, it's probably closed.
23. What about the Kennedy Center for the Performing Arts? The Kennedy Center does receive an annual appropriation from Congress, but also runs on ticket revenue and endowment funds. The center expects to stay open through a shutdown.
24. What about the National Archives?All archives and most presidential libraries will be closed, unless they're operated by a private foundation — as all pre-Herbert Hoover presidential museums are. The Federal Records Center Program, which supports other agencies, would continue to operate because it uses a revolving fund.
25. Will the District of Columbia shut down? The district does not have complete autonomy and relies on an appropriation from Congress to operate. So during the shutdowns in the 1990s, trash went uncollected, and many city departments closed. In a departure from past shutdowns, Mayor Vincent Gray has informed the Office of Management and Budget that he has deemed all city employees "essential." The district's own attorney general has declared the mayor's plan illegal.
28. Will the government still release economic data? Probably. The weekly unemployment claims number would still come out, and the September jobs report, due out Friday, probably will, too. The Department of Commerce reasons that some of its data is so economically sensitive that delaying it risks that it will be leaked.
30. Will disaster response be affected? No. However, all "non-disaster" grants — such as state and local preparedness programs — would be postponed, the Department of Homeland Security says.
31. Will e-Verify be affected? Yes. The government system to allow companies to voluntarily check the legal work status of its employees would be shut down.
32. Would a shutdown put the brakes on implementing the Affordable Care Act, or "Obamacare?" No. The state-run exchanges for the uninsured would open as scheduled Tuesday. "The marketplaces will be open on Tuesday, no matter what, even if there is a government shutdown," President Obama said Friday.
34. Would seniors continue to get Social Security benefits? Yes. Social Security is a mandatory spending program, and the people who send those checks would continue to work under a legal doctrine called "necessary implication."
35. Can I apply for Social Security benefits, appeal a denial of benefits, change my address or sign up for direct deposit?Yes.
36. Can I get a new or replacement Social Security card, benefit verification statement or earnings record correction?No.
37. Would the government continue to pay unemployment benefits? Yes. The Employment and Training Administration "will continue to provide essential functions, as occurred during the shutdown of 1995," according to the Department of Labor contingency plan.
38. Will I be able to get food stamps? Yes. The Supplemental Nutrition Assistance Program (SNAP) is funded through the Recovery Act and from funds that don't expire for another year, the U.S. Department of Agriculture says.
40. And the federal school lunch program? Schools are reimbursed for these costs on a monthly basis and are allowed to carry over funds from the previous fiscal year. The USDA expects most schools will be able to continue providing meals through October.
41. What will happen to veterans receiving compensation for service- or combat-related wounds and injuries? The Department of Veterans Affairs said if the shutdown continues into late October, it will run out of money for compensation and pension checks to more than 3.6 million veterans who rely on the money to support themselves.
42. Can I still get a federally backed loan? Maybe not. "Federal loans for rural communities, small business owners, families buying a home will be frozen," President Obama said Friday.
43. Does that mean I can't get an FHA mortgage? No. The Federal Housing Administration says it "will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market."
44. Does that mean I can't get a VA mortgage? No. The Department of Veterans Affairs says loans are funded via user fees and should continue. However, during the last shutdown, "loan Guaranty certificates of eligibility and certificates of reasonable value were delayed."
52. Why do some federal employees continue to work during a shutdown? The law — or at least, the Justice Department's interpretation of it — contains exemptions for several classes of employees: The biggest exemption is for employees necessary to protect public health, safety or property. But property could include government data, ongoing research experiments or other intangibles. Political appointees are exempt because they cannot be placed on leave by law. Employees necessary for the president to carry out his constitutional responsibilities are exempt. Finally, employees whose salaries are paid from sources outside an annual spending bill can still get paid and report to work.
54. Would the president be paid during a shutdown? Yes. The president's $400,000 salary is mandatory spending. If furloughs begin to affect the government's ability to process payroll, his paycheck could be delayed.
55. What about White House staff? Some high-ranking presidential appointees are exempt from the Annual and Sick Leave Act of 1951, which means they can essentially be made to work unpaid overtime. Also, any employee necessary for the president to carry out his constitutional duties would be exempt.
56. And the president's personal aides? The White House has 90 staffers who work in the residence. During a shutdown, 15 of them would stay on the job.
57. Would Congress continue to be paid during a shutdown? Yes. The 27th Amendment to the Constitution, ratified in 1992, holds that "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of representatives shall have intervened." Intended to prevent Congress from voting itself a raise, it also protects members from a pay cut.
58. What about congressional staff? Like other federal employees, they would be deemed essential or non-essential. Essential staff would include those necessary to carry out constitutional responsibilities, such as the parliamentarians, or for protection of members, such as the sergeants-at-arms. Staff of the appropriations committees may also be needed to write the law that would end the shutdown.
59. Would active-duty military be furloughed? No. All active-duty military are essential and should report as scheduled Tuesday, the Department of Defense said Friday.
61. Would active-duty military be paid during a shutdown? If a shutdown lasts longer than a week, the Pentagon might not be able to process its payroll in time for the Oct. 15 paychecks, Defense Department Comptroller Robert Hale said Friday. The House passed a separate bill early Sunday that would appropriate money for active-duty and reserve paychecks regardless of the shutdown — and also pay for support services to make sure they get paid. That bill passed the House 422-0, but still must go to the Senate.
62. Could federal employees simply volunteer their services? No. A 19th-century federal law forbids volunteers because the government doesn't want them filing claims for back pay after the shutdown is over, according to a legal analysis by Washington attorney Raymond Natter.
63. Would federal employees get paid retroactively, even if they didn't work? Maybe. Congress granted retroactive pay to furloughed workers after the shutdowns of the mid-1990s, but that wouldn't necessarily happen again. "I believe this time is going to be much different. This is a much different Congress than the 1995 Congress," said Cox, federal employee union president. "I'm not sure that they'd even want to go back and pay the people who worked."
THE LONG TERM
64. How much money would a shutdown save taxpayers? Most likely, it wouldn't. The Committee for a Responsible Federal Budget says shutdowns cost money in terms of contingency planning, lost user fees and back pay. A government estimate after the shutdown in 1995-96 estimated its cost at $1.4 billion.
65. What effect would a shutdown have on the economy? Economists say even a short shutdown — of three or four days — would begin to shave decimal points off economic growth. A sustained shutdown of three or four weeks "would do significant economic damage," economist Mark Zandi told USA TODAY.
66. What about the stock market? The Standard & Poor's 500 fell 3.7% during the 1995-96 government shutdown, according to S&P Capital IQ. Stocks quickly rebounded after the government got back to work, rising 10.5% the month after the shutdown ended.
Contributing: Adam Shell, Tim Mullaney in New York, Gregg Zoroya in McLean, Va., Raju Chebium of Gannett News Service; Rick Maze and Andrew Tilghman of Military Times; Surae Chinn of WUSA-TV in Washington; and the Associated Press.
American college student Amanda Knox spent four years in jail because of murder charges in the death of her roommate Meredith Kercher while studying abroad in Perugia, Italy. She and her former boyfriend Raffaele Sollecito were convicted in 2009 to 25 years in prison (Sollecito got 26 years). The conviction was overturned in 2011. Here's a look at the characters in Knox's trial:
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Who's who in the Amanda Knox trial
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STORY HIGHLIGHTS
Knox and her ex-boyfriend were acquitted in 2011 over the killing
But the Italian Supreme Court has sent the case back an appeals court
Knox is staying in the United States and will not be in court
She has said she is afraid to return to the country where she spent four years in jail
(CNN) -- The latest chapter in Amanda Knox's long legal battle began Monday in Florence, Italy, with a retrial over the 2007 killing of her British roommate Meredith Kercher.
But Knox, 26, who has expressed concern about returning to a country where she spent four years behind bars, was not in court.
She was convicted in 2009 of murdering Kercher, a 21-year old British exchange student who was found stabbed to death in November 2007 in the villa the two young women rented in the central Italian university town of Perugia.
But Italy's Supreme Court decided last year to retry the case, saying the jury that acquitted Knox didn't consider all the evidence, and that discrepancies in testimony needed to be answered.
Afraid to go back
Knox has said she's scared to return to Italy.
"I'm afraid to go back there," she said in an interview with CNN's Chris Cuomo in May. "I don't want to go back into prison."
The high court also said evidence could support prosecutors' initial argument -- that Kercher was killed in a twisted sex game gone wrong.
Knox has said such claims are "a bombardment of falsehood and fantasy."
"No one has ever claimed that I was ever taking part in deviant sexual activity. None of my roommates, none of my friends, none of the people who knew me there. This is simply coming out of the prosecution," she told CNN in May. "I was not strapping on leather and bearing a whip. I have never done that. I have never taken part in an orgy. Ever."
The Supreme Court's decision to send the case back to the appeal court for retrial "may be interpreted by the American authorities as double jeopardy -- twice tried for the same fact or the same case," said Riccardo Montana, a law lecturer at City University in London. "In Italy it's not like this, because this is still the same trial."
Watching from afar
If the court convicts her, Knox will be ordered to return to Italy. If she refuses, Italy could request her extradition from the United States. But it's not clear if American authorities would comply.
Knox has said she would be willing to take a lie detector test.
"I'd do anything to prove my innocence," she told CNN affiliate ITV earlier this month. "I don't think that is necessary. But like I said, I'm doing everything to prove my innocence. It's just very sad that's what it has come to."
Knox isn't the only person watching the retrial from afar.
Sollecito, her former boyfriend, told CNN he plans to stay in the Dominican Republic with a friend. At the moment he says he has no immediate plans to return to Italy.
And as the legal saga continues over Kercher's death, her family remains in Britain.
"It took us as a family nearly five years to even begin to feel ready to lay Mez to rest and it is still extremely painful now," they said in a statement Sunday, according to ITV.
They also appeared to respond to recent comments by Knox that she would like to visit Kercher's grave.
"She now has a place near to us that we and her friends can visit to take flowers and spend time...her grave is now her safe place to sleep in peace and be with us and we hope that is respected by all," the family statement said.
CNN's Jethro Mullen reported and wrote from Hong Kong; Erin McLaughlin reported from London
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American college student 