Background on the shutdown and the looming debt ceiling fight
A useful article with some background info on the current government shutdown and the upcoming debt ceiling fight:
- a government shutdown due to failure to pass a budget and a shutdown due to failure to raise the debt ceiling are different things with different implications
- The Treasury reached the current debt ceiling of $16.7 trillion on May 19th, keeping going with extraordinary measures
- It will exhaust those “extraordinary measures” on October 17th
- Within a matter of weeks it will have to withhold payment on something and thus, the Administration says, default on its “obligations”, but that does not necessarily mean defaulting on its debt
would mean reneging on even more of its other obligations, whether Social Security, medical payments, military deployments or food stamps. If the government were forced to cut spending immediately to match incoming revenue, it would impose a hit worth 3.4% of GDP over a full fiscal year.
More at The Economist: Why does the debt ceiling matter?