Government Shutdown Update – Debt Limit?
Unless you’ve been living under a rock—not one inside a national park, of course—you’re aware of the current partial government shutdown that is in place within the United States. After two weeks, they surely must have solved the problem, right? The short answer? No. The long answer? Still no.
The shutdown in question occurred on October 1 after the two houses of Congress were unable to agree upon a single budget. The main component behind this standoff was the issue of the Obamacare healthcare law. The Republican-controlled House of Representatives wanted Obamacare to be delayed for a year as a condition for passing the bill. The Democratic-controlled Senate did not agree to this requirement and voted against the bill. This resulted in the partial government shutdown that the country is currently facing.
However, another issue has appeared, shifting the talks away from the partial shutdown topic—the debt limit. This debt limit is “the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.” The government is currently in talks to raise the $16.7tn limit before the deadline on Thursday. No deals have been finalized yet, but Senate Democratic Majority Leader Harry Reid said on Monday that, “We’ve made tremendous progress.” It is believed that this deal will fund the government until mid-January and raise the debt ceiling until mid-February.
Why is this issue more important than NASA being closed? Well, failure to raise the debt ceiling could have immensely negative results on the economy. It would cause the government to default on all of its legal obligations—likely causing the country to enter another recession. Both parties recognize the importance of this issue, and a solution has often been found in the past. With the deadline on Thursday, questions arise as to whether or not Congress will even be able to pass legislation in time if a deal is reached.
While the government’s focus is on the debt ceiling issue, some places are deciding not to wait for the shutdown problem to be solved. Arizona and New York are two of such places. The government shutdown closed many tourist sites like the Grand Canyon and the Statue of Liberty. State officials have made deals with the government to reopen these sites out of their own pockets. New York will pay around $60,000 daily to maintain the Statue of Liberty while Arizona is paying upwards of $100,000 daily for the Grand Canyon. Other states have followed suit—working out deals to reopen parks and attractions.
This situation reminds us of the debt crisis that the U.S. is facing. Is it feasible to continue raising the debt ceiling with each passing year? Is there a point where this action won’t be enough? Furthermore, how long will the government shutdown last? Let us know what you think in the comment section below.