Look at the barrel: debt crisis, government. imminent stop

The US government will shut down Thursday at midnight.

The Senate failed to pass a bill that would both fund the government and raise the debt ceiling.

The bill, which passed along party lines in the House last week, died in the Senate on Monday night as Democrats failed to secure the 60 votes needed to overcome the filibuster and pass The law project. Senate Minority Leader Mitch McConnell (R-KY) had sworn Republican opposition to the bill and managed to unify his fellow Republican senators around the opposition to the bill.

“Sen. McConnell rarely asks us to vote in a particular way, but on this one he made his wishes known, and I don’t think he’s bluffing,” said Sen. John Kennedy (R-LA) on the Hill in the days leading up to the vote.

Kennedy had publicly stated that he could very well vote yes on the bill, given that it includes vital emergency relief funds for his state. The senior Louisiana senator eventually changed his mind and voted against it, keeping the vote stuck along party lines.

Other Republican senators had expressed support for a spending bill, but also said there should be no action to raise the debt ceiling. Senator Kennedy told reporters he saw no way forward for the legislation to get the 10 Republican votes needed to pass the 60-vote filibuster evidence threshold.

“I don’t think they’ll get 10 Republican votes, and I said that at the White House,” Senator Kennedy said.

Government shutdowns are not uncommon, especially recently. Since 1980, there have been 10 government shutdowns that involved furloughing federal employees. Since 2010, there have been three; once under President Obama and twice under President Trump.

However, for a nation still reeling from the pandemic, a government shutdown would be particularly dire. According to an agency closure plan obtained by Reuters, about 62% of all CDC employees, essential to the fight against COVID-19, could be laid off. About three in five federal workers will be banned from reporting to work, instead of being forced to stay home without pay.

Last Thursday, the White House began telling U.S. executive departments and agencies to prepare for the shutdown, in a move administration officials have tried to explain as standard practice when a shutdown is possible.

The possibility of a shutdown isn’t what most people worry about; the threat that the federal government will default on its debts is.

Periodically, Congress must raise the “debt ceiling,” which is the ceiling on the total amount of money the federal government is allowed to borrow to operate. The Bipartisan Policy Center estimates that the US Treasury will run out of funds between October 15 and November 4.

If that happened, the federal government wouldn’t be able to pay anything; federal employees and contractors would go unpaid, Social Security payments would be stopped, and the millions of Americans receiving food and housing assistance would see nothing to help them. This has never happened before, and although no one seems to know exactly what will happen, it is agreed that the results will most certainly be catastrophic.

Moody’s Analytics, a financial services company, warned that the economic effects of a default would be felt for generations, even if only for a short time.

“Global financial markets and the economy would be turned upside down, and even if resolved quickly, Americans would pay for this default for generations, as global investors would rightly believe that federal government finances have been politicized,” the company said in a press release.

His analysis showed that in the event of a default, almost 6 million jobs would be lost, the unemployment rate would be close to 10%, stock prices would fall by a third and around $15 trillion in wealth would be lost. households would be lost.

As Treasury Secretary Janet Yellen wrote in The Wall Street Journal, a default would most likely lead to “a historic financial crisis that would compound the damage of the ongoing public health emergency.”

Yet despite the extraordinary risk posed by this issue, Republicans have continued to refuse to budge on government funding as long as the measure to raise the debt ceiling is attached.

Instead, the Senate Republican leadership is insisting that Democrats try to raise the cap by attaching it to the $3.5 trillion spending bill, which Democrats are trying to push through reconciliation (a process which does not require the same threshold of 60 votes).

Curiously, congressional Republicans have had no problem raising the debt ceiling repeatedly under the Trump administration — often with support from Democrats as well.

The failure of the Senate funding bill has left Democrats shattered, angry and in a frenzy. Their leaders in Congress are now scrambling to find a way to pass not only a funding bill to keep government open, but also a measure raising the debt ceiling.

“Republicans are having a dinner and a dash of historic proportions … Democrats are going to do what’s responsible and vote to extend the debt limit when the time comes,” said Senate Majority Leader Chuck Schumer (D- NY), from the Senate. of the vote. “We’ll see which of our fellow Republicans on the other side has the strength, the courage, to follow suit.”

Now the question is who will own it? If the economy ends up collapsing due to Congress’ failure to pass a measure raising the debt ceiling, which party will face the wrath of voters? Will the American people notice the rapid flip-flop in the Republican stance on the debt ceiling? Or will the Democrats and Joe Biden face two unimaginable crises, one economic and the other political?

For comments/questions on this story, tweet @TheWhitOnline.

Robert P. Matthews