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Government Shutdown or Debt Ceiling Increase?

by Countable | 4.24.17

The federal government reached its debt limit as of March 16. The Treasury Department is currently using ‘extraordinary measures’ to manipulate existing federal debt obligations to cover approved appropriations. They could continue to do this until the fall without the government going into default. Congress has until April 28, however, to approve a bill to fund government operations or risk a partial shutdown of the federal government.

(See Also: What the Heck is the Debt Ceiling?)

If Congress cannot agree on a funding bill by April 28 they could pass a very short-term extension of a week or two to hammer out a final deal, or they could simply agree to fund government at current levels until a full appropriations bill is passed for the upcoming fiscal year.

The Debt Ceiling Debate Now

Though administration officials are all stating publicly that they expect the debt ceiling to be raised, the details and tactics vary from official to official.

Treasury Secretary Steve Mnuchin has been the clearest about his expectations that a bi-partisan debt ceiling deal will be reached. His clarity may be aided by his stated belief that the debt ceiling should not be a factor in partisan disputes. In March he wrote a letter to House Speaker Paul Ryan (R-WI) urging Congress that " honoring the full faith and credit of our outstanding debt is a critical commitment. I encourage Congress to raise the debt limit at the first opportunity so that we can proceed with our joint priorities."

At the Institute of International Finance this week, Mnuchin stated:

"I’m confident we’re going to get the debt ceiling raised...I think we’re going to have bi-partisan support on raising the debt ceiling. We’ve committed the money, the U.S. government credit is the most important credit. I believe it is a AAA credit and we’re going to keep it that way."

Budget Director Mick Mulvaney is looking at using a budget reconciliation process. This was the process used in the attempt to push forward health care last month, which would protect any proposed spending cuts from a Democratic filibuster. When raising the debt ceiling came before Congress in 2011 and 2013 Mulvaney was at the head of a Tea Party effort to force the Obama administration to agree to deep spending cuts in exchange for an increase in the debt limit.

That brinksmanship led to the first ever reduction in the U.S. government’s credit rating, which had enormous fiscal consequences for consumers:

"According to the Government Accountability Office, the mere threat that the debt ceiling might not go up cost taxpayers $1.3 billion in higher borrowing costs in the 2011 fiscal year, and tens of millions of dollars in 2013 too. U.S. credit was downgraded for the first time ever."

His current plan to use the reconciliation process, with Republican control of both houses of Congress and the White House may not be less contentious, but may be more successful in advancing his agenda of vastly reducing government spending.

For his part, President Donald Trump does not seem to be primarily concerned with reducing spending overall, but rather with shifting spending priorities. During the presidential campaign then-candidate Trump floated the idea of allowing for government bankruptcy. He stated in an interview with CNBC:

"I am the king of debt. I love debt. I love playing with it. I would borrow, knowing that if the economy crashed, you could make a deal. And if the economy was good, it was good. So therefore, you can't lose."

Now, he is on board with Mulvaney to use the budget reconciliation process, though not to pursue overall spending cuts. The administration hopes to push forward with appropriations for a border wall with Mexico, increased military spending and increases in funds for immigration and law enforcement in exchange for signing off on continuing health insurance premium subsidies, a key point for Democrats.

Meanwhile, Democrats are poised to reject any spending bill that involves President Trump’s priorities. They insist that if the government shuts down it will be Republican’s fault. Democratic Senate Leader Chuck Schumer (NY) vowed:

"If Republicans insist on inserting poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force, they will be shutting down the government and delivering a severe blow to our economy."

In the next week we’ll see if there will be a replay of the game of fiscal chicken that wreaked such enormous havoc for the economy in 2011 or if cooler heads will prevail.

Should Congress focus on funding existing appropriations to keep the federal government in business or should they add in new spending to address the President’s national security priorities? Use the Take Action button to let your reps know what you think!

— Asha Sanaker

(Photo Credit: *U.S. Customs and Border Patrol via Flickr / Creative Commons)*

Countable

Written by Countable

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(136)
  • Pru
    04/24/2017
    ···

    Do not shut the government down again. If you can't get legislation passed with a Republican president, house and senate; you should concentrate on legislation that Americans support. You are the party of greed, corruption, and dishonesty; only supporting anything that supports 1%. You continually are Trashing investments, healthcare and the environment. I am fed up with your treatment of women, elderly, sick and the poor.

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  • Leigh
    04/24/2017
    ···

    No wall. No massive military spending increase. No shutdown.

    Like (40)
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  • Patty
    04/24/2017
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    No wall. No shutdown. No defense increase. No more breaks for the 1%.

    Like (32)
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  • Carole
    04/24/2017
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    We elected an incompetent bully. The Republican and Democratic leadership had drafted an agreement to increase the debt ceiling and keep government running. Then Trump butted in, insisting that the deal include funding for his stupid wall. No deal, Trump. #DonTheCon #TrumpIsToxic

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  • Sherrie
    04/24/2017
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    No wall or shut down. Work out a compromise

    Like (21)
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  • Baybeari
    04/24/2017
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    It obviously depends on why you are raising the debt ceiling! No wall! Why should we pay billions of dollars on a new wall when we already have border control, and that is not the real problem, anyway? We need affordable healthcare, which means, to me, universal healthcare. If you raise the debt ceiling for that, then I am all for it. This administration seems to want to spend our money on all of the wrong things. If you need to shut down the government to make them think hard about what people really need, then so be it!

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  • DannybAZ
    04/24/2017
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    Pass a clean budget without attacking healthcare AGAIN or funding this outrageously exorbitant useless wall. We do not need increases in defense spending as we outspend the next 8 countries combined. We need to fund programs that benefit our Citizens other than the top 1% that have gotten all benefits for 30 years.

    Like (14)
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  • Colleen
    04/24/2017
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    No shutdown! Take the wall, deportation force, and increased military spending off the table. 45 too for that matter

    Like (9)
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  • Marty
    04/24/2017
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    No Wall. No US tax dollars should be spent on this ridiculous, useless monument to stupidity. Thanks Marty Jones, 89084

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  • Betty
    04/24/2017
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    I dislike the way President Trump is trying to get his way by using the deadline this week to push for funding for the border wall and his other agendas. Please do not let him get away by using this tactic against us, the American people. Thank you for standing up for us.

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  • Robin
    04/24/2017
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    No wall. No shut down. Stop Trumps travel to Florida at our expense!

    Like (6)
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  • Paul g
    04/24/2017
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    The Trump administration's "extraordinary measures" currently funding government operations is endangering my pension! Stop playing "accounting tricks" and do the job you were elected to do. The national debt & debt ceilng reflect laws ALREADY PASSED. The US Government has ALREADY PROMISED to pay those debts. USA's reputation has already tanked for so many (GOP caused) reasons. Don't make our country a financial deadbeat too, just so you can blackmail citizens into paying for your pet (Mexican wall) project.

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  • Theresa
    04/24/2017
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    As always, the House will let the debt ceiling and budget come down to the 11th hour. They do this 'wolf crying' tactic to try to add new spending, rather than focus on existing spending categories. We do not need even one cent spent on a wall between Mexico and the US.

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  • Bernie
    04/24/2017
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    This is a form of bullying politically and will set the stage for bullying again on highly controversial and often partisan issues. Remember what goes around comes around and nobody likes a bullying tactic from the receiving end

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  • Renee
    04/24/2017
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    The wall isn't part of the deal. Do your job and fight for your people!!!

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  • Ticktock
    04/24/2017
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    The debt ceiling should be raised at the first opportunity. The US should not flirt with the idea that refusing to raise the debt ceiling is a good protest move to use to force lower deficits spending. Refusing to responsibility raise the debt ceiling will only result in a lowering of the US credit rating. Since funds must continue to be borrowed the US would pay substantially higher interest rates. The budget should not include funds for further construction of a wall on the southern border between the US and Mexico. The number of illegal crossings have been drastically reduced, the increased number of border patrols have been mandated to be increased therefore the additional expense of a wall would not be productive. The travel expenses allocated for Secret Service protection and the extended first family should be addressed and reduced. As programs designed to support the elderly, children, middle class and poor are cut or reduced the first family should lead by example and reduce that portion of the budget that is allocated for their activities. No additional tax reductions should be allowed for anyone with and income greater than $250,000. If the country is going to go on an austerity budget, everyone should go on an austerity budget. Beginning with the President and Congress down to every US citizen regardless of social status!

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  • Laura
    04/24/2017
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    No shutdown! It's time for government to start working together and listening to the American people, NOT blindly following party lines! The American people will not be held hostage by demands to fund a wall we don't want, or to strip people of affordable healthcare! It is time for both parties to start governing for the people, and to work together to find an 80% solution to problems, not the partisan "us vs them" garbage that has been spewing forth for the last number of years! Grow up, find some common ground and LISTEN to your constituents! That's what we pay you for, not to hold us hostage unless party leaders get what they want!

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  • Delores
    04/24/2017
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    No border wall !!!!

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  • Pamela
    04/24/2017
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    Let's be very careful about continuing to raise the debt ceiling to assure appropriations for all budgeted items. Congress must take a hard look at all spending across the board & make bipartisan decisions about issues that are in the best interest of ALL the American people. Hard???yes but very necessary. We all hear about Congress "holding the purse strings" so do your job & come to bipartisan agreement.

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  • Levis
    04/24/2017
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    No wall. No massive military spending increase. No shutdown. If you were putting in place single-payer health care, something Americans can actually benefit from, then you would have legitimate grounds to argue over.

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