Explaining The Difference Between A Government Shutdown & The Debt Ceiling

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WASHINGTON, D.C. – In Washington, two issues with two deadlines now just days away, and both involve your money. 

Let’s start with the looming government shutdown. First, what is it exactly? A shutdown happens when Congress fails to approve a budget by the start of the new fiscal year, which is this Friday, October 1. This can have real-world impacts, especially if a shutdown drags out for weeks like we saw in December 2018 into January 2019. The 35-day impasse was the longest government shutdown in U.S. history.

“When we’ve had government shutdowns before, employees were not paid. They shut down the national parks and the like,” explained Todd Belt, professor and director of the Graduate School of Political Management at George Washington University in Washington, D.C. “Those people were usually paid back.”

The second part is the debt ceiling, which is a financial cap on how much the federal government can borrow to pay off its debt. Treasury Secretary Janet Yellen warned Tuesday the government will hit that limit in three weeks.

“Some people consider (the debt ceiling) to be the government’s credit card, but it’s not really a credit card at all,” Belt said.

Congress can either raise or suspend the debt limit. Doing neither means the country would default on its debt, which has never happened.

“This is where it starts to affect individuals,” he said. “That includes not funding retirement programs, perhaps stopping loans to students and small businesses.”

Of course, politics are at play with both issues. Democrats have tied legislation to suspend the debt ceiling to a short-term funding bill that would avoid a government shutdown. Senate Republicans rejected that on Monday.”

“It’s usually been very bipartisan, the idea that we need to expand the debt limit to pay our bills,” Belt said. “So, this is the first time it’s become extremely partisan.”

A partisan battle with just days to solve both problems.


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