Congress Must Quickly End Shutdown, Raise Debt Limit

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The federal government began a partial shutdown today because it lacked a budget for the new fiscal year, raising concerns about whether Washington has become so dysfunctional that it might also fail to raise the federal debt limit before the country starts defaulting on its financial obligations for the first time in its history.

“The government has shut down because politicians have failed the most basic test of leadership — principled compromise,” Robert L. Bixby, executive director of The Concord Coalition, said today. “This embarrassing and economically damaging spectacle must end. It’s long past time to fund the government for 2014, raise the debt limit and get on to the critical business of negotiating a fiscal sustainability plan.”

The shutdown — the first in 17 years — will cost taxpayers millions of dollars and risk harming the economy, particularly if it drags on. The shutdown came after the House and Senate volleyed stop-gap funding legislation back and forth through last night, with the House approving provisions targeting the 2010 Affordable Care Act (“Obamacare”) and the Senate rejecting them.

Congress did pass legislation this week to allow some members of the military and some civilians who work with the Defense and Homeland Security departments to be paid during the shutdown. President Obama signed that legislation Monday night.

The shutdown comes after Congress failed to approve any of the 12 annual spending bills needed to fund the government in the coming year. Making matters worse is the insistence by the House that a funding bill for the entire government must repeal, entirely or partially, the Affordable Care Act.

“While fights over policy matters are not unusual in the appropriations process,” Bixby said, “it is unrealistic and unreasonable to condition funding for all appropriated programs on the dismantling of one particular program.”

As for the debt limit, the Treasury says that by Oct. 17 it will have exhausted its “extraordinary measures” to avoid default. It is possible this could happen even earlier, however, and turmoil could strike global financial markets before the debt limit is actually breached.

In a recently revised issue brief, Concord notes that raising the debt limit is essentially a decision to pay the bills. If Congress finds the vote on a debt limit embarrassing, the solution is not to risk default but to enact more fiscally responsible policies.

Business leaders have also become increasingly concerned. In a recent letter to lawmakers, the U.S. Chamber of Commerce and 235 other business organizations from across the country warned that a government shutdown would be “economically disruptive.” The letter also urged Congress “to raise the debt ceiling in a timely manner and remove any threat to the full faith and credit of the United States government.”

External links:
It’s Time to Raise and Reform the Statutory Debt Limit (Concord Coalition Issue Brief)
Statement Tuesday by President Obama (transcript provided by the Washington Post)
Statement Monday by Speaker John Boehner
Letter from Business Organizations on Continuing Resolution and Debt Limit
Everything You Need to Know About How a Government Shutdown Works (Washington Post)
A Government Shutdown Will Cost Us Billions (Washington Post)
The Federal Debt Explained in Two Minutes (Washington Post video)
BPC Analysis on Debt Ceiling Time Frame (Bipartisan Policy Center)
Federal Debt and the Statutory Limit (CBO)

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