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In recent weeks, Capitol Hill has been fixated on two major deadlines to pass important legislation. One was October 1, when spending authority ran out for many federal operations causing a partial government shutdown because Congress did not enact legislation to continue to fund those programs. The second deadline, which is much more serious, is October 17, when the U.S. debt will reach the existing $16.7 trillion debt ceiling set in federal law, making it impossible for the federal government to entirely meet obligations like Social Security payments and debt payments.
The government shutdown is tragic because it needlessly closes down public services and removes money from the economy with no benefit whatsoever. Breaching the debt ceiling would be catastrophic because it would lead the U.S. to default on its debt obligations, which is difficult to even fathom because much of the global economy is based on U.S. debt (on U.S. Treasury bonds).
Recent reports are that the government shutdown may continue on for some days and some lawmakers may attempt to link legislation to open the government with legislation to raise the debt ceiling.
The two posts below address some important aspects of this situation that you may not have heard about regarding both the shutdown and the debt ceiling.