GECON200-Topic #1: The Government is Closed

On October 1st gridlock in the U.S. government shutdown portions of their operations, furloughing hundreds of thousands of federal workers around the world. Before this happened though the House of Representatives and the Senate played ‘ping-pong‘ with a number of different bills. The main point of these exchanges was to extend government operations via a ‘continuing resolution’ (CR), and some offered to extend government operations for longer periods than another. The biggest point of contention for the GOP is that some members would like to eliminate all or some aspects of the Affordable Care Act (i.e., Obamacare), which not coincidentally began operating on October 1st–the first day of the 2014 fiscal year. Each time the Republican controlled House sent a bill to the Democratically controlled Senate, the ACA riders were stripped and a “clean” CR was sent back to the House.

All revenue related measures must begin in the House of Representatives, so the fact that the Senate cannot come up with their own new spending bill is somewhat problematic. The Senate is able to amend bills and send them back to the house where they can be voted on or ignored.

To briefly summarize what has happened, the House first passed HR-59, a proposed CR through 12/15 (10 weeks), in exchange for a ending funding for the Affordable Care Act. The Senate changed this to a six week CR and removed the language ending the ACA. This bill that was returned to the House could still be approved by them, and is what people are terming a “Clean CR” since it only continues government operations for six weeks, but does nothing more. The house amended that returned bill to end the medical device tax–which is intended to help fund the ACA–and extended the bill to cover a ten week period, but also delayed all portions of the ACA by a year, and included the “Vitter Amendment” which ends a government subsidy to congressional staffers to pay for their health coverage on the new ACA exchanges. That language was essentially stripped again, and sent back to the House as a “Clean CR.”

So at this point, the House can attempt to come up with a new CR that the Senate may or may not approve, or they can vote on the clean CR. Neither of these possibilities seems to be forthcoming. Moderate Republicans have pushed to vote on the clean CR, but the Republican “Hastert Rule” has prevented Speaker of the House John Boehner (R-OH) from putting this measure up for a vote. Since a majority of Republicans must approve any (or most) bills coming out of the House, the contentious “Tea Party Caucus” has been able to keep this clean CR from coming to the floor even though it might have wide support of the House and Senate. President Obama will speak on the budget/debt impasse at 4pm, 10/2 on CNBC.

Another problem is that by October 17th, the Treasury department is expected to hit the debt ceiling, meaning they could no longer pay the country’s bills. There are a number of ways out of this, including Congress raising the ceiling, Obama ignoring the ceiling and ordering the Treasury to pay, or defaulting on the nation’s debt. None of these is particularly appealing, but raising the ceiling comes with the fewest consequences. Around this time each of the past few years, a big deal was made about the nation’s large deficits and rapidly rising debt. However, due to the economic turnaround deficits have shrunk and the debt is not rising as rapidly. This might be the reason that the new debate is not so much about deficits, but other mandatory spending programs like the ACA.

Questions you might answer

I would like you to think about the government’s role in the economy when it comes the responsibilities of Congress to pass a budget. DO NOT try to answer all of these questions, just focus on one topic. Also, try to think about your comment from different angles. To write a brief comment, read the previous comments, compose your thought in a Word document, and paste it in the comment box below. The more original and factually supported your comment, the better your grade will be. Avoid anecdotal evidence including personal accounts, and avoid using subjective terms like “I think” or “I believe.” Remain as objective as possible, and avoid emotional stories often used in place of the general truth. Finally, your comment will appear ONLY AFTER IT IS APPROVED. Please don’t email me asking where it is, it often takes a while for me to get to it. I will ignore these emails.

NOTE: Read other students comments before posting, and please leave your name with your posting.

  • What would you recommend the House or Senate do? Provide evidence as to why. What are the problems of a government shutdown? What happened in the past? If you think that the House should pass a clean “6-week” or “10-week” CR, try to provide supporting evidence as to why they might want to do that. Who stands to benefit from the passage of a clean CR? Who stands to be hurt by a continued shutdown?
  • What would be the consequence of delaying the “individual mandate” portion of the ACA? Think carefully about how insurance works, and why this might be a good or bad idea. Why is the individual mandate there in the first place?
  • What would be the consequence of not raising the debt ceiling and/or not passing a budget before the debt ceiling is reached?
  • What is the consequence of not doing anything about our deficit? How should the deficit be solved? Should we raise taxes or cut spending? Think of this in the context of current House rules which restrict changes in policy to those which to not raise revenues.

Do not necessarily limit yourself to these topics, and not necessarily these articles. You should read all or most of them and formulate a fact-based opinion that you can use to argue your point. I am not grading you on the correctness of your opinion, only whether or not it is convincing based on the facts you display. (Note: pointing out that pundits like Paul Krugman or Charles Krauthammer agree with you is not a fact.)


38 thoughts on “GECON200-Topic #1: The Government is Closed”

  1. On October 17th, the government will be forced to default their loans due to the lack of payment on our debts interest. Without raising the debt ceiling, there would be chaos in the stock market, skyrocketing interest rates, and hold outs on many government bond payments and possibly social security compensation. Therefore the government would lack the amount of cash flow necessary to pay their bills. The battle in congress reaching an agreement to raise the debt ceiling is strictly from lack of compromise. Republicans stand strong resisting to raise the ceiling without spending cuts (Affordable Care Act), while the Democrats want to raise the ceiling and present a clean continuing resolution to meet in between the two parties funding level budget plans. If the debt reaches the point where it overflows the ceilings limit, the government will have nearly $175 billion dollars of obligations that cannot be funded. Therefore, the government would have a sudden 39% decrease in spending, leaving out payments to possible expenditures such as federal salaries, social security, the FAA, FEMA, Federal Highway administration, Department of Energy and the FBI. If the government wants to prevent the world from another economic crash similar to 2008, compromise must be accepted and the debt ceiling must be raised.


    Aaron Kline

  2. The government “shutdown” is not a shutdown at all. Only so called “nonessential” government activities and employees have been temporarily furloughed. This means that the vast majority of the government activities, and thus government spending, continue at levels that far exceed government revenues. Although this has continued for the past several years, eventually this will be unsustainable. The “Affordable” Care Act will not solve this problem; it will only add to it making the discrepancy between expenses and revenue even greater. Even though this program has only been in effect for five days, it’s already considered “essential”. This kind of illogical activity has led to the enormous budget deficits in the past and will continue to spur government spending in the future if such activities and programs continue unabated.

    The House of Representatives was retaken by the Republicans as a direct response to the passage of the Affordable Care Act. Under the Constitution, all appropriations must originate in the House. Consequently, to think that the House would not utilize its position to defund the ACA contradicts the very reason that the majority in the House is today Republican. By acting to defund ACA, the House is acting in accordance to the Constitution. This should be the first in a series of steps taken by the House to reign in governmental expenditures and excesses so that only truly “essential” programs are funded. For the Senate and the President to ignore this political reality, while insisting that the budget busting nonessential “Affordable” Care Act be implemented demonstrates the lack of concern to truly solve the budgetary deficits faced by this country.

    Works Cited:
    United States Constitution: Article I, Section 9, Clause 7

    “GOP roars back to take US House”

    “We Are Shutting Down Only Thirteen Percent of the Government (At Most)”

    “ ‘Not One Dime’: Health Care Law Projected to Add $6.2 Trillion to U.S. Deficit”

  3. With the government shutdown in affect many Americans’ are being affected. The media focuses on the government workers being furloughed. However, the most effected group of citizens is low-income families, which according to the Population Reference Bureau make up, “one-third of all working families”. Due to the government shutdown, which resulted in a suspension of government funding, low-income families are unable to receive their usual food and health care benefits. Low income families benefit from several government funded programs, which include Special Supplemental Nutrition Program for Women, Infants and Children (WIC) that benefits nearly 9 million individuals per month through food benefits and clinical services. The WIC program’s yearly budget is 6.618 billion dollars which as been allotted by Congress, but without the funding these families aren’t able to support themselves and their children. Additionally, the Supplemental Nutrition Assistance Program (SNAP), which is also funded by the government, provides food to many low-income families through food stamps. The average SNAP, “household has a net income of $338” per month, which isn’t enough for families to provide all the necessities (food, shelter, healthcare) to themselves. With food stamps a family can benefit an additional 133.85 dollars per month to purchase food for their families. Government funding is essential for well being of many low-income families and with the shutdown many of these families are struggling to survive.

    Work Cited:

  4. One of the main causes for the shutdown can be attributed to the lack of cooperation between the Democratic and Republican parties in the house and senate. It has become a standoff between the parties due to the fact that Republicans are refusing to agree on the new debt ceiling until the mandatory individual Health Care sign up is pushed back another year and demanding a clean CR. Democrats, on the other hand, are waiting for the Republican Party to fold, and agree to the new debt ceiling without having to push the sign up date back another year. The mandate is to ensure that there is enough money in the system to support the older and ill members. If there were more people taking money out for paying medical bills then there were people paying to sign in, then there would already be a deficit problem that would require money from the government to keep it afloat. This is not ideal because it would only increase the current debt. Democrats argue that without the mandate, insurance premiums would see an increase and the number of people uninsured would remain the same. Instead of this, Democrats want to make people sign up by issuing fines and late fees if they don’t. Their idea behind this is to prevent people skipping out on the new Health Care plan. People may often skip out on it regardless because the fine is cheaper than actually signing up. This argument contributes greatly to the current hold up.


  5. The consequence of not raising the debt ceiling and/or not passing a budget before the debt ceiling is reached would be devastating for the U.S. economy. We would default on our loans, and stock markets would plummet. This means bondholders would demand higher interest rates, increasing borrowing costs for everyone. Essentially, we would be put right back into another recession such as the recession of 2008. Recessions are caused by a decline in GDP growth, which would happen if we defaulted on our loans. The government shutdown already has approximately 800,000 people out of work, and many more will be added to that number if we do not raise the debt ceiling. It is projected the U.S. will have between 30-60 billion dollars by October 17th (the date we need to decide what to do or default on loans) which is a dangerously low amount and puts us at high risk to default on the loans. The government shutdown is taking about .1 percentage point from economic growth for every week of shutdown, meaning it is doing nothing but hurting us. All of these facts lead us to believe we will be headed towards a huge economic recession if the debt ceiling is not raised or a budget is not passed before October 17th, which is the worst-case scenario for America.


  6. Some Republicans in the House are attempting to delay the Affordable Care Act (ACA) and the Individual Mandate by tying it to a vote to keep the government funded. The Individual Mandate is included in the ACA to ensure that uninsured Americans, including those who would not be good insurance risks, have access to affordable insurance. Most Americans will be required to be covered by insurance or they will pay a penalty. To cover the higher costs of insuring less healthy patients, a large number of younger, healthier patients need to buy insurance. By requiring everyone to be insured through the mandate, premiums will be lower.
    If the ACA Individual Mandate is delayed, people who currently need insurance will want to enroll now, while healthier individuals may wait or decide not to enroll. If healthier patients do not enroll, they will not provide the income that the insurance companies need to cover the costs of paying for less healthy patients. The result of delaying the Individual Mandate would be that 11 million fewer Americans will buy insurance than with the mandate. The insurance companies will have to increase premiums causing less people to sign up. Therefore, delaying the Individual Mandate could cause the Affordable Care Act to fail. Delaying the mandate is a good idea if you want to see the ACA fail and a bad idea if you support the ACA. For this reason, some politicians are willing to shut down the government to stand their ground on the ACA.
    Works Cited:

  7. The government was shut down because the fiscal year ended for them on October 1, 2013. If the government has not figured something out by October 17, 2013 they will be forced to default on their debt, meaning that the will not be able to pay back any of their loans. This government shutdown is the 12th government shutdown since 1981. In past government shutdowns prior to 1980 people were allowed to continue to work, but after attorney general Benjamin Civiletti passed a legal opinion saying that people in the government could not work until it was funded. There is no point in government shutdowns because the longer that they stay shutdown the more money it costs them, and the reason that the government is shutdown is because they cannot reach a budget for this new fiscal year. The shutdown we are currently in is only a partial shutdown, meaning that only the “nonessential” parts are not working and the “essential,” like military, are still working. What congress should do is sit down a figure out the budget, there would be no purpose in issuing a “6-week” or “10-week” continuing resolution because then we would be placed back in this situation when the continuing resolution ended. What congress can do is raise the debt ceiling, so we will not be able to default on our loans before October 17th, but the House Speaker rejected that vote. The people of congress are not being affected by the shutdown they are still getting paid, but it is affecting Americans who work for the government and have been furloughed and now are struggling to provide for their families. The only thing that congress has left to do is sit down and figure something out unless they want America’s credit to fall.


  8. The GOP has a strong stance against the health care reform which has halted compromise on resolving the economic situation in America. Many of the political ideologies of the right want to cut spending and believe the health care reform act needs to be altered or completely thrown out, but this may not be the best solution for the nation. The GOP should reconsider of dropping the fight of eliminating the health care act and focus on a financial compromise with the majority leading Democratic Party. This also means the Democratic Party needs to compromise with the GOP with their proposal of the CR as each party cannot pass anything without cooperation’s of both sides. If nothing is passed by Oct. 17th the U.S. will reach the debt ceiling causing immediate and unconstitutional acts by the President. Where it seems that we are heading to this case, the President may have to ignore the debt ceiling in order to finance our debt. If nothing is done millions of Americans, especially the lower class, will be effected because they will not receive the mandated government support they depend upon to survive. The problem is if the debt ceiling is just keeps getting raised there will be no true solution to our financial debt. It is best for each political party to surrender their fight against one another, against Obama care or CR, and focus on reducing spending and raising taxes in order to halt the reach of the debt ceiling.

  9. On May 16, 2011 the U.S. government officially reached the debt ceiling. In 2011, we were in the midst of a recession where consumers had no confidence in the economy, but this put it over the edge. The stock market plummeted, including a drop of close to $1000 from April 29 to June 10 in the Dow Jones. Simultaneously, interest rates dropped from 5.08% to 4.65% making it much harder to get loans. This time around, however, it is going to be far worse. Failure to raise the debt ceiling will result in a cash crunch. This will put our country in a predicament of not being able to pay off all of the country’s bills resulting in prioritizing who gets paid first. With the approximated $30 million a daily, we would never pay off what can amount to $60 million in expenditures. Overall economic shock will hit the country. It is predicted that the fiscal shock treatment of having to eliminate the deficit in one fell swoop would reduce GDP by more than 5% that will cause a severe recession. Essentially, if the debt ceiling is not raise or congress does not come to an agreement by October 17, 2013, then the government will fail to pay daily expenses like its employees’ wages, electric bills and Social Security checks. The economic recession that will occur if the debt ceiling is not raised could be catastrophic.

  10. Claire Beeks
    The nations debt has caused severe problems and arguments within the government, especially between the Republican and Democratic parties. The debt ceiling was decided by Congress in 2011 and set at $16.4 trillion. The Republican Party is pushing for a clean CR to extend government funding but stand a firm ground to lower government spending. Both parties want to raise the debt ceiling but are troubled by deciding how much to raise the ceiling. Obama only wants to negotiate with the Republican leaders after they agree to fund the reopening of the government and higher the debt ceiling as well as allow for government spending on the new health care law. The Republicans and Democrats are unable to agree to how much spending should be allowed in the next budget. Because the government spends more money than they take in each year the deficit has reached an uncontrollable amount potentially leading to a default in government debts. The default could lead to another depression for the United States and potentially lower social security payments to thousands of Americans. The value of the dollar would decrease making everything more expensive. The value of the dollar would decrease because “91% of [the Federal Reserves] assets are backed by US government debt.” The decline in the value of the assets would mean that there would be basically no value backing the dollar. Interest rates would also spiral out of control, and billions of Treasuries would need to be sold and placed on the market. Banks would soon become insolvent because they would have to “write down the value of those assets,” because bond values would decrease. The government needs to make a quick decision on government spending before the economy goes into a depression and millions of people are affected.

    Works Cited:

  11. One way to reduce the yearly deficit is to cut mandatory spending on government programs. There are laws in place now that make it so that when mandatory spending is increased in one area, there has to be cuts in others to offset the budget. However, when the budget decreases due to tax cuts, those cuts in the budget do not have to be offset and this leads to higher deficits. The deficit has been lowered in the past and our budget balanced when the pay-as-you-go laws apply both for spending increases and tax-cuts. Both raising taxes and cutting spending are ways of reducing the deficit and both can be effective especially when used simultaneously. However, at this point in our country’s economy it would be more viable to raise taxes to offset the deficit than it would be to cut spending. Many of the required government entitlement programs continue to need more and more funding each year and it is unrealistic to try and implement spending cuts on such programs. If we do not reduce the deficit, our debt will continue to get bigger every year until the deficit is no longer negative. At which point, we can begin to pay off our debt and further stabilize our economy.


  12. The government shutdown has forced the United States into a controversial frenzy over what actions need to be taken to fix this economic mess. The Senate and House of Representative’s inability to compromise over the topics of Obamacare and the nation’s budget has caused this government shutdown of “nonessential” government programs. In order to fix this debate, the Senate and House of Representatives must come up with a suitable compromise that will ultimately benefit the nation as a whole in the end. A possible solution is to delay Obamacare in order allow Republicans the time to agree on a vote on how to fund the government since they seem to be obstinate with their decisions thus far. A budget needs to be established before Obamacare can be put into place. The government is considering passing a six or ten week continuing resolution, but that would only serve as a part time solution. The government should continue to fund at its current level, but at some point they will inevitably have to raise the debt ceiling. By not raising the debt ceiling, some of the US bills will go unpaid and not enough of the money collected through taxes will be able to cover our bills. This will increase our deficit and even more than what is currently being shut down will continue to shut down. If the deficit continues to increase it will become harder to borrow money and inflation will increase. A possible solution to fix our deficit is to reduce all budgets and spending by an equal rate and increase taxes by that same rate. This would be a moderate handling of the nation’s budget without an extreme increase in taxes or a drastic cut in spending. The government needs to learn how to compromise in moderation in order to escape the financial and economic mess it is currently in.


  13. The problem of our debt is a very complex one with few viable solutions. The consequences of defaulting on the national debt are monumental and fast approaching. If a new debt ceiling is not reached by October 17th many government programs would be put into jeopardy, especially social welfare programs such as Medicare, and social security. Also massive governmental layoffs would take place resulting in thousands of unemployed government workers. A default on the debt would also mean that the government would not be able to pay back hundreds of millions in bonds and government securities. The global consequences might be even more severe. Countries often loan money to each other with interest, similarly to how banks operate. The default of the US government on its loans would result in a freeze of international loans similarly to how the failure of major banks froze loaning during the 2008 financial crisis. The result would be another catastrophic recession on a global scale. Countries struggling economically, like Italy and Greece, would be hit especially hard.

    Despite all of this there is hope, in recent years the government has come alarmingly close to reaching the debt ceiling and found a way to prevent going through and defaulting on its loans. Also due the economic resurgence following the 2008 financial crisis the US deficit is becoming less and less of a % of GDP and the government has been able to maintain payments.


  14. The current issue within Congress is working to vote on a continuing resolution to keep the government funded to provide time to raise the debt ceiling and bring closure to the fiscal year 2014 budget. The position of the Republicans in the House and Senate to adjust the Affordable Care Act via the Vitter Amendment in addition to passing a continuing resolution is confusing the issue and adding complications to arriving at a mutual agreement.

    Their current indecision has caused the government to shut down which has left hundreds of thousands of people without work. This also causes a cascading effect of impact to the small businesses that supply the federal workforce. Taking on too many legislative ventures at once may prove to be more harmful than helpful; the continued delays of coming to agreement may result in a recession. The House and Senate passing a clean continuing resolution seems to be the most practical approach to dealing with the direct budget conversation. Focusing on the task at hand – which is to simply pass a clean CR – would be the best use of Congress’s time during the government shutdown. Though the Republicans have credible grounds for wanting to put their amendments into effect, these are matters better determined at a later date.


    Mary Kate Appel

  15. The United States has about 16.7 trillion dollars of debt and on October 17th, the U.S. will have reached the debt ceiling. Which means the U.S has two options: to increase the debt ceiling or to ignore it. Ignoring it would be unconstitutional because it would be illegal not to pay the F.B.I, school districts, Medicare doctors, etc. However, even if the House voted to impeach him the Senate would not follow through. Also, these substantial spending cuts and tax increases will leave citizens and mandatory programs without funding resulting in an economic downfall and most likely a recession. The debt ceiling is similar to a credit card limit, in that if it is raised it does not force you to spend more money you don’t have but makes it feasible. However, the whole point of raising the debt ceiling would be to allow more room for the government to borrow money to pay its bills. Increasing the debt ceiling could result in the government continuing to spend money aimlessly or to buy some time to get its act together and compose a budget that could potentially begin to lower our debt instead of continuing to raise it.


  16. U.S. government officials say that if nothing is done by October 17th, then the government will be forced to default their loans. This would be due to the government running out of the money needed in order to pay the interest on our debt. By October 17th the government will only have an estimate 30 billion dollars of funds and it costs 60 billion dollars to operate the government per day. The consequences of this could potentially hurt the economy and result in another economic recession. Another possible consequence is that this could hurt the credibility of the U.S. dollar from the viewpoint of lenders across the global economy. The U.S. dollar is not backed and so the trust lenders have would be hurt if the value of the dollar crashed as interest rates soared. Soaring interest rates would result in the downfall of the financial stock market, which is based heavily off of the current interest rate. The consequences of this would also be felt worldwide due to how important of a role government treasury bonds and the U.S. dollar play in the global economy. Congress must pass a bill to raise the debt ceiling before October 17th, otherwise these potentially catastrophic events could occur. However the problem is that the Democrats of Senate and the Republicans of the House have been in deadlock and been unable to get such bill passed.


  17. A reoccurring issue that comes up when talking about the government shut down is the Republican Party reverting to the “Vitter Amendment.” The Vitter Amendment, legislation led by Senator David Vitter (R-LA), would eliminate employer health insurance to members of congress and their staff. They would instead have to get health insurance under the new Obamacare policies without any subsidy from their employer (the federal government). This amendment would go against the Affordable Care Act, which helped subsidize employee healthcare. The implementation of this Vitter amendment raises many questions because although it may save the federal government some money, it hurts the thousands of government employees who are often making very low wages. This is part of the standstill in Congress because the two parties cannot come to an agreement on the specificities of Obamacare. According to Niels Lesniewski on, many Republicans claim that this amendment is the only extra provision they request in “an otherwise agreed upon continuing resolution.”

    Alex Goldberg

  18. Over the past 50 years, the deficit of the U.S. Federal government has grown to a frightenly large amount of money. As of mid October 2013, the debt “will reach $16.7 trillion.” The annual payment just to service that debt is now $420 billion. If we don’t make a major course correction with regards to deficit spending, then the government will continue to overspend on programs, such as Obamacare, Medicaid, Medicare, and Social Security that are too costly to be sustainable in the long run. These programs will only become even more costly “as millions of baby boomers reach retirement age.” This debt burden, in turn will substantially lower the standard of living for my generation and the generations to come. Also, not paying back the government’s deficit reflects poorly on the nation, and makes it look unreliable and untrustworthy to other nations, and will accelerate the inevitable depreciation of the U.S. dollar. “There will be a point when the rest of the world will begin demanding much higher rates to compensate for such a deeply indebted nation.” To solve the deficit, government spending should be cut. The unemployment rate is already so high, that raising taxes would just make things worse, and drag down the economy. The government needs to get our spending under control. In order to do this, the government, ultimately needs to shift their focus back to ensuring the most efficient delivery of government services. This will require strong leadership and a new government culture of efficiency. This huge issue of the government deficit is better solved now, then later because according to the congressional budget office we have about twenty-five years until defaulting on our debt becomes unavoidable.

  19. On October 17 2013 the United States Government will run out of money to pay its bills. If the United States Congress does not raise the debt ceiling, which currently is 16.7 trillion dollars, then the United States would default on its loans. This could have an impact on the global scale. U.S. treasury bonds and the U.S. dollar are “cornerstones of the global financial system” and a default could send the world into a recession. Interest rates would increase substantially, people would stop lending as much money to the government and the value of the dollar could potentially crash. The increase in interest rates would make it substantially harder for new home or car buyers to afford the home or car they want and harder for average people to pay of their credit card debts. Ben Bernanke stated that a United States default could be a “recovery-ending event” that could create a recession even worse then in 2008. The Dow Jones as well as many other stocks will plummet and many Americans could loose their savings, 401(k) or retirement funds. Needless to say, the consequences of not raising the debt ceiling are too extreme to ignore. Congress needs to put aside their differences and reach a bi partisan agreement to prevent our country from plunging into an economic catastrophe.

    Work Cited

    Michael Haddad

  20. Government shutdowns have occurred seventeen times in the United States government. The most significant shutdown was in 1995-1996 and lasted twenty-one days as a result of disputes over domestic spending cuts between Bill Clinton and congressional Republicans. The effects of the 1995 shutdown were detrimental, including loss of $800 million of taxpayer money and $400 million in lost wages of federal workers who were unable to report to work. The shutdown also caused delays in social security claims and applications for Medicaid. The shutdown finally ended when President Clinton and Congress came to an agreement to balance the budget in seven years. Only after six days, the government shutdown has led to hundreds of thousands of federal employees being sent home, millions of visitor spending lost, and many local programs without funding. The underlying issue facing Congress and President Obama that far eclipses the Affordable Health Act and the budget, may be the issue of wealth distribution for the foreseeable future. The key to wealth distribution is the budget. As such it should be openly approached as such. Rather than demonizing “Obama Care” or tying up the financial future of the country through procedural acts and threat of veto, the two should use the budget to map a strong and sustainable economic future for America. The first step is to raise the debt ceiling to buy time to address the fundamental financial problems facing the nation. The credit of the country and its obligations far outweigh political concerns and bickering over approach. Defunding or delaying the ACA is a no-go from the get-go. As are efforts to achieve the same objective by piece meal funding of everything except the ACA. A fair approach is to first raise the debt ceiling but with provisions for across the board automatic cuts in programs at certain dates unless a budget resolution is worked out, approved by both houses and signed by the president. This should be tied to a short term continuing resolution(s) that ensures all sides will stay engaged on the subject. This will also enable all sides to declare victory and reopen government.–politics.html

  21. The government shut down impacts government employees and government services, but hitting the debt ceiling will have an even greater impact on the U.S. The debt ceiling deadline is approaching on October 17. On this date the U.S. will no longer be able to borrow. Assuming the debt ceiling is not raised and the U.S. reaches the debt limit, it will not be able to meet 30% of its obligations. Prior to this, one of the safest investments to make was purchasing U.S. debt. The U.S. is known for always paying back their bills, therefore it is almost a no-risk investment. What will happen when “The most stable investment will no longer be considered safe?” (Caldwell 23). This could result in countries shying away from U.S. Treasuries to invest in other countries, which could ultimately raise U.S. Treasury interest rates. A raise in Treasury interest rates would result in higher interest rates not just for the government but for all U.S. consumers on their home loans, credit cards, and business loans. The investor confidence problem could be long-lasting, impacting interest rates long term. Therefore hitting the debt ceiling would create a much more significant problem than the government shutdown. The government exhausted all their other options in May to compensate for the debt ceiling, but now it haunts them once again.

    Works Cited:

    Nicole Braun

  22. The simple fact that there has been a government shutdown due to disagreements within the Affordable Care Act and with the debt ceiling is an automatic red flag that something is not entirely right with these plans. There is no sense on making any permanent decisions if the majority of congressman cannot agree on how to implement these major governmental issues appropriately. With that being said, a unanimous agreement will virtually never be made, but with the amount of controversy surrounding the ACA and the debt ceiling significant changes have to be implemented. Obama is pushing for a “short-term spending bill with no strings attached”. He thinks that this will pass in the House and lead to an end in the government shutdown. Obama believes that there are enough Republican and Democratic votes in the House to end the shutdown, but Boehner believes that there aren’t enough votes to pass the clean continuing resolution. Republicans are demanding spending cuts and say they will then agree to raise the debt ceiling along with passing a spending bill. This plan seems like a reasonable compromise. Spending cuts or raising taxes are completely necessary at this point. If Democrats can agree with this compromise these cuts need to be implemented immediately to begin to decrease how fast the government is spending money that they don’t have.


    Emily Miglis

  23. The government shutdown that began on October 1st is mainly the result of the Republican House and the Democratic Senate disagreeing on some parts of the Affordable Care Act. As a result, no budget for the 2014 fiscal year that began on October 1st has been created. The two sides need to cooperate if any progress is going to be made. In addition, the Treasury Department is projected to reach the debt ceiling by October 17th. If nothing is done about the deficit, we will reach this debt ceiling and be forced to break the law to fix it. It is technically unconstitutional to arbitrarily raise taxes. Despite the fact that it is illegal, the government should raise taxes, because the economy returned to large deficits when Bush attempted to cut taxes in 2001. The tax cuts Bush attempted resulted in increases in the deficit by 2.6 trillion. Past experiences prove that cutting taxes and reducing spending only increase the deficit. Raising taxes and cooperation between Republicans and Democrats are the only way the government can prevent an economic crash similar to the one in 2008.


  24. On October, 17 another controversial issue will arise. The debt ceiling is supposedly going to be reached and the US Treasury will have to default on the country’s bills. If the country hits the debt ceiling, there would be a tremendous effect on the government’s ability to finance its operations including national defense, Medicaid, and Social security. Federal spending would be significantly decreased and taxes would sky rocket. In addition, certain government funds and buy/selling of securities would be limited. The economy’s fate is in the hands of the debt ceiling because if the government does not have a compromised solution, this problem could keep occurring and another financial crisis would be anticipated. With the gridlock over the debt ceiling, bond markets will be questionable and interest rates will likely rise.

  25. The U.S. government’s “Debt Ceiling” is the limit on the amount of money the treasury can borrow (through the sale of Treasury Bonds). As the government shutdown continues, the Treasury is running out of money ($30 billion by October 17) and NOT raising the debt ceiling will force the government to default on its debts. On one hand, the government default will decrease its powers – a smaller government. On the other, it is a violation of the 14th Amendment which declares “the validity of the public debt of the United States . . . shall not be questioned.” Indeed, the entire world economy relies on the stability of the U.S. government debt because “buying” U.S. debt is a huge source of income for many (through the return of loans). The disruption in the economy would lead to a stock market fall making interest rates rise. Higher interest rates would make mortgages more expensive just as the housing market is almost restored.
    One thing must be made clear: Raising the debt ceiling does NOT increase federal debt. In fact, it allows the government to pay its existing bills, avoiding default.
    If the debt ceiling is not raised, retirees/elderly and the poor might not get the benefits of Social Security checks or Medicaid/Medicare receipts. Consumer confidence will plummet (as it did in the 2011 Debt Crisis) exacerbating the recession by decreasing the flow of money in the economy.. Therefore, the debt ceiling must be raised before it is reached to avoid economic crisis.


    Meagan Dalton

  26. With October 17th rapidly approaching the treasury is expected to hit the debt ceiling. There are three options for the government including; Congress raising the debt ceiling, Obama ignoring the ceiling and ordering the treasury to pay, or defaulting on the nation’s debt. If Congress does not raise the debt ceiling, the other two options would force Obama to violate the law one way or another. The least unlawful option would be for Obama to ignore the debt ceiling and go on as usual. If Obama is forced to do this he will most likely be impeached by the House, but would not be convicted by the Senate. Most economist believe the impact of outright government default would be severe. The U.S. default would likely spark another financial crisis. The delay in raising the debt ceiling could harm the economy. The congressional gridlock will likely place upward pressure on interest rates. With rates increasing it would hike future borrowing costs and raise capital costs for struggling U.S. businesses and homebuyers. It can also divert future taxpayer money away from infrastructure, education, and health care.

  27. There is a group of around fifty to sixty Republicans in the House that have the power to end the government shutdown. It is a matter of whether or not they can be swayed to disagree with Boehner and vote for the clean CR instead of trying to come up with a new CR. There are already about thirty to forty Republicans in the House that disagree with Boehner and want a clean CR. Boehner’s following is also slowly falling. Of the 234 Republicans in the House, only about twenty percent of them are actually loyal to him. If the moderate Republicans were to turn against Boehner, they would have the power to oust him from his position as Speaker of the House. The gap between the tea party Republicans and the moderate Republicans has been growing and the Democrats are trying to utilize that and persuade Representatives such as Patrick Meehan and others like him to go against Boehner and the rest of the hardline conservatives. Representative Peter King, a Republican from New York, believes that if a clean CR was put to a vote on the floor of the House that two-thirds of the other Republican members of the House would vote for it. The moderate Republicans in the House have the power to end the government shutdown.
    Works Cited:
    Ball, Molly. “Even the Aide Who Coined the Hastert Rule Says the Hastert Rule Isn’t Working.” The Atlantic. N.p., 21 July 2013. Web. 09 Oct. 2013.
    Klein, Ezra. “Why Boehner Doesn’t Just Ditch the Hard Right.” Washington Post Wonkblog. Washington Post, 1 Oct. 2013. Web. 6 Oct. 2013.
    Memoli, Michael A., and Lisa Mascaro October 1. “Republican Moderates Hold Key to Ending Government Shutdown.” Los Angeles Times. Los Angeles Times, 01 Oct. 2013. Web. 09 Oct. 2013.
    Woodruff, Betsy. “King: Two Thirds of House Republicans Would Support a Clean CR | National Review Online.” National Review Online. N.p., 30 Sept. 2013. Web. 09 Oct. 2013.

  28. Currently, the major issue within the U.S. government is that it is having a financial crisis of being unable to pay their debts. The last time the government shut down was in 1995, when Bill Clinton was in a similar situation. The shutdown lead to recriminations inside the party, that of which include Newt Gingrich. The controversy did not go that well because the Republicans were blamed for putting their political agenda ahead of the country. There are many consequences that can happen due to the government shutdown. The government’s shutdown causes problems around the world to foreign countries because China and Japan have interest in saving the economy and social stability. Since the government has closed, the Federal Aviation Administration has laid off over 3,000 inspectors, suspending aircraft safety and regulations. This is an example of how bad unemployment is in America, and the government shutdown making it even worse. Even public museums and zoos are closed which affect the animals because the live cameras were shut down and require federal resources to run. Also, tourists won’t be able to see any national tourist sites because all the parks and monuments are closed, such as Grand Canyon, Yosemite and the Statue of Liberty. The government shutdown affects many everyone because people lose jobs and companies lose money.


  29. The government shutdown was primarily caused by the lack of agreement between the two political parties in Congress. That is only the least of the worries that the government has, with the debt ceiling deadline quickly approaching. There are many consequences if the debt ceiling isn’t raised, not only by the deadline, but in general for the U.S. economy. High interest rates will result from the U.S. Treasury and will create inflation and will be difficult for people to take out loans for houses, cars, etc. This problem could end even worse than the stock market crash of 2008, because interest rates are increasing and bondholders are unloading their bonds. If the debt ceiling isn’t raised, then the value of government held assets will decrease in their value. The following isn’t the best option we have, but Tim Geithner proposed that this could avoid a default on the government’s debt. In the far future, this could lead in the status of the dollar as the U.S. currency. If the entire debt ceiling is ignored, President Obama could run into problems and possibly be impeached by the House. Our entire economy will collapse if the government can’t reach a mutual agreement by October 17th.
    Danielle Taylor

  30. As anyone following the government shutdown and the issues involved with it knows, the consequences of failing to raise the debt ceiling would be disastrous. October 17th is the key date that everyone is focusing in on here. It has been estimated by the US Treasury that at that date the government will run out of “extraordinary measures” to stave off the effects of the debt ceiling, leaving the government with around $30 billion plus taxes to pay off its daily dues. Roughly a couple days later, the US government will have completely run out of funds, sending shock waves throughout the world. Stock prices would fall, interest rates would rise dramatically and the US government would have to prioritize and thus wouldn’t be able to pay out certain things like Social Security benefits. The economy would tank, and not just the US economy. A massive blow to a lender like the US would cause a huge hit to the economies of countries around the world. The best thing to do would seem to be to raise the debt ceiling like we did in 2011.


  31. The greatest game of chicken in the world since the cuban missile crisis is coming to end. Although still eight days out from the treasury debt ceiling deadline both parties have started to come together. Even yesterday there were articles talking of how neither party is willing to back down and go against their principles. Yet yesterday afternoon was a new day with Obamas statement that he would support a short-term legislation to fund government and raise the debt limit as well as embraced attaching a mandated, bipartisan budget process to legislation that would increase the debt ceiling and open the government. This kind of statement is exactly what is need to start the gears of legislation to avoid the upcoming debt crisis we will face if both parties do not come together and work out a deal. Yet even as we see the light at the end of the tunnel darkness looms in how the president and his party are not on the same page as well as how senator Boehner said he would not support a short term deal. On the other hand there are plans to pass a short term bill through to raise the debt ceiling and several notable republican have announced that will indeed support the measure but will not allow the debt ceiling to be pushed passed the 2014 elections without serious spending reforms. While all this is happening there is also a serious effort to try and bridge the gap between the two parties and solve the upcoming problems we will face as a government and as people. To end with a quote from today “It’ll be close,” Begich said. “I’m confident that even though we may have our differences, the sides are not going to let the government default. That would be economic suicide.”. Showing there is hope that it will end and we will move on.

  32. The spending and budget impasse has shut down the federal government for eight days and threatens to prevent the raising of the country’s $16.7 trillion borrowing limit before an October 17 deadline identified by Treasury Secretary Jack Lew. The consequences that could arise from the United States neglecting the deficit include the U.S. falling into a fiscal crisis. The inability to pay for the debt will affect the U.S. standing internationally among all other countries. The well-known ranking could dangerously fall, “The U.S. must avoid a situation where it cannot pay (for its debt) and its triple-A ranking plunges all of a sudden,” Japanese Finance Minister Taro Aso told reporters after a cabinet meeting. Countries such as China and Japan are now worried about their trillions of dollars of investments in the U.S. Treasury. Some solutions to solving the deficit include cut spending toward foreign aid, cut government contractors , and cut pay of civilian federal workers by five percent. Cutting spending toward foreign aid could be useful because rather than focusing on helping other countries while we are suffering a large deficit ourselves we could use that money to improve our debt. Others argue that an insignificant amount is being used of foreign aid so that point would be useless. Cutting workers and reducing pay is a unfavorable idea because that directly effects civilians.
    One of the struggles of proposing solutions is the balancing act between short term and long term gains and losses for the U.S. economy and people.,0,1118790.story

  33. The consequence of not raising the debt ceiling and defaulting on public debt would be calamitous across global economies. As of now, the two parties seem rather uncooperative; Democrats are unwilling to address the debt ceiling until a CR is passed. Meanwhile, the GOP looks to spending reform before passing a CR. Failure by the world’s largest borrower to meet its debt obligations will throw global economics in disarray; undermining the United States critical role in the economic growth of the world economy. Many large economies, including the United States’ largest creditor, China, have pressed the United States’ policy makers to pass a deal before a potential default. United States Treasury securities have long-held a AAA credit rating, providing a safe haven for investors worldwide. Even with speculation of a potential default, (like we saw in 2011), rating agencies could downgrade Treasuries, sending interest rates higher across the world. This would have a cataclysmic effect on investment, home buying, and overall consumer spending. With rising borrowing rates, the private sector would curb investments and cut costs; the most likely victim being labor. Any rise in unemployment should halt any signs of economic growth and send us into a second recession in 5 years. As a young student, it’s alarming to see unemployment of people 25 years and younger to be 15.6% in a stabilized economy with steady growth. With much of the younger generation coming into the workforce with mounting student debt as well as inheriting the country’s federal deficit for coming years, it’s a devastating thought of what will happen to the labor force if the debt ceiling is breached.

  34. It has been approximately one whole week since the government shutdown had taken place. However, Economists are now focusing their attention towards the debt limit, or debt ceiling, which is defined as the total amount of money Government may borrow in order to pay off its obligations. Officials claim that by October 17th, 2013, the government will have reached its borrowing capacity and will therefore no longer acquire enough money to pay for its bills. The Treasury Department will have just $30 billion on hand which isn’t nearly enough taking into consideration that the Government spends as much as $60 billion a day. Unless the debt ceiling is raised, Government will be forced to withhold from numerous payments. Such withholdings will prevent retired persons from receiving their social security checks, which can be extremely problematic for the millions of Americans who practically depend entirely on social insurance programs to provide their income. Likewise for those who are inheritors of Medicaid and Medicare programs. Although it seems like the unanimous solution to this dilemma is to raise the debt ceiling, it is not quite that simple. Raising the debt ceiling could potentially increase our debt provoking Government to spend more of the money which they do not have. Unless a compromise is made soon, the consequences of the debt ceiling will have a devastating toll on our economy and perhaps even throw it back into recession.


  35. The consequence of not increasing taxes or decreasing spending is obvious: the deficit will continue to rise. The remedy enacted during the Bush administration showed to actually increase the deficit, and should Paul Ryan become the new Chairman of the Budget Committee, now only will those problems be back in full force, but they will be much more permanent and potentially more severe. The answer is not to simply cut spending or increase taxes; it is to make small changes within both areas that allow the deficit to become smaller gradually. The governmental departments deemed “non-essential” could probably stand to cut spending even by small amounts, and it is a sad truth that most people in our country probably wouldn’t even notice if some items were taxed more than they may have been in the past. The current House rules are making it difficult to make substantial changes, and it is mostly about unwillingness to see from the other party’s perspective and find a middle ground. There is always room for small changes regardless of whether they are put into place under the current Chairperson or the new Chairperson in January. The point is that every day we spend with the government shutdown, the deficit rises. The only way to stop that is to consider what is necessary for our government to function and thrive (Federal Trade Commission, Dept. of the Treasury, etc.) vs. what has been put in place during better economic times, and is not necessarily as useful as it is costly for our government (Administration for Aging, National Wild Horse and Burro Program, Bureau of Western Hemisphere Affairs, etc.).


  36. Regardless of any Replublican, Democratic, or third party views raising the debit ceiling is an action that needs to be enforced as soon as possible to prevent potential economic destruction. Considering that so far the Federal government has lacked in defaulting on some of its obligations, our credit ranking has already fallen from an AAA rating to an AA+ rating. This has not happened since 1917 meaning it endured the economic crisis such as the Great Depression and the attacks of September eleventh without falling. The government shutdown has also already occurred partially as a result of the failure to raise the debit ceiling and another potential fate is a devaluing of the United States dollar. Setting a limit on the amount of money the government may borrow decreases the debt in return for the money saved by not allowing more borrowing. President Obama submitted a budget with a 1.5 trillion dollar deficit and in addition asked for a blank check of more money that he would be borrowing. With an increase to the debit ceiling this type of borrowing is limited. Also unemployment rates will decrease and the risks of reducing the dollar value decrease. Citizens of the United States would not need to worry about a reduction in buying power which would cause a change in the lifestyle most Americans have become accustomed too. However if the conclusion to raise the debit ceiling is reached, we must also consider that suddenly cutting government spending can lead the United States economy into another recession; therefore, leading to addition economic problems. The simple way of avoiding this comes from slowly cutting spending rather than jumping straight into the act.


  37. Not expanding the debit limit will have a severe negative effect on the U.S. economy and its world leadership as an economic power. The debt limit reflects our ability to borrow money to pay our debts; our credit worthiness is based on the ability to borrow money to pay our debts. The loaners of the money (through treasury bonds) have a reasonable expectation of being paid back with interests. If we default, IE, are not able to pay our borrowers and not able borrow money to pay the debts, our credit worthiness drops and the risk to lender increases. This will drive up the interest rate that the lenders will change due to this increase risk. The debts we are trying to pay are based on debts that have already been spent by Congress (both discretionary and non-discretionary spending). The way to look at this is Congress has charged our credit card and now it is time to pay the bill. The REAL problem is that Congress has spent more money than we have, and we now have to borrow. The issue for Congress is to treat the problem (too much spending with not enough incoming revenue) and not the symptom (debit ceiling). Congress has spent this money and not expanding the debt limit is pointless. What it needs to do is either increase revenue (taxes) or decrease spending (cuts to programs, etc.) or a combination of both to reduce the amount of money that the U.S. is required to borrow. Not authorizing an increase in the debit limit (allowing us to borrow more money) will cause our credit worthiness to decrease and decrease our status of the United States as an economic leader. We are the “full faith and backing of the US” leader in the world. This will affect our status on a global economic level, allowing China and others to move up in status, as well as send our economy into chaos.


  38. If President Barack Obama does not order the US Treasury to ignore the debt ceiling by October 17, the U.S. will soon have only an approximate $30 billion in cash and need to exhaust every measure possible to stay under the $16.7 trillion federal debt. While other options such as choosing not to pay lawful bills exist, they are technically as illegal as surpassing the debt ceiling and would be far more detrimental to the economy. Obama may be concerned for his presidency as impeachment could follow such a decision, however, action needs to take place or the economy will begin to plummet. Further government cuts to prevent further borrowing would require all discretionary spending, such as for defense, education, and other mandatory programs such as Social Secutiy, to cease. Such sudden and deep cuts would spiral the economy into an almost sure recession. Without a raise in the debt ceiling the US will struggle to pay interest on debt, including a $6 billion payout due at the end of the month. If the country defaults, it could further result in a bond market crisis, decline in the stock market, lowered value of the dollar, and spikes in unemployment. Despite these horrifying worst-case-scenarios, economists and stock analysts predict that fear of these circumstances will lead to the prevailing of common sense, or at the very least, political self-preservation.


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