Aug 25, 2017

Don't confuse a government shutdown with the debt limit

With the relationship between President Trump and GOP leaders in Congress deteriorating, chances have risen for both a government shutdown and a failure for the United States to increase its debt limit. The timing of these very different issues — the government is funded through the end of September and the debt needs to be raised sometime in October — has led to some confusion.

Why it matters:

When these issues have come up before, conservative Republicans have threatened to vote against raising the debt limit unless the increase was matched by spending cuts, so Democratic votes were required to help Republican leaders push the bills through. But the failure to act on either would have vastly different consequences.

A government shutdown might mean a temporary inconvenience — an unplanned furlough or a botched trip to Yellowstone — but a failure to raise the debt limit would be a catastrophe for global finance.

The facts:

The government can only stay open and operating as long as it has the funding to do so. Congress reached a deal back in April to keep the government funded through the end of September, but Trump has threatened to block any spending bill this time around that doesn't include funding for his border wall. The last shutdown in 2013 lasted 16 days and shut down national parks and monuments, delayed tax refunds, and held up government loans to businesses and homeowners. But "essential" government operations, like the military and air traffic control, continued.

The U.S. Treasury has been using "extraordinary measures" to avoid breaching the debt limit since March. Those efforts won't last for long in October, though the exact date is uncertain. When that day comes, the government won't be able to pay all its bills. (Here's our Facts Matter on the debt limit specifically.) Failing to raise or suspend the debt limit would be unprecedented.

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