Republican Source Sees 75% Chance of a U.S. Government Shutdown

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U.S. Government Shutdown Seeming “More Likely Than Not”

Political pundits are seeing a U.S. government shutdown in the cards as U.S. policymakers approach two major deadlines in the coming weeks.

America has very little time left to decide whether it will be cutting taxes and raising its debt ceiling. The two decisions will help lay out the government’s federal funding plan for the next fiscal year. General market expectations are that the American government will loosen its fiscal policy and raise the debt ceiling in the coming days.

However, with an unpredictable president in the office, an air of uncertainty is surrounding Capitol Hill. The two significant events in the coming weeks could change the political landscape in America.

After Goldman Sachs Group Inc shared its prediction last week of a 50-50 chance of a U.S. government shutdown, more government insiders are coming forward and concurring with the idea. “Almost everyone I talk to on the Hill agrees that [a government shutdown] is more likely than not,” said one Republican insider. That Republican source said that he or she would put the probability of a government shutdown at 75%.

It is interesting that these predictions are pouring in at a time when President Trump has indicated that he would shut down the government if he has to in order to deliver on his election promises. Speaking to a supporters’ rally earlier this week, Trump said that, despite opposition from the Democrats, he would build a wall on the Mexican border even if he has to shut down the government.

Meanwhile, America has almost approached its debt ceiling and will no longer be able to issue more debt if the ceiling is not raised. That would ultimately force the government to default on its debt—an event which could hurt America’s sovereign debt rating.

The chances of that happening may still be low, but it has already thrown a scare into the markets. The Treasury bill spread is widening while stock market volatility is increasing.

With Trump repeatedly taking controversial stands, the divide between the Republicans and Democrats is growing. If the two sides fail to find common ground on policy matters in the coming weeks, a government shutdown may become inevitable.

Source

1 big thing: Spoiling for a shutdown,” Axios AM, August 24, 2017.

Categories: Government Shutdown, News

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