October 17th and a Government Shutdown Don't Mix

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Tuesday, 01 October 2013 03:58

The national media continue to express their disdain for logic and arithmetic when they warn that we will face a debt ceiling, in addition to a government shutdown, on October 17th. That one doesn't make sense.

The government shutdown means that much of the spending that would otherwise be going to support the $1.2 trillion discretionary portion of the federal budget is not being made. As a result, the government's borrowing needs will be considerably lower over this period. Depending on how much spending goes out the door, it is possible that the government is not even borrowing at all during the period of shutdown.

This means that the shutdown will extend the date at which a debt ceiling will be reached. That would change if the standoff is settled and all the delayed payments are made retroactively. However, if the government remains shut for several weeks, the debt ceiling deadline will be pushed out past the October 17th deadline indicated by the Treasury Department.