Democrats claim that government shutdown will "Devastate Economy"
. . . If lawmakers don't reach an agreement to fund the government by Friday, an array of programs will shut down. The freeze, if it lasts for several weeks, could wound Americans' confidence enough to tip the economy into recession, Mark Zandi, chief economist of Moody's Analytics, said last week.
But even that scenario wouldn't be as damaging as if the government defaulted on its debt, a consequence that could come sometime in the next several months if lawmakers, locked in a political stalemate, fail to increase the federal debt limit.
A government shutdown has the potential to cause a recession if it lasts long enough, experts say. A default would likely ravage the economy almost immediately. Both could be caused by gridlock in Congress.
"It would be a big, big, big deal" if the United States defaulted on its debt, said Nariman Behravesh, chief economist at IHS Global Insight, a financial and economic analysis firm. "It could mean the collapse of the dollar. People would run away from the U.S."
"That's playing with fire," he added.
At stake is the ability of the United States government -- and indeed of all of its citizens -- to borrow money cheaply, something Americans have long taken for granted as an essential feature of their first-world economy. If interest rates rise high enough, the economy essentially grinds to a halt. . . .
The ultimate irony is that now Democrats won't extend the deadline for a shutdown.
Obama threatens to veto GOP budget extension plan
House Republicans advanced legislation Thursday to avoid a government shutdown for one more week, cut spending and fully fund the Pentagon, but the White House labeled the measure a distraction and said President Barack Obama would veto it.
Obama said in a statement he believes "we need to put politics aside and work out our differences" on a spending plan that covers the government through September, when the current budget year ends.
House Speaker John Boehner, R-Ohio, quickly countered with a statement saying he was "confident that those Democrats who believe it is important to fund our troops and make real spending cuts will prevail upon Senator Reid and our commander in chief to keep the government from shutting down." . . .
Apparently, Obama doesn't believe that the military should keep getting paychecks.
From the WT:
The White House has vowed to veto the short-term spending bill House Republicans will vote on this afternoon, taking away the safety net that could have given both sides another week to avert an immediate government shutdown.
Without a short-term extension, the options would be narrowed to either a broad successful deal or a shutdown as of midnight Friday.
“If presented with this bill, the president will veto it,” the White House said in an official statement of policy.
The House bill would extend the shutdown deadline by another week, to April 15, while funding defense needs for the rest of this year so that troops’ paychecks would not be endangered by a shutdown.
Meanwhile, negotiations on a broader year-long bill appeared to be foundering.
Senate Majority Leader Harry Reid on Thursday morning said it now “looks like it’s headed in that direction” when current funding runs out at midnight Friday.
Mr. Reid, Nevada Democrat, met for 90 minutes late Wednesday with Mr. Obama and House Speaker John A. Boehner, Ohio Republican, as they tried to work out a last-minute agreement to avert a shutdown, and Mr. Reid said he was optimistic after that meeting.
But just 11 hours later, he said that optimism had faded as the two sides have deadlocked over legislative add-ons, known as “policy riders,” such as restricting federal funding for Planned Parenthood and halting environmental rules.
“The only thing — only thing — holding up agreement is ideology,” Mr. Reid said on the Senate floor.
Mr. Reid objects to the inclusion of any major policy riders. But House Republicans included many of them in the year-long funding bill they passed in February that also cut $61 billion from 2010 spending levels. . . .