Just like we can all be sure of death and taxes, we can also count on political theater to break out at any moment in the U.S. capitol.
This time it’s a repeat of the debt ceiling faux crisis. The U.S. government is not allowed to borrow more than what the congress allows, even if the spending was already approved through the passing of a Congressional Act.
What does the government do if it can’t get approval to raise the debt limit, allowing it to borrow more money? It closes down he government, at least for a while. In past shutdown incidents workers are sent home without pay. While that sounds harsh, it’s quite the opposite. When the debt ceiling eventually does get raised employees get paid for the days during which they were furloughed.
Right now we know we are close to the high of what can only be called a media-led drama, which is not that much different to TeleNovela. The theme of the DC theatrical show is simple. If the two parties can’t reach a deal to increase the debt limit then the country will inevitably default and that will shake the foundations of the American (and global) economy, thus pauperizing pretty much everyone. Of course at the last minute both sides agree, the debt limit is increased and financial armageddon is avoided.
Going back to 1953, when the first debt limit battle erupted, there has never been a U.S. debt default. Not ever.
And it’s likely there won’t be a default this time either, experts say. Earlier today currency trading company Bannockburn Global Forex pubslihed am research note titled “Neither the Threat of Intervention Nor a Possible US Government Shutdown is Derailing the Greenback.”The message is clear, investors in dollars are in no way concerned that a financial sink hole is about to swallow the U.S. economy.
That news comes in line with realistic concern that this time there will be a government shutdown — which as indicated above is just another theatrical routine. The Bannockburn note reads as follows:
- “The US still appears headed for partial government shutdown. There are some efforts, of course, to avert it, but they lack sufficient support. A House proposal of a stop-gap measure cuts spending by more than 25%, which is unacceptable to the Senate. A bipartisan bill in the Senate will not get the support of much of the Freedom Caucus in the House. Four appropriations bills are making progress: State, Agriculture, Homeland, and Defense.”
So what? Yes there may be a shutdown. In realistic terms the government staff will get a paid vacation albeit for an unspecified period, and we will all realize how much we can dow without much of the government.
The last act in the DC theater is always the same. The leaders of each side sit down together and look grim. They look like they are determined to get what they promised their followers. Eventually, they come to an agreement and the media provides hundreds of column inches and hours of TV time.
Then things will be calm until the next theatrical event in the country’s capitol.
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