A Government Shutdown Could Threaten a Healthy Economy

Washington Post: “The U.S. economy is entering an uncertain and perilous autumn, facing risks from abroad and from policymakers in Washington in what promises to be another tumultuous chapter in the nation’s slow-going recovery.”

“The irony is that 2015 is expected to mark the first time in four years year that the federal government is actually boosting economic growth, rather than detracting from it, according to an analysis by Macroeconomic Advisers. But if a budget deal is not struck and the spending cuts outlined in a compromise report laid out this summer are enacted, the country could be headed back into recession, the report found.”

“Already, the economy has been growing, albeit slower, for a longer period than the post-World War II average. The unemployment rate, which peaked at about 10 percent just after the recession, is now about half that, and many analysts believe it is nearing its lowest sustainable level.”

“More important will likely be the volatility a poisonous political climate could inject into already skittish financial markets. Worse, the mounting rancor in Washington could carry over into difficult debates later in the year. Beyond approving a stop gap measure to avert a government shut down now, lawmakers must negotiate a long-term budget deal, fund federal highway and transit projects and lift the national borrowing limit to avoid what would be a catastrophic default.”

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