Government shutdown doesn’t buy much more time on debt limit

WASHINGTON -- The partial government shutdown reduces the federal government’s expenses but not enough to significantly push back the mid-October date by which the debt limit needs to be raised, according to Treasury Department officials and a think-tank analysis.

The Treasury Department has estimated that the government would be at risk of a default if the debt limit is not raised by Oct. 17. The Bipartisan Policy Center, which has done extensive debt-limit analysis, has estimated that the so-called X Date for raising the debt limit is between Oct. 18 and Nov. 5.

There’s been speculation that the government shutdown could change those estimates, but in a letter to lawmakers this week, Treasury Secretary Jacob J. Lew said it would not.

“Although the current lapse in appropriations creates some additional uncertainty, we do not believe it will impact our projections materially unless it continues for an extended period of time.” Lew wrote.


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The Bipartisan Policy Center agreed in a new report.

“Our analysis indicates that a short shutdown of a week or two would have a negligible impact on government spending,” the center said. “While a longer shutdown could have a more significant impact, there is not enough time between now and our projected X Date window for a shutdown to change the X Date by more than a couple of days.”

The center, which had correctly predicted the mid-October date weeks before the Treasury Department set it, analyzed government spending trends during the last shutdown in 1995-96 and compared them with the same three-week period in the previous year and the following year.


There was little difference. 

The center said much of the federal worker payments scheduled to go out in the next few weeks are for pay earned before the shutdown, so would not be held back. Also, when withheld worker pay does start adding up, it would be partially offset by the cost of unemployment benefits for those furloughed employees.

A shutdown that extended deeper into October would reduce government expenses by about $10 billion to $15 billion before the debt limit needed to be raised -- “not enough to change our best estimates by more than a few days,” the center’s report said.

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