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It’s official! The 2017 edition of Government Shutdown Theater, which MyGovCost hinted was coming less that two weeks ago, was initiated by President Trump at a speech in Phoenix, Arizona on Tuesday, August 22, 2017. The Hill‘s Mike Lillis reports on the now increased chance that the U.S. government will be partially shut down in October.
The chances of a government shutdown in the fall are growing.
Congress returns to Washington next month facing a full plate of must-pass legislation and a shutdown threat that looks more serious after President Trump suggested on Tuesday he won’t support a spending package that omits new funds for a southern border wall.
“Believe me, if we have to close down our government, we’re building that wall,” he said during a fiery rally in Phoenix….
So what would a federal government shutdown mean in 2017 if it comes to pass?
Today, we got a surprising answer to that question, where we learned from Reuters Richard Leong that so long as the U.S. Treasury Department prioritizes making principal and interest payments to the U.S. government’s creditors over its other non-debt liabilities, it won’t affect the U.S. government’s top-notch credit rating from one of the world’s big three credit rating firms.
Moody’s Investors Service said on Thursday it would consider stripping the United States of its top-notch rating in the event of a default, not over late or skipped payments on non-debt obligations, as the federal government faces the possibility of running out of cash in coming weeks….
Delays on non-debt payments including salaries to federal employees and payments to social programs such as Social Security would not result in Moody’s stripping the U.S. government of its Aaa rating, the agency said in its annual analysis of the United States.
“If the Treasury were to fail to meet some of its non-debt obligations as a result of a political deadlock over this issue, that would not affect the U.S. sovereign rating because our ratings reflect the risk of default and loss on government debt, not the risk of failed or delayed payment on non-debt obligations,” Moody’s said.
Moody’s did give an estimate for the size of what would amount to a partial government shutdown in the event the U.S. government’s debt ceiling is not raised to allow the government to borrow more money. With the U.S. government limited to spending just the money it collects through regular tax withholding payments, tariffs and other fees and penalties, only 14% of the U.S. government would need to be shut down.
By comparison, when the 2013 edition of Government Shutdown Theater played out, 17% of the federal government closed down. In 2017, more of the federal government would be staying open for business.
Now, if the U.S. Congress and the President could just get their collective act together and restrain the growth of the government’s spending to be slower than the growth of its revenue, we might finally get to the point where we can officially cancel any new performances of Government Shutdown Theater.
Update: The second of the big-three credit rating firms, Standard and Poor, has affirmed that the U.S. government’s credit rating will not be reduced if the U.S. Treasury Department prioritizes debt payments to U.S. creditors over the government’s non-debt obligations.