Divided Government – The New York Times

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If Congress doesn’t approve spending bills, it can force the government to shut down, as it did in 2013 and twice in 2018. During a shutdown, some parts of government stop working at full capacity, such as national parks and environmental or food inspections. (Others, like Medicare and the military, largely continue running.) A shutdown not only disrupts services that many Americans rely on but also means hundreds of thousands of government workers in the affected agencies go unpaid.

But the bigger threat is if Republicans refuse to raise the debt limit, which the federal government could hit early next year. The details can get wonky quickly, but here’s a brief explanation: When the government borrows money, it issues U.S. Treasuries. Because the U.S. government always pays its debts, these Treasuries are purchased around the world with the expectation that they are essentially risk-free investments. They are seen as so risk-free, in fact, that much of the global financial system is built on them.

But if the U.S. government hits its debt limit, it no longer has legal authorization to keep up with debt payments and could be forced to default. That would destroy the trust underpinning the value of Treasuries, causing the once risk-free investment to collapse and taking much of the financial system with it.

Under Obama, Republican lawmakers repeatedly invoked the threat of the debt limit to push for government spending cuts. And they appear ready to do the same under Biden.

Democrats might try to pre-empt these crises this year, before Republicans would take control of the House in January, by passing spending bills or increasing the debt limit.

Even without Democratic action, another factor could constrain Republicans: their razor-thin majority. More moderate Republicans in swing districts, which the House majority relies on, might not want to take on risky fights that could shut down the government or cause economic chaos.

At the same time, McCarthy might not have the support needed within his party to pass spending bills. The lack of votes could force him to rely on Democrats to get bills through the House. But that idea is unpopular with McCarthy’s most conservative members, who do not want to compromise with Democrats on many issues.

Sumber: www.nytimes.com

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