GOV/MIL There is a "Real Risk" The Government Will Shut Down At The End Of The Month

[marsh]

Zerohedge

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There is a "Real Risk" The Government Will Shut Down At The End Of The Month

In all the excitement surrounding the Evergrande crisis which hit risk assets like a ton of bricks today, market watchers may have forgotten that not only is the Fed scheduled to make a regular appearance on Wednesday but that the debate over the fiscal stimulus and the debt ceiling are still ongoing.

So, as Goldman's Alec Philips summarizes the latest newsflow out of the Beltway, there are two main risks out of Washington at the moment:

First, the debt limit (late October deadline) and funding the government to avoid a shutdown Oct. 1 appear no closer to resolved. The House Rules Committee was due to move forward today on legislation addressing both issues, but it is still not clear whether the stopgap spending measure Democrats instead put forward to keep the government open past Sep. 30 will include a debt limit suspension. If it does, there is a real risk of a shutdown at the end of the month, since Republicans look likely to oppose it in the Senate. If the issues remain separate, a shutdown becomes unlikely but the risk around the debt limit increases somewhat.

That decision, which should have come today, now looks likely tomorrow, though further delay is clear possible.



The other risk relates to the fiscal package the House has been working on. Axios reports that Sen. Manchin (D-W. Va.) told a group that he supported a "pause" on the broad fiscal package until 2022. While not completely surprising -- he already said he supported a pause, but did not specify for how long -- this suggests more risk to the fiscal package than his prior comments had.

Separately, Sen. Sinema (D-Ariz.) is reported to have indicated that she would not vote for the broad fiscal package if the House does not pass the separate infrastructure bill when it is expected to come up for a vote on Sep. 27. This comes as Democratic leaders have raised the prospect of delaying the vote on the infrastructure package, which was scheduled for Sep. 27 as part of an agreement with Democratic centrists in the House, in return for their support for the Democratic budget resolution that passed in August.

In short, a mess, but as the Goldman strategist notes, while these appear to be important developments that could shape the outcome of the fiscal legislation Phillips still expects both fiscal packages to become law despite potential setbacks:

It seems unlikely that any of these lawmakers will want to take responsibility for blocking their own party's entire domestic policy agenda. Indeed, some of the centrists who have raised issues with the legislation are often in the most competitive congressional districts and are likely to want to be able to show an accomplishment between now and the midterm election. More generally, we would expect that even if the legislative process on both packages stalls, Democratic leaders would likely find a way to salvage many of the important pieces before year-end, when items like the expanded child tax credit expires.

That said, recent developments are another reason to believe that the size of the package will be scaled back (as discussed last week, Goldman expects the $3.5 trillion to be reduced to $2.5 trillion, and the risks lean toward an even smaller package, just as the US economy is rapidly slowing down) and that the tax hikes proposed to pay for it are scaled back as well (the bank expects $1.5 trillion in tax hikes, also with risks leaning toward a smaller figure).

 

[bw]

You always have to weigh this against the real risk that the government might continue to operate.

 

[Dozdoats]

Well, we can hope anyway.....

 

[helen]

“In a matter of days, millions of Americans could be strapped for cash,” Yellen said.
“Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.”

What the federal debt ceiling showdown could mean for you

Here's a breakdown of what may happen if Congress fails to suspend or increase the debt ceiling by October.

www.cnbc.com

 

[Ragnarok]

Doesn't this happen quite often?



I think folks that pay attention are getting used to the constant cry of, "Wolf!"

 

[Tripod]

They pull this shit every year and turn it into nothing more than a political football and campaign for the next election. Both sides do it.
Mike

 

[sy32478]

Doesn't this happen quite often?



I think folks that pay attention are getting used to the constant cry of, "Wolf!"

They pull this shit every year and turn it into nothing more than a political football and campaign for the next election. Both sides do it.
Mike

Perhaps it is designed to also assuage our creditors that we are being very careful with our monetary policy. That way we can keep the game rolling without anyone calling the bluff.

 

[JF&P]

If they shut off my SS... I'm screwed, but I don't think they are that stupid.

 

[bassaholic]

If they shut off my SS... I'm screwed, but I don't think they are that stupid.

This is coming at some point. Will have to do something for it. It's about control.

We are not there yet, I don't think.

 

[SageRock]

The last real delay on raising the debt ceiling happened in 2011, and it caused one credit agency to downgrade the U.S. debt.

Serious debt ceiling fights don't happen very often.

Also, if the Treasury runs out of "extraordinary" measures before the debt ceiling legislation is passed and signed, then all Federal expenditures are potentially at risk, including Social Security and disability payment, Medicare and Medicaid, federal employee pay, military pay and benefits, Treasury bills, payments to state and local governments, etc.

The most recent letter from the Treasury department indicated that the hard limit will hit sometime in October, or possibly November.

There are no hard and fast rules as to the priority for payments. Want to bet that they will prioritize paying foreign creditors and welfare/foodstamps over paying Social Security and the VA?

 

[Ragnarok]

If they shut off my SS... I'm screwed, but I don't think they are that stupid.

When the government granted themselves the authority to raid social security and replace tangible money with nothing but "IOU"s there should have been a massive uprising. The government has no right to touch that money.

Now, paying into it my entire working life ( which started at 16 years old ), I will probably see nothing of the money these asswipes STOLE from me!

Social Security to Run Out of Money Sooner Than Expected

Social Security to Run Out of Money Sooner Than Expected

The financial toll of the pandemic means the fund is scheduled to run dry one year earlier than expected.

www.barrons.com

 

[Rex Jackson]

“In a matter of days, millions of Americans could be strapped for cash,” Yellen said.
“Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.”

What the federal debt ceiling showdown could mean for you

Here's a breakdown of what may happen if Congress fails to suspend or increase the debt ceiling by October.

www.cnbc.com

This is great. 50,000,000 Americans wont have any bills either....or TAXES!
Let the government burn. We will finally know for sure how much we DONT need them. It will seem like we are on a forever vacation.

Barter, gold / silver, then barter some more. Ask for help if you need it, Americans love to help. Any zombies come around, roast'em, dig a pit, burry'em. Good folk come around w/o food, turn them into guards and worker bees.

 

[SageRock]

Here's the most recent letter from Secretary of the Treasury Yellen to Congress.

https://home.treasury.gov/system/files/136/Debt-Limit-Letter-to-Congress_20210908_FINAL-Pelosi.pdf

 

[Sooth]

Social Security "checks" and Military "checks" are in reality computer generated direct deposits. To truly shut down "the Government" somebody has to shut down all those computers. Not going to happen. The direct deposits will continue.

 

[Ragnarok]

The last real delay on raising the debt ceiling happened in 2011, and it caused one credit agency to downgrade the U.S. debt.

Serious debt ceiling fights don't happen very often.

Between 1995 and 1996, the US government faced two shutdowns during the Presidential term of Bill Clinton, who opposed proposed appropriation bills for 1996 by congressional Republicans (who had a majority in both chambers) and House Speaker Newt Gingrich.

The shutdown of 2013 occurred during the Presidential term of Barack Obama, focusing on a disagreement between Republican-led House of Representatives and the Democratic-led Senate towards the contents of the 2014 Continuing Appropriations Resolution bill, alongside other political issues.

The shutdown of January 2018 was the first to occur during the Presidential term of Donald Trump and was centered around a disagreement on the issue of immigration. By the start of October 2017, Congress had failed to approve an appropriation bill to fund the US government in 2018, and instead passed three CRs to keep federal agencies open until 19 January 2018.

The shutdown of December 2018–January 2019 was the second to occur during the Presidential term of Donald Trump, and was due to a disagreement on border security amongst Republicans. Trump sought to have the appropriation bill for 2019 include a funding measure on border security, providing $5.7 billion toward construction of a new wall extending the barrier along the Mexican border. Democrats refused to support the bill, citing that the funding would be a waste of taxpayer money and questioned the effectiveness the new wall would have, opting to propose bills that would include funding for border security, but towards improving pre-existing security measures.

Now, we are hearing about the 2021 shutdown...

 

[Ragnarok]

Social Security "checks" and Military "checks" are in reality computer generated direct deposits. To truly shut down "the Government" somebody has to shut down all those computers. Not going to happen. The direct deposits will continue.

No.

Will Military Members Get Paid During a Government Shutdown?
The most recent government shutdown in 2018 – 2019 did not cause members of the Department of Defense (DoD) to miss a paycheck. This means that all military members, military retirees, military annuitants (survivor benefit recipients), and DoD civilian employees that fall under the DoD received their normal paychecks.

However, other members of the Uniformed Services that do not fall under the DoD were not funded under those government spending bills. That means members of the following organizations went without pay until the government shutdown was over:

- The US Coast Guard (USCG), which falls under the Department of Homeland Security,

- The National Oceanic and Atmospheric Administration (NOAA), which falls under the United States Department of Commerce, and

- The Commissioned Corps of the US Public Health Service (USPHS) which is a division of the Department of Health and Human Services concerned with public health.

However, military members have missed paychecks in some previous government shutdowns.

Most Recent Government Shutdowns and Impact on Military Pay & Benefits:

There is a difference between a full government shutdown and a partial government shutdown.

If there is a full government shutdown, it is possible that military members may not receive their full pay and benefits such as BAH and BAS. However, other benefits, such as health care, would generally be available.

When the DoD is fully funded prior to the shutdown, or if there is a partial government shutdown, it’s possible there will be no impact to your military compensation, including your base pay, or other benefits such as your BAS and BAH.

Again, this may apply differently to members of different organizations. Check with your parent government organization for further clarification.

What About Leave? In previous government shutdowns, military members were forced to cancel leave because technically the government is not allowed to permit government workers to take paid leave while there is no spending plan, due to the way paid leave works from an accounting standpoint.

Will Military Members Get Paid if the Government Shuts Down?

Will US military members receive pay and benefits if the US government shuts down? US debt ceiling crisis threatens to affect military pay.

themilitarywallet.com

 

[SageRock]

Please keep the two issues clearly delineated.

The government shutdown is one issue -- it comes into play after September 30, 2021 if there is no continuing resolution. There have been quite a few government shutdowns in recent years. Many programs continue on autopilot during the shutdown.

The debt ceiling is a completely separate issue. It comes into play sometime in October or November. The last time the debt ceiling was a serious issue was 10 years ago, in 2011. Almost everything is up for grabs if the debt ceiling measures hit a hard stop. If you receive any federal money, don't count on receiving it if the hard limit is hit.

The government shutdown does not usually affect automatic direct deposits that are on autopilot, like Social Security. However, the debt ceiling is a completely different beast.

 

[Tripod]

You can not spend your way out of debt.
Mike

 

[lonestar09]

Several things here. All tourist sites shut down immediately like all the times before. If the gov shuts down and no medicare medicaid payments are made does that stop Biden mandates to facilities that receive money from those programs? Does border patrol stop working? Does that mean that Texas national guard and DPS will then be the defacto border patrol keeping the illegals from crossing? Does that mean cowboys and illegals along the Texas/Mexico border?

 

[helen]

While they play chicken, anything that physically prevents them from meeting to vote would be a crippling event.

 

[marsh]

Remember last shut down? The big thing was that the Park Service shut down the monuments in DC so the Honor Flight (WWII armed service) veterans couldn't visit their memorial. People removed the barriers and went in anyway.

 

[Dennis Olson]

Looking for a downside. Not seeing one.

 

[dioptase]

I was in the East Sierra (on a hiking trip) during that shutdown. The park rangers (at the Yosemite NP entrances) had to let you traverse Tioga Road (Hwy 120 traversing the Sierra east to west) if you needed to, but they weren't happy about it and you got the third degree as to your destination. They told you not to stop, and had locked up all the restrooms along the way, plus taped or otherwise blocked off scenic pullouts, parking lots, campgrounds, etc.

I was travelling east to west, returning home, and that time of year there is always at least one motorcycle club that comes through the East Sierra (they generally overnight at a lodge I stay at). That year I encountered them as I was driving down to Yosemite Valley. They were congregated at a scenic lookout with a great view of the valley, 50 or more of them, and had torn down the barriers and were having a great time. I could have cheered ( and I bet none of the rangers would have dared to mess with them).

When I got home I wrote my senator expressing my outrage about the shutdown, for all the good that did.

 

[Murt]

so do all of the welfare programs get shut down too

 

[greysage]

It's good doom pron on a different spectrum than say a 300 foot tidal wave.

 

[Squid]

So let me understand this. If the government who is spending Trillions we do not have, shuts down all the federal workers who are not doing a damn thing under Wuhan Covid rules continue not working under a shutdown and they close the parks.

And CNN/MSNBC/NYTimes is telling me I need to care, why?

 

[bobfall2005]

In 2011, the than ruling government, made the max pain.
Helped it's friends.
Hurt it's enemies.

Expect the same.
Expect China to push a move on the world reserve currency front.

 

[JasmineAndLace]

In the past when there has been a "government shutdown," social security checks were still received. Don't know if that will be the case this time or not. If they would first stop the salaries and benefits of all the congress critters so that they could actually feel the repercussions of their actions, maybe they would be more inclined to work to accomplish something rather than just fighting and bickering among themselves. After all, they only "work" about half of the year anyway.

 

[WTSR]

Just came from a country where there is no "Social Security". Was there for 2.5 months. Sure there are lots of beggars, but families take care of there own. That's how they survive.

 

[Samuel Adams]

Just came from a country where there is no "Social Security". Was there for 2.5 months. Sure there are lots of beggars, but families take care of there own. That's how they survive.

Just wrap mind around the red tape avoided, the corruption avoided, the tendency to not provide for one self avoided, family breakdown avoided, government stranglehold avoided......

Then wrap mind around the REAL reason(s) the US instituted “social security”.

 

[mikeabn]

They pull this shit every year and turn it into nothing more than a political football and campaign for the next election. Both sides do it.
Mike

Exactly. At the last minute they pass a continuing resolution.

 

[von Koehler]

The last real delay on raising the debt ceiling happened in 2011, and it caused one credit agency to downgrade the U.S. debt.

Serious debt ceiling fights don't happen very often.

Also, if the Treasury runs out of "extraordinary" measures before the debt ceiling legislation is passed and signed, then all Federal expenditures are potentially at risk, including Social Security and disability payment, Medicare and Medicaid, federal employee pay, military pay and benefits, Treasury bills, payments to state and local governments, etc.

The most recent letter from the Treasury department indicated that the hard limit will hit sometime in October, or possibly November.

There are no hard and fast rules as to the priority for payments. Want to bet that they will prioritize paying foreign creditors and welfare/foodstamps over paying Social Security and the VA?

No. The Treasury has a very complicated computerized system to pay debts as they are due. It wasn't designed to pick or chose which debts to pay now or push off for later

 

[West]

Seems to me the safety nets, military etc.. will keep on keeping on with getting their electronic fiat digits one way or the other.

BUT what will continue to get worse is availability of everything and affordable stuff if you can find it.

Much slow pain is coming our way for all. The PTB will blame capitalism.

 

[Old Gray Mare]

I fully expect government services to shutdown. If the currency isn't worth toilet paper they can't afford them. This may be a good thing. This maybe a bad thing. I look at each month Social Security turns up as a gift.

 

[DazedandConfused]

Best news I've heard all week.

 

[Codeno]

It's good doom pron on a different spectrum than say a 300 foot tidal wave.

Yep.

Or a 300 foot gorilla - I hate those.

 

[Blacknarwhal]

“In a matter of days, millions of Americans could be strapped for cash,” Yellen said.
“Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.”

What the federal debt ceiling showdown could mean for you

Here's a breakdown of what may happen if Congress fails to suspend or increase the debt ceiling by October.

www.cnbc.com

Dogs and cats! Living together! Real end-of-the-world type stuff!

It just seems like I've heard these vague threats before and they never come to pass, you know? Nothing against you here, yer sexiness; just the kind of threats Yellen usually makes to rile up the seniors and get them calling their congresscritter to put more pressure on them to "do something".

 

[nehimama]

In the past when there has been a "government shutdown," social security checks were still received. Don't know if that will be the case this time or not. If they would first stop the salaries and benefits of all the congress critters so that they could actually feel the repercussions of their actions, maybe they would be more inclined to work to accomplish something rather than just fighting and bickering among themselves. After all, they only "work" about half of the year anyway.

Huh! Never happen.

 

[Thinwater]

I could see them cutting off Social Security then blaming the republicans for it. I NEVER see them cutting off the welfare class. That could result in nationwide looting and burning within a few days.

 

[Cacheman]

Since the Democrats Marxists control the WH and Congress any shutdown is entirely on them, debt ceiling only needs 51 votes. Just fearmongering but whatever is passed will be fully owned by them. McConnell has already said Republicans are staying out of it.