In the United States, a government shutdown happens when there is a gap in federal funding and the government furloughs federal workers without pay. Although there are exceptions for certain “essential” employees (including the president and members of Congress, all of whom continue to receive pay) a shutdown means that a large portion of the federal government stops functioning.
It’s a little unnerving that we’re seeing record budget deficits, soaring government debt, and steadily rising interest rates--all at the same time.How much of this can be undone? And how did we get here? The short answer is, government spending remains notably higher than it was pre-Covid, while revenues are more or less the same. And the fact that both deficits and debt are higher than in the past while our borrowing costs have soared means that paying interest is also taking up an increasing share of that revenue pie.
Here’s what we know: the budget deficit has doubled over the past year, to $2 trillion. It would have actually been $2.3 trillion if the Supreme Court hadn’t scuttled President Biden’s student loan forgiveness plan. That’s not only double what we ran last year ($1 trillion in fiscal 2022), it’s also double what we ran pre-pandemic, in 2019.
With recent setbacks in negotiations and the deadline quickly approaching, emerging consensus among lawmakers, staff, the Capitol Hill news media and longtime Washington operatives is that the federal government is almost certainly heading for another government shutdown come Oct. 1, the beginning of the government’s fiscal year.
A government shutdown isn’t inevitable – it is a choice. And it is among the dumbest decisions Washington can make.