A government shutdown beginning on Tuesday became a virtual certainty over the weekend. And the conventional wisdom holds in Washington that though the shutdown will be damaging, it could stave off a much bigger crisis — failure to raise the debt ceiling.
The reasons for that are simple, if presumed: Wall Street will start freaking out, Republicans will start getting blamed, and the Tea Party caucus pushing for something to be done about Obamacare will be satisfied with the fight over the government shutdown.
But Democrats believe there's a huge caveat to that conventional wisdom.
"All that presumes that you have a sensible negotiating partner on the Republican side, and we know that hasn’t been the case," one Senate Democratic aide told Business Insider.
The aide said that if the government shuts down, Congress would likely dump together the two issues — the continuing resolution and the debt-ceiling hike. Resolving two issues in one sounds simpler, but could it actually make things even more complicated than they already are?
"Ha. Is anything easy for House Republicans?" the aide said.
This is a view shared by many analysts in Washington who don't foresee the potential shutdown as something that will have a profound effect on Republican sentiments on the debt ceiling. Last week, Republicans unveiled the outline of a bill that contained a list of policy demands in exchange for a debt-ceiling hike. And even that fell apart because it didn't satisfy enough of the Republican caucus.
Greg Valliere, an analyst at Potomac Research Group, warned in a note Monday that President Barack Obama might have to take drastic measures on the debt ceiling — like unilaterally raising the debt limit through the 14th Amendment.
And in a note entitled, "Winter Is Coming..." Guggenehim Securities' Chris Kreuger explained why a shutdown may not be enough to break the Tea Party "fever" on the debt ceiling:
Negotiating a CR to keep the government open is a basic maintenance function that, from a policy perspective, is relatively easy (pick a date and a total spending number). The fact that the CR has become such a fiasco does not bode well for the far more intricate and complex issue of raising the nation’s $16.7T debt ceiling in 17 days. Yes, a shutdown could cause some of the pressure in the House and Senate to be released, but it could also cause both sides to double down. The problem with a government shutdown is that it creates a type of zero gravity backdrop – no one can quite predict what will happen once the lights go off.
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