Published on Monday, September 18, 2023

US | Abuse of exorbitant privilege

Once again, a critical date in the U.S. fiscal calendar is approaching. If Congress does not approve an increase in the federal government's budget by September 30, the executive branch will be forced to enact a shutdown on October 1.

Key points

  • Key points:
  • This scenario would imply the suspension of the vast majority of government activities, except for those considered essential, such as national defense.
  • Failure to come to an agreement would not be as catastrophic as it could have been in negotiations earlier this summer, when it would have resulted in a default on the country's sovereign debt, with negative consequences for the global financial system.
  • A partial government shutdown would have a limited detrimental effect on economic activity, but would not destabilize the financial system. The United States has already experienced episodes of partial government shutdowns due to lack of political agreements.
  • The country should modify its administrative structure in such a way as to eliminate the redundant debt ceiling approval process.
  • Calculations by the technical, non-partisan Congressional Budget Office indicate that if the country continues on the same path, government debt—which today stands at 97% of GDP—will rise to 115% in ten years and to 192% by 2053.

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