Eric Posner on Debt Ceiling and Government Shutdown
President Obama shouldn’t let the United States default on the debt, even if this means defying Congress and disregarding the debt limit. However, he shouldn’t, and can’t, stop the government shutdown.
Barring a compromise with House Republicans, the government closes Tuesday. The showdown over the debt ceiling will come in mid-October. The implications of the threats, as well as the timing, are different. If the debt ceiling is not raised, and the executive branch stops borrowing, the government will need to cut spending by about 15 to 20 percent—or almost 40 percent of spending on everything (yes, Medicare and defense) other than the interest on the debt. The decision about what to cut appears to be largely, but not entirely, up to President Obama.
Whatever he does, the impact will be large and imm