ETHAN HARRIS: A Government Shutdown Could Be Sustained And Damaging

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It looks as though we're heading for a government shutdown.

Our Brett Logiurato has the full story, but essentially negotiations are too far apart right now and the parties may simply run out of time. 

Some think that this drama will ultimately end like previous shutdown showdowns, with Democrats and Republicans finding a way to muddle through a deal in the 11th hour.

Ethan Harris at Bank of America has the one paragraph that will have you praying they find a way to do so:

As in the past, we worry that if they do cross the Rubicon—and start a shutdown—what will get them to turn back? If they have decided that the political calculus is in their favor, what will make them decide it no longer is? In our view, it might require either a major popular outcry or a major stock market correction. Recall that as the fiscal cliff approached at the end of last year, one popular view was that the fiscal cliff was really a “slope”—it would impact the economy slowly and that any damage could be easily reversed. That kind of attitude is what could cause a really damaging sustained shutdown. 

Democrats believe that the public will blame intransigent Republicans if the government shuts down. Determined to use this opportunity to weaken Obamacare, the GOP believes that the public will put the blame on the president here.

Neither party has blinked yet. Let's hope Harris is wrong and it doesn't take a "major stock market correction" to get Washington moving.



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