Goldman Sachs puts odds of government shutdown at 50/50
With a disconnect growing between the White House and Congressional leaders, the chances that the federal government will shut down in the new fiscal year are now 50/50, according to Goldman Sachs (GS).
"In the near term, we believe there is a 50% chance of a brief government shutdown, as the president seeks to solidify support among his base by embracing more controversial positions, despite needing Democratic support to pass spending legislation," Goldman said in a research note Thursday.
The finance behemoth had put the chances of a shutdown at 30 percent in May.
Other Wall Street analysts question whether the White House, weakened by the president's response to Charlottesville and now by the departure of chief strategist Steve Bannon, will be able to push forth its agenda.
"[F]inancial markets are marking down prospects of this president being able to achieve any constructive objectives for tax reform, infrastructure spending or health care reform," High Frequency Economics wrote. "There are even renewed questions about whether Congress can raise the debt ceiling in an orderly way without leadership from the White House," it continued.
Still, a shutdown -- if there is one -- likely wouldn't last long, because Congress will need to regroup pretty quickly to pass legislation raising the debt ceiling, Goldman believes. The U.S. will hit its limit on borrowing in the first half of October, according to the Congressional Budget Office, and without raising the debt ceiling would risk defaulting on its debts.
Congress has never failed to raise the debt ceiling, although it came perilously close in 2011, leading Standard & Poor's to downgrade the U.S. credit rating for the first time. In 2013, a protracted fight over the federal budget led to a 16-day shutdown of the federal government.
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