Reich: 'Significant Chance of Another Government Shutdown in January'

Friday, 18 Oct 2013 09:27 AM

By Dan Weil

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The agreement Congress achieved to fund the government lasts only until Jan. 15, when the threat of another government shutdown will be real, says former Labor Secretary Robert Reich.

The debt ceiling increase, which lasts until Feb. 7, is likely safe, Reich writes on his blog.

"It seems doubtful House Republicans will try to prevent the debt ceiling from being raised next February," says the public policy professor at the University of California, Berkeley.

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"Saner heads in the GOP will be able to point to the debacle Tea Partiers created this time around."

But the government budget is a whole different issue, Reich argues. "There’s a significant chance of another government shutdown in January," he writes.

"By then we’ll be well into the gravitational pull of the 2014 mid-term elections." Most House Republicans are in safe districts where their biggest threat will likely be from tea party challengers, Reich explains.

Incumbents will be itching to show progress on dismantling Obamacare and shrinking government, he notes.

"The threat of another government shutdown is the only major bargaining leverage House Republicans possess in order to get what they consider 'meaningful' concessions."

Meanwhile, experts say the budget/debt ceiling impasse hurt the economy. The government shutdown sliced about 0.3 percentage point from GDP growth this quarter, according to Macroeconomic Advisers, The New York Times reports.

And Standard & Poor's sees a reduction of twice that amount, according to the paper.

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Pimco's Gross: Washington Dysfunction a 'Permanent Disease'

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