The growing spat surrounding the possibility of a Federal government shutdown and the debate over raising the debt ceiling could turn out to be nothing more than old-fashioned political theatre, with the Republican controlled House and the Democrat controlled Senate eventually coming to a last minute deal. As it stands now, however, both sides appear to be spoiling for some kind of fight and there is a rising danger that this brinkmanship will go too far. Depending on how long it lasted, a government shutdown could knock 1% or more off annualised GDP growth, while a failure to raise the debt ceiling could theoretically lead to a debt default.
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