Today officially marks the end to the second week of the partial government shutdown in Washington D.C.and the beginning of a third as lawmakers continue to fight over how to get things reopened. Republicans in the House and moderate Republicans in the Senate have repeatedly offered a number of compromises that have been rejected by Senate Democrats. The biggest issue this week comes Wednesday when the United States is expected to hit its debt ceiling with no real deal in sight.
Talks both on ending the shutdown and on avoiding the debt ceiling have shifted to the Senate, as Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell, along with other top senators, began discussions this weekend.
The Senate reconvened Sunday afternoon, with Reid saying he would do "everything I can throughout the day" to reach some sort of bargain with the chamber's Republican minority.
But a source familiar with the ongoing Senate discussions expressed doubt that any significant progress would be made Sunday evening. And the Senate adjourned shortly before 5 p.m. ET, showing no signs of such progress.
Last week on Capitol Hill, Treasury Secretary Jack Lew testified about the potential breach of the debt ceiling should Congress fail to come up with a way to increase the United States' borrowing limit by Thursday and President Obama has been shamelessly fearmongering about default.
In addition to the economic costs of the shutdown, the uncertainty around raising the debt limit is beginning to stress financial markets. At our auction of four-week Treasury bills on Tuesday, the interest rate nearly tripled relative to the prior week’s auction, and it reached the highest level since October 2008.
In measures of expected volatility in the stock market have risen to the highest levels of the year. The only way to avoid inflicting further damage to our economy is for Congress to act.
Despite the continuing partisan warfare, Republicans have are remaining optimistic. Over the weekend in the Republican Weekly Address, Chairman of the House Armed Services Committee Buck McKeon continued to urge President Obama to work with Congress to find a solution and reminded the country of the more than a dozen bills passed by the House to fund parts of the government.
The Senate will continue work Monday to come up with a solution.