Shutdown Showdown Draws Closer to Midnight Deadline

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Sept. 30 (Bloomberg) -- Bloomberg’s Adam Johnson examines the day’s comments on the impact of a possible government shutdown and the bigger implications of a default on the lack of a debt ceiling agreement. He speaks on Bloomberg Television’s “Lunch Money.”

Issue than just a government shutdown.

We have so much policy uncertainty every year at the end of each year, we've got hundreds of tax provisions that may or may not expire so there is a lot of uncertainty not just around debt ceilings and shutdowns but our regular tax policy environment.

It might be for households or businesses but it seems it is a necessary component to have consistency.

As this is cannot plan ahead of they don't know what taxes are expiring or what funding will be there or government contracts will come through.

It makes it awfully difficult to operate.

We can see it has been depressing business investment over the past few years.

Let's say congress figures out a budgetary deal, you still got the other elephant in the room which is the debt ceiling.

October 17 is when the government runs out of cash.

They have been using a variety of you makes to take cash out of one pocket and put it in another.

The difference is that the government will continue to operate on october 17 but they won't have enough cash to meet its bills every day.

If the shutdown is over at that point, we will have another situation where all the operations will go on but you cannot pay the bills on a regular basis and many people will be very unhappy.

What about investors?

My worry is if we don't get a resolution -- if we don't get a continuing resolution and we shut down, that would set market expectations for the debt ceiling that so far we have been lucky that the financial markets have been pretty complacent and i think they will no longer be complacent and amazed -- and that makes the risk greater going into the debt ceiling debate.

You would think investors would be looking for some sort of perceived safety like treasury bonds?

I think the treasury 10-year bond yield could get below 2.5 are sent.

-- percent.

Even bonds will start to become suspect it would get into mid october with the possible debt ceiling crisis.

It's probably safe to say that not just on wall street but also on main street.

This uncertainty on capitol hill, it feels like groundhog day.

This is the new normal.

We have to get over the idea that we are going to back to the way it was.

One of the thing ceo's will get paid for is making some calls and taking some risks in this political environment.

Democrats and republicans have districts but politicians are not worried about their donors.

A number of republicans have constituencies that are more important than companies or corporations.

Mr.

president?

I don't know how i can be more clear about this.

Nobody gets to threaten the full faith and credit of the united states just to extract political concessions.

No one gets to hurt our economy and millions of innocent people just because there are a couple of laws you don't like.

It has not been done in the past.

We are not going to start doing it now.

I am willing to make a whole bunch of tough decisions, ones that may not be entirely welcome by my own party.

But we are not going to do this under the threat of blowing up the entire economy.

Raising the debt ceiling is simply authorizing the treasury to pay for what congress has already authorized.

Failure to meet this responsibility would be far more dangerous than a government shutdown.

It would effectively be an economic shutdown with impacts not just here but around the world.

Obviously, it is not ready but maybe this is how democracy is supposed to love.

Just supposed to look.

Should we be concerned about a shut down?

If you look at the history of democracies in the world, they only succeed when people can feel like they can unify and come together.

World war ii was one example.

The places where democracies have not succeeded in parts of the middle east is because you have this tribal warfare where people will not come together.

We are in a situation where we have become a tribal country where there is people on the left and the right and refused come together and that is a huge problem in this trillion dollar economy.

Congress has less than 12 hours to agree on a stopgap spending will to keep the

This text has been automatically generated. It may not be 100% accurate.

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