The debt limit is increased well before October 17 but the shutdown continues beyond that.
It is possible that after attempting to merge the two issues,
congressional leaders could find themselves still unable to agree on how
to resolve the shutdown by the time the debt limit deadline has been
reached. However, it appears fairly clear to us that neither Republican
nor Democratic leaders are interested in allowing the Treasury to run
out of cash.
In such a scenario, it is plausible that
House Republicans could agree to bring up a "clean" or nearly clean debt
limit increase, which would pass with more Democratic than Republican
votes. Media reports indicate that Speaker Boehner has raised this
possibility with some of his Republican colleagues. We assume that
Senate Democrats would prefer to deal with both issues together, but
since the White House's position has been that there will be no
negotiation on the debt limit, it might be difficult for them to reject a
clean debt limit extension simply because it did not also reopen the
federal government. That said, while this is a possibility, this would
only come about if the approach to combine the debt limit and the
shutdown fails. We believe this outcome has a 30% probability.
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