"This chart comes from Tammy Frisby of the Hoover Institution. Note that in the 1970s, gaps in funding didn't mean that the federal government had to physically shut down. That practice only started in the 1980s, after then-Attorney General Benjamin Civiletti argued that the Anti-Deficiency Act required government agencies to close up if their funding expired. Since then, a lapse in funding has meant an actual, tangible shutdown."
Washington is just broken (and yes I blame one party). Look we don't have a budget, instead we're arguing over a continuing resolution that lasts just six more weeks before we have to argue again. Kevin Drum explains Here's Why the Public Blames Republicans for an Imminent Government Shutdown
Q: Why do we need a 6-week Continuing Resolution to keep the government running?
A: Because Congress hasn't passed a budget for the new year, which begins October 1st.
Q: And why is that?
A: There's no mystery. Both the House and Senate passed budget resolutions months ago, but Paul Ryan and the rest of the GOP have refused to open talks with the Senate to negotiate a final budget number.
Q: Why is that?
A: They've been crystal clear about this. They wanted more leverage for their demands, and they figured the only way to get it was to threaten a government shutdown.
Kevin Drums says I Think Republicans Are Confused About the Word "Compromise" "So I need to ask again: what exactly do they think is the compromise here? Obviously they're trying to get something they want, but what exactly are Democrats getting in return? I don't get it. If my neighbor threatens to steal my car, and then comes back and says he'll settle for just stealing my TV set, what kind of compromise is that? What am I getting out of the deal?"
If you think the answer is avoiding a government shutdown or a worldwide economic collapse, then you are confusing negotiating with hostage taking. Remember, if the Senate bill was brought to the house floor, it would probably pass. Boehner isn't doing this (so far) to appease the tea party caucus. It's not that Democrats are unwilling to negotiate with conservatives, it's that they're unwilling to be held hostage by a minority of one half of one branch of government. If you want a stronger bargaining position, win more votes.
If you've heard of "Plan C" or the "Vitter Amendment", Ezra Klein explains it all, John Boehner’s ‘Plan C’ hurts Congress, hurts taxpayers, fixes nothing.
A bit of background is necessary here. When the Affordable Care Act was being debated in the Senate, Sen. Chuck Grassley (R-Iowa) proposed an amendment forcing members of Congress and their staffs to buy their health insurance from Obamacare's insurance marketplaces. The amendment was meant to embarrass the Democrats: The marketplaces are only for individuals. They don't allow large employers. So it wasn't really feasible for a large employer like Congress to join them.
Grassley expected Democrats to reject the amendment on technical grounds and then Republicans could say that even congressional Democrats didn't want to be part of Obamacare. It was, like Sen. Tom Coburn's (R-Okla.) silly amendment to bar Obamacare from buying Viagra for pedophiles, a press release dressed up in legislative language.
But then Democrats agreed to it.
The result was that Congress was the only large employer in the country whose employees were allowed to participate in the insurance marketplaces. And they weren't just allowed to participate in the marketplaces. They were forced to participate in the marketplaces. But there was no guidance in the legislation for how their participation in the marketplaces would work.
The way employer-sponsored insurance works is that the employer pays most of the cost. The way the exchanges work is that taxpayers subsidize people making less than 400 percent of the poverty line. But it wasn't clear if the federal government could pay for employee insurance on the Obamacare marketplaces and no one wanted taxpayers subsidizing congressional staffers.
Say we repeat this crap with raising the debt ceiling. Most people who understand this realize that is very serious. Paul Krugman tries to explain what would happen. Rebels Without a Clue.
First of all, hitting the ceiling would force a huge, immediate spending cut, almost surely pushing America back into recession. Beyond that, failure to raise the ceiling would mean missed payments on existing U.S. government debt. And that might have terrifying consequences.
Why? Financial markets have long treated U.S. bonds as the ultimate safe asset; the assumption that America will always honor its debts is the bedrock on which the world financial system rests. In particular, Treasury bills — short-term U.S. bonds — are what investors demand when they want absolutely solid collateral against loans. Treasury bills are so essential for this role that in times of severe stress they sometimes pay slightly negative interest rates — that is, they’re treated as being better than cash.
Now suppose it became clear that U.S. bonds weren’t safe, that America couldn’t be counted on to honor its debts after all. Suddenly, the whole system would be disrupted. Maybe, if we were lucky, financial institutions would quickly cobble together alternative arrangements. But it looks quite possible that default would create a huge financial crisis, dwarfing the crisis set off by the failure of Lehman Brothers five years ago.
He also throws in this, "On the economics: Republican radicals generally reject the scientific consensus on climate change; many of them reject the theory of evolution, too. So why expect them to believe expert warnings about the dangers of default? Sure enough, they don’t: the G.O.P. caucus contains a significant number of “default deniers,” who simply dismiss warnings about the dangers of failing to honor our debts."
Alpha has some more details on how the catastrophe would play out, Meet the new idiots, same as the… actually these idiots might be worse.