Last month, we wrote about Congress’s debate regarding the fate of the U.S. debt ceiling and what it means for your portfolio. Now, the fight has been taken to a smaller stage, and for some of you, maybe a bit closer to home.
At midnight last night, the Minnesota government shut down for the first time in six years as Democratic Governor Mark Dayton failed to reach an agreement with the Republican legislature on how to address the state’s $5 billion deficit. While Governor Dayton wants to raise taxes, the Republicans are set on cutting spending, and the two are unable to reach a compromise.
National Budget Fight
The Minnesota debt debate reflects a much larger debate that is coming to a boil in Washington, D.C. The government, which has already hit its $14.3 trillion debt ceiling, faces debt default if Congress is unable to reach an agreement to raise the ceiling. With the looming threat of default and the shutdown of the Minnesota government, President Obama is already navigating tough economic waters, but another hurdle could be coming his way.
A Murky Future
Treasury Secretary Timothy Geithner may be leaving the Obama administration, throwing yet another wrench into Congress’s decision process. Geithner has expressed his plans to stay with the administration for the “foreseeable future". However, sources close to him say that the Treasury Secretary intends to leave after Congress settles on a deal, perhaps to be closer to his son who is finishing high school in New York City.
Geithner is the last remaining member of Obama’s original economic team, and if he leaves, Obama would be left rebuilding a brand new team in preparation for the 2012 election. We’re not sure if that means Obama will change course on his economic policy, but one thing is clear – something is going to change soon for government spending.
Tell us: Do you live in Minnesota? If so, how do you feel about the government shutdown?