The Government Shutdown

 

October 2, 2013
 

                       

As you have no doubt heard, the United States government shut down at midnight (Eastern) October 1, 2013. There are many questions and concerns about this situation, but here are some basics.
 

 

What happened? In short, Congress did not pass any of their appropriations bills. These bills provide money to various federal agencies. Federal law requires agencies without these funding laws in place to close.1
 

 

How long will this last? As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.1
 

 

What’s closed, what’s open? Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military will continue to function, as does the Department of Defense, intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.1,2
 

 

CNN has a frequently updated list of shutdowns at: http://www.cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar
 

 

How is this different from the debt crisis? They are different situations, but one can affect the other. With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. If the shutdown drags on, it will start to shake consumer and business confidence.
 

 

The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.4  The brewing fight over raising the debt ceiling is actually a much bigger threat to the economy and the markets than the shutdown.
 

 

Overall, we expect this shutdown to be resolved and the debt ceiling to be raised – but politics will likely cause volatility in the markets. We will be watching the situation closely.  As always, call with any questions.  
 

 

Sincerely,

 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA
 

 

   http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 



This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

   

Citations.

1 - latimes.com/nation/politics/politicsnow/la-pn-government-shutdown-q-and-a-20130930,0,5564531.story [9/30/13]

2 - cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar [10/1/13]

3 - businessinsider.com/government-shutdown-debt-ceiling-obamacare-2013-9 [9/30/13]

4 - money.cnn.com/2013/09/25/news/economy/debt-ceiling-lew/index.html?iid=EL [9/25/13]
 

 

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Kohlhepp Investment Advisors, Ltd.
3655 Route 202, Suite 100
Doylestown, PA 18902
Phone: 215-340-5777
Fax: 215-340-5788
Email: Info@KohlheppAdvisors.com

Securities offered through Cambridge Investment Research, Inc. a Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Kohlhepp Investment Advisors, Ltd., a Registered Investment Advisor. Kohlhepp Investment Advisors, Ltd. and Cambridge Investment Research Advisors, Inc. are not affiliated.

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