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Gov't shutdown

U.S. could face a government shutdown

Marketplace Staff Apr 4, 2011
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Gov't shutdown

U.S. could face a government shutdown

Marketplace Staff Apr 4, 2011
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JEREMY HOBSON: Now let’s get to the budget showdown in Washington. Lawmakers have until Friday to reach a deal on tens of billions of dollars in budget cuts or the government will shut down.

Let’s bring in our regular Monday analyst, Julia Coronado. She’s chief economist at the investment bank BNP Paribas and she’s with us live from New York. Good morning.

JULIA CORONADO: Good morning.

HOBSON: Well, I’m sure you probably wanted to talk about the McDonald’s story, but let’s go government shutdown Julia. What if there is a shutdown? What happens?

CORONADO: Well, it’s going to affect some government workers and some government contracts. And it may cause some volatility in financial markets. But more than likely it would be short lived and these effects would be temporary. It wouldn’t be a big story for the economy.

HOBSON: All right, so short lived. What if there is no shutdown — but we get tens of billions of dollars in cuts?

CORONADO: Right, well, keep in mind that the government played a central role in helping the economy exit the great recession and the government deficit expanded enormously, so what we’re embarking on is the inevitable ratcheting back fo that stimulus. So we’re haggling over tens of billions of dollars, but the deficit this year is projected at $1.5 trillion. So right now the arguments are about setting priorities and the government is not going to be the source of support that it has been over the last couple of years.

HOBSON: Julia Coronado, chief economist with the investment bank BNP Paribas, thanks as always.

CORONADO: My pleasure.

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