The U.S. Can Survive a Shutdown but Not a Default

As the World Bank and IMF meetings wrap up in Washington and the world’s finance ministers give Jack Lew little sympathy hugs on their way out, it’s a good moment to look at the U.S. government shutdown from an international perspective.vThough Congress’s refusal to pass a clean continuing resolution has inflicted considerable damage on the U.S. economy, the shutdown is a comparatively small economic event by global standards. The reverse is true, however, should the U.S. default on its debt obligations—where costs are likely to dwarf those associated with debt crises elsewhere in the world. And the combination of debt crisis and budget blockage together will make matters even worse.