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Here's why a government default may be worse than a government shutdown

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FILE - The early morning sun strikes the U.S. Capitol Nov. 6, 2006, in Washington, DC. (Win McNamee/Getty Images)WASHINGTON - All the hand-wringing over a potential government default if Congress doesn't increase the government's $31.4 trillion debt ceiling has conjured up images of past government shutdowns.

In shutdowns, "essential" workers — TSA agents and such — showed up, but most federal employees stayed home. Work piled up in offices, and litter piled up in untended national parks.However, there's a big difference between a government shutdown and a default on the nation's debts.America very well knows what happens in a shutdown — it's had four of them in the past 30 years.

There's a lot more uncertainty about a default, which could well have more wide-ranging and devastating impacts, at home and around the world.

There's never been a default, and negotiators are trying to find a way to avoid one now.A look at what is known — and not — about both:A shutdown occurs when Congress doesn't approve funding legislation so that the government can keep spending money to remain open.When Congress hasn’t authorized or extended government funding, there is no authority to spend money.

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Debt ceiling deal needs to happen by June 5 to avoid default: Yellen
Memorial Day long weekend, Treasury Secretary Janet Yellen extended the deadline for a deal to raise the government’s $31.4 trillion debt ceiling, but only by four days.Originally, Yellen said the deadline was as early as June 1 to avoid a potential default but in a letter to Congress on Friday, the date was extended to June 5.Yellen said her department would make more than $130 billion in scheduled payments in the first two days of the month, including to veterans and Social Security and Medicare recipients, but encouraged the White House and Republicans to come to an agreement “as soon as possible.”“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote.The extension comes as President Joe Biden and Republican Speaker Kevin McCarthy appeared to narrow in on a two-year budget deal that was aimed at curbing federal deficits.The pair are hoping to strike a compromise over the weekend, but any deal would need to be a compromise as support would be needed from Republicans and Democrats to pass a divided and narrowly-controlled Congress.On Friday evening before departing for Camp David, Biden said “things are looking good.”“I’m hoping we’ll have some clear evidence tonight before the clock strikes 12 that we have a deal,” he said. “But it’s very close.”Despite potential hang-ups, including over stiffer work requirements on people receiving government food stamps, both sides appeared to be optimistic that they could find a deal.“I’m a total optimist,” McCarthy said Friday.
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