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government shudown

The U.S. Government Shuts Down; How Sad Is That?

I’ve never been a big fan of government, especially big government [3]. Thus, I’d like to think that the shutting down of the government would largely go unnoticed. It’s probably true that, like sequestration [4], we probably won’t see the type of negative impact from a government shutdown that some have predicted. But the government does provide some vital services; plus, it’s very likely that this whole exercise won’t accomplish anything.

Most folks believe that Republicans will blink soon. They may, but many feel this is just a warning shot leading up to the really big debate over the debt ceiling, which hits on Oct. 17. 

I hear some people talk about a bipartisan solution [5]to these problems, but I don’t see it happening. Actually, I don’t see any solution occurring at all. Rather, we’re likely to see short-term resolutions to both the funding of the government and the debt ceiling, while the status quo is maintained.

We won’t see a bipartisan solution, as the whole Obamacare [6] feud was created when the Republicans were completely shut out of the lawmaking process. Republicans feel the law was forced on them without any input, and the one-sided passage of the law is responsible for delivering them control of the House of Representatives.

Republicans feel they were elected to try and stop Obamacare’s implementation; meanwhile, the Obama administration and the Democrat-led Senate are committed to seeing its implementation. So there’s no room for compromise for either side.

It’s all about power

Thus, it comes down to power [7]. Technically the constitution gives the House the power to originate funding bills, and so they should be able to force the Democrats to compromise. In reality, however, the power resides with the Democrats, as the Republicans seem to be drawing the popular blame for the impasse. Still, neither side can afford to let the government shut down for too long of a period, so the conventional wisdom is that the Democrats hold the winning hand. 

Yes, it may be a prelude to the debt ceiling debate [8]that is on the horizon, but the Republicans will be wounded going in. And as we have seen, in a world where a reduction in unprecedented growth in government spending is portrayed as draconian spending cuts, nobody expects the government, which has gotten into the habit of operating without a budget, will do anything substantive about our nation’s march to joining Greece [9], the old Soviet Union, et al, in financial ruin. 

Real issues, including the farm bill and immigration reform [10], will probably get postponed as these fiscal battles play out. It’s important to understand that none of these battles were ever expected to change what both sides agree is a fundamentally flawed law (Obamacare [11]), or to address our out-of-control spending and unsustainable debt creation. They are merely window dressing for both sides leading up to the next election.

It is a battle of lesser evils. Obama remains the most popular politician in D.C., though his approval rating is dangerously low. Compared to the popular rating of Congress, however, it’s actually pretty high.

So, how did we get in this mess? It began when we started these omnibus spending bills that allowed both sides to keep pork-barrel spending going. Now, overspending is the norm. If your ranch, every month, was spending over twice what it took in, you’d probably sit down, study every budget item, prioritize them, cut some, eliminate others, and keep doing it until you balanced your budget. That’s not how it works in Washington.

In Washington, you would increase your spending every year. In fact, you’d even add the purchase of what promises to be the most expensive entitlement of all time – health care – with no seeming way to pay for it.

That wouldn’t be an option in your operation, because the banker [12]would never have allowed you to get this far in debt. Moreover, the bank’s only option for you as a client would be to get your spending in line with income.

Theoretically, that was what the debt ceiling was supposed to do – get spending in line with income. However, in Washington, anyone who advocates a reduction in the growth of the deficit is a heretic.

It’s been made clear that not raising the debt ceiling would lead to our country defaulting and that eventually would lead to the collapse of the entire system. I guess there have actually been similar situations in the real world; a business gets in debt so fast and so far that the bank is in deep trouble if it forecloses, so it loans the business even more money hoping the business can somehow turn the situation around.

Will the electorate tolerate reform?

The political pundits all say the electorate won’t tolerate real reform [13]. They claim that if somehow the House declared it would only pass a balanced budget and begin to send spending bills one by one for the specific budget items the American people agreed were priorities, and stopped funding when the outflows reached inflows, there would be riots in the street. I don’t buy that. I think everyone would support paying for the military, key entitlements and government services, but I don’t think the politicians want to invite that kind of transparency or accountability to the system.

It’s all so absurd and so sad [14], and yet nobody believes there is any solution except to continue on the same unsustainable path. Obamacare is a great example. Contrary to the earlier pronouncements, we’re now told that the number of uninsured in the U.S. may be nearly twice as large as projected. In addition, the fear is that healthy young people, whose participation in Obamacare is necessary to pay the tab for older participants, are more likely than previously thought to ignore the program and just pay the fine. That would make the system far more expensive and less sustainable.

The Washington Beltway [15] has learned one valuable lesson through all of this. That is that any attempt to return to fiscal sanity is political suicide; the belief is that the only way to stop the runaway train is to let it derail and then pick up the pieces afterward.

I hope they’re wrong, but the only thing I’ve learned is that fiscal responsibility and bipartisan solutions in today’s political environment are akin to peace in the Middle East. They are all noble goals, but they have a snowball’s chance in Hades of ever happening.

 

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