Monday, September 30, 2013

The Shutdown of the United States Government

Congress with a closed sign in front

The federal government is a few hours away from being shut down for the first time in 17 years, the first since the Clinton Administration. Congressional negotiations have previously been extremely difficult, most notably in 2011 when the credit for the United States was downgraded due to a fight over the debt limit.

At the time, Republicans seemed wary of forcing a shutdown akin to the 1996 shutdown, when then-Speaker and former presidential candidate Newt Gingrich was intent on forcing a government shutdown.

Gingrich’s strategy backfired when House Republicans were blamed for playing politics with the budget rather than President Clinton who was subsequently re-elected while the Democrats cut took Republican seats in Congress.

In 1997, when Clinton and Gingrich began budget negotiations, the economy was surging which facilitate the negotiation of a deal that balanced the budget.

How did we get so close to a government shutdown?

Unfortunately, we are currently nowhere near a surging economy nor a balanced budget. In addition, Congress along with America is more polarized than any other time since before the Civil War. This does not produce a Congress willing to make deals. Gone are moderate Republicans and Democrats who previously facilitating negotiating a deal. It was also quite popular in the day for both sides to approve of the others’ pet projects which increased the deficit so greatly.

The liberal Democrats and conservative Republicans hated those deals, which did not lift the poor out of poverty for Democrats, or sufficiently reduce shrink government for Republicans. Stalwarts in both parties did not see their moderates as sufficiently loyal to the faith and attacked the other party’s moderates as too allied with the extremists in order to win swing seats.

Republicans currently seem hell bent on demonizing healthcare reform, aka Obamacare. They despise it for fear that once it works it will become extremely popular, similar to Medicare and Social Security, programs that cannot easily be changed due to their immense popularity. Obamacare is a hot button issue that the House Republicans have repealed 40 times, though with the Democrats in control of the Senate, their efforts have been futile. Polls show that parts of health care reform are popular even if the name isn’t.

What’s the fallout from a government shutdown?

This is no way to run the country. How can the United States expect to maintain its preeminent position in the world with these shenanigans? It’s like playing chicken with the most important matter in the government. Who is supposed to respect this?

The problem is that the three issues of the debt limit, the federal budget, and Obamacare have been forcibly entwined. Since both sides have gone to the mattresses, they’re a little entrenched.

However, Wall Street does not seem to like this either. The effects in 2011 of the negotiation over the budget were bad as well form them. Thus far t seems that the shutdown strategy is not popular.

We’ll see what happens next.