Current / Economics


I have but one question, and it is one word long: really?  For the first time since a certain ignoble stretch of 21 days in December 1995 to January 1996, Congress has failed to pass a Continuing Resolution (CR) on time.  I should probably preface this by saying passing a CR is necessary because the Republican-controlled House of Representatives and Republican-filibuster-blocked (i.e.: essentially Republican-controlled) Senate cannot even move in the direction of a traditional budget resolution

House Appropriations Committee Chairman Hal Rogers delivered the following statement on the House floor tonight in support of the move by the House to go to conference committee on H.J. Res. 59, the Continuing Resolution to fund the government after midnight on September 30, 2013.

No, I will not include Rogers’ statement—this conference committee, by admission of the House Appropriations Committee Chairman, is not to arrive at a budget resolution.  It is to “reconcile” the House-passed CR with the Senate-passed CR; the latter’s only difference from the former being that a rider that disables certain health care legislation passed in 2010 has been removed.  While media on the progressive (their term) side of the spectrum are making hay about the 18 times the ostensibly Democratic-controlled Senate has asked to enter conference over the competing budgets passed in the respective chambers (a former demand of the House Republican majority that the Republican minority in the Senate instead filibustered), this current gambit is to iron out a budgetary stopgap.  A budgetary stopgap, I might add, that conforms to every stated fiscal desire of the Republican Party save for the implementation of a separate piece of legislation.  Go figure.

Starting October 1 2013 at 12:01 P.M. all non-essential federal functions (i.e.: tasks that don’t literally direct air traffic and the like) ceased to, well, function.  Federal employees whose jobs are not considered essential under the Anti-Deficiency Act, renamed “non-excepted” when the term “non-essential” employee cut too close to the bone in 1995-96, are now forbidden from carrying out duties that until September 30 were considered extremely important.  Again, I have to ask: really?  What is the endgame for this shutdown of non-excepted federal government functions?  Oh, Paul Ryan has an idea:

We have a debt limit coming. That debt limit is coming in about two weeks. Most budget agreements in the past have always involved debt limit increase. We think that’s the forcing mechanism, just like the Budget Control Act that President Obama signed before…

I’m a little confused.  How, exactly, does this gambit work?  The House is going to dither on enacting a budget (sorry, pass a CR—Republicans for the past six months have refused to enact a new budget) until October 17, 2013, to threaten to default on the federal debt?  Wait, won’t shutting down much of the government push that Treasury estimate further into the future?

The government shutdown means that much of the spending that would otherwise be going to support the $1.2 trillion discretionary portion of the federal budget are not being made. As a result, the government’s borrowing needs will be considerably lower over this period. Depending on how much spending goes out the door, it is possible that the government is not even borrowing at all during the period of shutdown.

This means that the shutdown will extend the date at which a debt ceiling will be reached. That would change if the standoff is settled and all the delayed payments are made retroactively. However, if the government remains shut for several weeks, the debt ceiling deadline will be pushed out past the October 17th deadline indicated by the Treasury Department.

Naturally prominent economist Dean Baker has the answer.  This government shutdown/debt ceiling breach gambit seems ill-thought out.  Even if the debt ceiling breach date wouldn’t push back as a result of a weeks-long federal government shutdown, the Republicans clearly don’t recognize the major threat that in all likelihood will derail their best-laid plans no later than October 15th:

About 1.4 million active-duty military personnel, some reservists and about 1.3 million civilian federal workers will still report to work during the shutdown and would be entitled to their pay. If the shutdown drags on, their pay could be delayed. It’s likely they would eventually be paid what they’re owed a few days after the government reopens, but that must happen about four days before their next scheduled pay day for the payroll system to issue their checks on time.

For another 800,000 civilian employees whose jobs are not exempt from furloughs and would be sent home, Congress must decide whether to reimburse their lost pay. Here is the pay schedule for employees who will not be furloughed:

I am going to go out on a limb and predict essential/excepted federal employees will revolt at being forced to work without pay when their paychecks are “delayed.”  I use quotation marks because those same essential/excepted federal employees have access to the internet and I guarantee someone from one of those affected agencies will discover this:

While many government employees will be furloughed starting next week if the government shuts down, “essential” employees will continue working. Those include members of the military, border control agents, air traffic controllers, the FBI and the TSA–basically anyone who deals with issues of national security or generally keeping people alive.

According to USA Today, an “estimated 59% of non-defense federal employees would be exempt from the shutdown and would go to work as usual.” However, those essential employees would not get paid during the shutdown, but would receive retroactive paychecks once business-as-usual resumed.

These employees have been hammered by the Sequester since March.  I believe I can reliably say Matt Yglesias doesn’t have the pulse of these abused workers:

One reader asked me how long we can keep providing essential services on this basis. The answer is that there is no answer: It can last a while, but not indefinitely. These are patriotic people who will keep doing their jobs, but they obviously can’t work for free forever.

Amongst the essential/excepted list are over 15,000 air traffic controllers.  Thirty-two years ago, over 11,000 controllers risked their jobs (and lost them all) in an illegal strike against undue workplace stress.  Should the controllers responsible for 744,000,000 lives each year walk (or sick out) on account of being forced to work without compensation, who could blame them?  I asked a colleague how he would react to being required to work for free, and his response was quick and unequivocal: BURN IT DOWN

Never fear, Congressional Republicans, the shutdown will never reach October 15th (unless your caucus is suicidal).  Consider Stan Collender’s timeline:

As I said 10 days ago, I’m projecting that the shutdown will last at least a week because it will take that long for the impact of the shutdown to start to be felt and, therefore, to make ending it more politically acceptable.

Consider the following:

1. The impact of the shutdown will barely start to be felt by noon today for the reasons noted above. There likely will even be some silly public statements by some elected officials that the shutdown is having no effect whatsoever.

2. From noon today until the close of business on Wednesday, there will be more amusement with the spectacle of the shutdown — such as video of federal employees leaving their buildings, “closed” signs on department offices, people being turned away from national parks, less traffic on the roads in areas with high concentrations of federal employees — than inconvenience with the lack of government services.

3. The inconvenience and, therefore, frustration, will grow steadily through the week. It will subside a bit over the weekend when most federal agencies are closed anyway and few people typically have any dealings with them. National parks and recreation areas will be obvious exceptions.

4. As the weekend comes to a close, the frustration will change to anger as anyone who works for or needs to deal with the government realizes that they are facing another week without a paycheck, an answer to their question, a tax refund, an invoice payment, access to the campsite they reserved a year ago at Yosemite or Yellowstone, etc.

5. This is the point at which there will start to be real pressure on members of Congress as the impact of the shutdown finally hits home for many people and the prospect of lost wages and less business becomes a reality.

6. This is also the point that contractors and businesses that rely indirectly on the federal government — like the restaurants across the street from the big IRS facility in Fresno and the suppliers those restaurants use for everything from napkins to hamburgers — start to realize how much this could hurt them if it’s not resolved soon. Many will tell employees to stay home and those that get paid by the day will suffer.

7. Assuming the Democrats stay as united as they have been the past week, only 16 House Republicans will need to feel this pressure from their voters. When that happens, House Speaker John Boehner (R-OH) will have a tougher time convincing his members to stay together.

8. And that’s the point at which at least a short-term break in the shutdown will be politically acceptable, or possibly even mandatory.

Congratulations, Congressional Republicans.  In your ceaseless quest to seek out more leverage against the foes you wish to vanquish, you find yourselves in the enviable position of having absolutely no leverage at all.


One thought on “Really?

  1. Pingback: The Week of Reckoning | In The Corner, Mumbling and Drooling

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