Congresss has arrived home from its Presidents’ Day recess facing a potential government shutdown, as the government will go broke this Friday.
A shutdown would aggravate the recession for reasons that include:
- A government shutdown undermines government bonds, reducing investor confidence and destabilizing financial markets
- Government workers make up an important percentage of the workforce, and a shutdown would reduce their spending confidence lessening overall economic activity
- Government-related commerce makes up a sizable portion of the national economic output
Yet for better or worse, a shutdown would make clear the penalties of America’s ravenous overspending in three key areas:
- So-called welfare entitlements like Social Security and Medicare
- Neverending Middle Eastern war campaigns
- Kickbacks to Wall Street and favored special interest groups in the form of bailouts and massive tax cuts for gazillionaires
To circumvent the consequences of a shutdown, Congressional partisans are working on a deal.
- For Democrats and the White House, this continuing resolution would finance government operations for another few weeks until politicians reach a more permanent agreement.
- For Republicans, the deal will incorporate $4 billion in cuts, sold by party leaders as significant Democrat concessions.
Having hypocritically embraced massive deficit spending under President Reagan and both Presidents Bush, Republicans are now between a fiscal rock and hard place.
- On one side, Democrats will try to blame conservatives for the economic hurt incurred by a shutdown.
- On the other, the GOP’s Tea Party base will be apoplectic that Republicans colluded with Democrats and blinked on fiscal conservatism to keep the country’s bloated, cancerous government in business.
None of these lazy machinations should impress deficit hawks.
- The profligate Obama already requested in his current budget $1.24 billion of these cuts.
- The rest arise from reduction in earmarks, which Congressional leaders would have, could have, and should have banned outright – if they were fiscally serious.
The continuing resolution is a lame stopgap measure merely delaying the inevitable.
Until Congress gets real about embracing entitlement reform, reducing war spending, and ending its bailout/tax break collusion with the super-rich, the American treasury will remain in disarray.