Is A Government Shutdown Inevitable?
I've been taking some serious grief from others in the federal budgeting community because of my now months-old prediction that a government shutdown was on the horizon, so I have to admit that it's been a little gratifying to see much of the rest of the budget world moving toward that same conclusion this week. As this story by Alexander Bolton from yesterday's The Hill shows, budgeting luminaries (and good friends) from both sides of the aisle such as Republican Bill Hoagland and Democrat Scott Lilly now seem to be coming to the same conclusion that I reached a while ago: A government shutdown, which up to about a year ago would have been considered a crazy idea given the experience with the last two in 1995 and 1995 1996, is a real possibility.
But while gratifying, Bill's and Scott's quotes are actually less instructive than the one from Linda Bilmes, who teaches budgeting at the Kennedy School of Government at Harvard and led a discussion on the budget during the orientation for newly-elected members of Congress late last year (Full disclosure: I've led that discussion several times over the past decade and am not at all bitter about not being invited to do it again this time). Here's her money quote about what she observed at the orientation:
It was clear there was a group of new members who in my mind were more concerned with making statements than working with their own leadership to solve the nation’s problems,” said Bilmes. “Nothing I’ve seen in the last week changes my mind.
This is only part of the story. As I've been saying for a while, the House GOP leadership may have to agree to a shutdown to show the tea party folks that they are willing to do it. They also need to show that the Republican Party will suffer real political pain from everyone but tea party supporters by shutting down the government. As Bill Hoagland implies with his quote, the inability of the House Republican leadership to temper its tea party types last week on the continuing resolution is as strong an indication as you can get that it needs additional leverage over that faction of its caucus and the likely negative political reaction to a shutdown may be the best/only way it can get it.
Not that Rachel Maddow is a
Not that Rachel Maddow is a reliably objective regarding GOP leaders, but she did a pretty good review yesterday of Speaker Boehner's wobbly first weeks as the country's top elected Republican. He is not getting much cooperation from his freshmen. That's Bilmes' point, too.
We may be facing one of those tests which modern elected officials are so prone to fail. Boehner needs to assure uninterrupted funding for government operations for the good of the country. He needs to do it for the good of his the GOP caucus as a whole. But the lesson he seems to have learned from the spanking he has suffered from the chest-thumping members of his caucus is that he should simply jump in the way of whatever parade they decide to march in. If the baggers want to shut down government, Boehner seems just the guy to go along.
1995 and 1995?
"A government shutdown, which up to about a year ago would have been considered a crazy idea given the experience with the last two in 1995 and 1995, is a real possibility."
I assume you mean 1990 and 1995, but you might be referring to 1995 and 1995-1996.
In either case, I'm confused. Please clarify.
Let's hope so
Shutting down the government won't cause nearly the pain which will be produced by continuing on the present course -- sky high interest rates and sovereign default.
We are on the speed rain to becoming the next Argentina or Weimar Germany -- and the political class is either to venal or too stupid to care.
America is becoming one gigantic legalized Bell City, California -- and the chattering class lacks any ethical or intellectual principle upon which to base the slightest qualm against such organized anti-social behavior.
As long as I'm getting mine, baby, the hell with the grandchildren.
It's shocking that people aren't sickened by themselves.
Shutting down the government is the least than these people can do.
The clock is ticking.
The sovereign debt bomb goes of in .....
the Overriegn, I trust that
the Overriegn, I trust that you have a huge and leveraged position in the TBT ETF (2x short long treasuries) or some equivelent. If you really think what you are saying is true, that would be the way to profit from it.
People have been crying that we are on the verge of being the new Weimar since the crisis first hit in the fall of 2008. Trailing 12 month core CPI, 1.0% a near record low (actual record was 0.6% in October). If inflation is a problem today, it must have been an absolute catastorphe even at the end of the Reagan administration, not to mention under both Bush's and Clinton.
When did deficits start to matter?
"You know, Paul [O'Neill], Reagan proved deficits don't matter,"
Vice President, Dick Cheney, December 2002.
The highest growth in the US Debt occurred between 1981 and 1993 (Reagan Administration) and 2001 to 2009 (GW Bush Administration).