Ceiling Our Fate

“Unless the debt ceiling is raised and the president signs a continuing resolution allowing government services to go on, the federal government will be forced to furlough 800,000 employees Tuesday morning. Only those deemed essential and others in jobs that are pre-funded will continue being paid.” But while this looks like something out of today’s reports dealing with the current budget impasse between a Republican-majority House of Representatives and a Democratic Present, it is actually taken from a November 11, 1995 CNN report dealing with a…. Republican-majority House of Representatives (led by Speaker Newt Gingrich) and a Democratic Present (Bill Clinton).

In short, budgetary brinksmanship, like the one facing the U.S. as the debt ceiling slams shut on March 4^th, is nothing new… what is new is a very large contingent of freshmen Tea Party players, hell bent on drastic downsizing … the austerity kings & queens, who believe that cutting the federal budget will create a plethora of new jobs by keeping taxes lower, a discredited trickle-down theory that refuses to die notwithstanding mounds of evidence to the contrary and no evidence to support it. Even the new Speaker of the House, John Boehner (pictured above), has climbed onto his minority Tea Party conservatives’ bandwagon: “Read my lips,” he stressed, “We are going to cut spending!” Indeed, pork is de-porking, military cuts are slicing, but the battle remains over recent Presidential priorities in spending… it is a fundamental schism between party philosophies, brought home in the recent mid-term elections. And indeed, the House passed their reduced budget with a clear slap in the face to the President’s clearly stated goals, reducing allocations for education, environment, infrastructure and mass transit.

Senate Majority Leader, Democrat Harry Reid, is threatening to extend the deficit ceiling from that side of the legislature, where Democrats still control a majority… but not enough to stop a threatened filibuster from the Republican side. It’s ugly in Washington, and indeed, while not every government service would be shut down instantly when that cap it reached, you can expect massive furloughs of federal personnel and lots of “non-essential services” to shutdown… with numbers increasing as time passes and even the pre-funded programs run out of money. Of course, people expect some of those “pre-funds” to be diverted in the political system, and you can bet that pensions will not be funded during this period.

The Federal Reserve can indeed expand the money supply and service the national debt for a while (to stop a default), but even they have Congressional limits on their overall maximum ability to engage in such activities. What is really likely to happen is that the public will be even more frustrated and distrustful of a government that simply has lost its ability to govern. And remember, Congress’ has pretty consistently maintained a lower approval rating than the President, so “stand-by-the-principles-under-which-you-were-elected” might seem to naïve freshmen Congress-people like strong and positive popular representation, but if they can’t exercise that force without bringing the country to its knees, they will simply be seen as incompetent elected officials who probably shouldn’t be re-elected.

The February 20^th Los Angeles Times reminds us what happened after the last federal budgetary shut-downs in 95/96: “Social Security checks continued to be mailed, although many government payments were delayed as officials struggled to keep enough employees on the job on an emergency basis, as laws allow, to continue service… Many other Social Security services halted, including responses to requests for retirement and disability claims, address changes and Social Security numbers needed for work… During that time, museums and national parks were closed and applications for visas and passports went unprocessed. A downturn in the housing market was blamed on a halt to transactions involving the Federal Housing Administration and the Veterans Administration, now called the Department of Veterans Affairs.

“Government economic reports were delayed, and federal employees went without paychecks for as long as the shutdowns lasted. Claims for veterans benefits also faced delays… Some government functions determined to be ‘essential’ — such as national security, law enforcement and emergency assistance — continued. But in the sprawling federal bureaucracy, determining what fit that classification, and even who made the determination, was not clear.” Want some specifics? “[In 1995], the departments of Commerce, Justice and State kept about 63 percent of their workers on the payroll. Just over 50 percent of Interior Department workers stayed on the job, as did 42 percent of employees at the departments of Education, Labor and Health and Human Services, GAO said… [As for Social Security, the] agency made about 4,800 employees work through the 1995 shutdown to ensure beneficiaries obtained their checks, according to a Congressional Research Service report. An additional 61,000 workers had to stay home, but officials later called some in to help process new claims.” Washington Post, February 22^nd. The government has a sequencing plan to lay off additional personnel as any budget impasse de-funds the government.

Indeed, today the bloated federal budget is ripe for big slices coming out of it. Servicing the national debt is a seemingly immutable obligation; how would the world react to our currency if we defaulted on the trillions we owe? But some of the really big ticket items, like military procurement budget (we spend about 46% of the entire earth’s military budget), sit relatively unscathed… Even Robert Gates’ masterful “sacrifice” of some weapons programs, while basically keeping the vast majority of the military budget intact, doesn’t remotely cut what a prudent society would insist upon, especially when funded military conflicts show no likelihood of delivering promised results. The budget battles will be the hallmark of the current Congress (notably the House, where appropriation bills must originate) versus the President. And this is year one, month two.

I’m Peter Dekom, and voters have a way of moving politicians who cannot govern out of office… we just have to wait, and wait and wait.