Thursday, April 7, 2011

What actually happens if the government is shut down?

A big tip of the hat to Rortybomb, which pointed me to this very timely and important interview concerning the looming shut-down of the federal government. New Deal 2.0 interviewed Roosevelt Institute Senior Fellow Bo Cutter, who was Director of the National Economic Council and Deputy Assistant to the President from 1992-1996 during the Clinton Presidency and was one of the key bureaucrats who managed and directed the shut-down of 1994.

It is a rather long interview, so I will first highlight the most important points Cutter makes, before starting with the beginning of the entire interview. First, is that a shutdown is real, and has effects the American people can quickly discern, such as being unable to visits national parks and monuments, and being unable to get any questions answered from the myriad of government departments and agencies. (That's right, there won't be any assistance to be had by calling the IRS). In 1994, the howling began almost immediately, quickly discomfiting the smug, ideological Republicans, and fracturing their unity in negotiations. As Cutter puts it:
I always thought that the Republican Congress basically thought none of this was real and therefore they could have it both ways. They could politically posture by saying that by god they were going to shut the government down and they were rough and tough and all of that, but in their hearts they kind of knew nothing would happen. So some of them were the most surprised people of all when actual things actually happened and when their constituents suddenly didn’t get services because the government was shut down. It is quite real.
Second, there is a law, called the Anti-Deficiency Act, that imposes personal, criminal penalties on government officials who direct work be done when there’s no money to do it. However, there is also legal agreement that certain "life or death" governemnt functions must be carried on. Cutter explains what happened in 1994:
So the military continues to function, although there are functions of the military and the civilian side of the defense department that have to begin to stop. The veteran’s hospitals continue. Walter Reed, that has the wounded from Afghanistan and Iraq and now maybe Libya, continues to function. Social Security checks do get mailed out. A lot of the stuff that is really immediate and involves immediate transfers of critical services like health or income will continue. Every agency has a plan. Employees are distinguished between those who are critical and essential and those who are not, and there’s a process that involves the legal counsel of each agency. The distinction is people who are required to keep the basic infrastructure of government going and people who aren’t. The critical people work without pay.
Third, about three quarters of the way through, Cutter discusses why today is more dangerous than 1984, because Gingrich had much firmer control of the Republicans in the House then, while Boehner is dealing with relatively crazier people.

Finally, Cutter argues that this showdown over a government shutdown is actually a much smaller political crisis that the next showdown, over increasing the federal debt limit. Cutter said
This [shutdown] is small potatoes. But we are about to see the debt limit debate. And there are people on the Republican side who actually believe that risking a default isn’t a bad thing. I think it’s an awful thing. I think it’s really, really reckless. And I don’t have any confidence that the Republican tea party members are going to come to that realization soon enough. . .
You really need to read the entire interview, especially the part at the end, to realize how dangerous is the brinkmanship the tea-hadists and the Republicans are engaged in. But, in my opinion, the tea-hadists and Republicans, and especially their rich masters, had better be careful here, because they are forcing a debate that has not been heard in the United States for over a century: what is the nature of government debt, and why do we even need to go into debt if we are a sovereign government that can issue its own money? At the beginning of the year, beowulf pointed to Coin Seigniorage and the Irrelevance of the Debt Limit, and just a few days ago, letsgetitdone on CorrenteWire renewed the push for this idea with Use Coin Seigniorage Now! These are exactly the kind of ideas that strike at the very heart of the banksters' power, and which can be expected to surface more and more as the economic depression continues.

What Actually Happens When the Government Shuts Down (And Other Things You Don’t Know About the Budget Fight)

Bryce Covert: What are the odds of a total government shutdown?
Bo Cutter: It looks like we’ll have one but it isn’t clear yet what kind it will be. It may be that we have one that’s purely procedural in the following way: The House Republicans have put in a requirement that a piece of legislation be available for public view on the internet for 72 hours. So if they come to a deal say on Wednesday, they can’t meet that commitment and they’ve made an avoidable showdown. And I think they said three working days, so weekends don’t count. Let’s say they came to a deal on Wednesday afternoon and the resolution has to be voted and in place, signed by the President, by close of business on Friday. They couldn’t make it unless they waive that requirement, and they don’t want to waive it. So you would in fact be shut down Saturday, Sunday and Monday. But it wouldn’t have much effect because there would already be a deal in place. It looks to me like the highest odds are that’s what it’s going to be. So going down that track, the results wouldn’t be particularly substantial.
But there’s every possibility that it could be real. There are a whole series of riders attached to the resolution that Democrats and the President have said not only no but hell no, and the tea party has said they won’t accept anything that doesn’t have them. I don’t believe the tea party, so we’ll see. As I understand it and as friends at the White House have said to me, all of the discussions to date between the members of Congress have been about the numbers and they’ve kind of put the riders to the end. If the riders wind up being the sticking point, you could have a real shutdown.
Bryce Covert: If it shuts down over the weekend, what effects will we feel?
Bo Cutter: The obvious public things that aren’t matters of life and death, if there’s no money to run the government then you have to shut them down. One of the things that governs this is something called the Anti-Deficiency Act that says there are actually personal, criminal penalties to officials who consciously direct that work be done when there’s no money to do it. So one of the things we found when I was there during the last shutdown was that in the absence of legal authorization to do work, people in the civil service are very reluctant to expose themselves and the people who work for them to penalties.
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