On October 1st, at 12:01AM, the Federal Government of the United States of America shut down. Not because of a disaster or war or zombie apocalypse, but because Congress could not agree on a budget. No budget, no work. Hundreds of thousands of employees have been furloughed. Essential federal employees, like TSA employees and FBI agents, are forced to work without pay until the shutdown ends. This is the seventh multiday federal government shutdown since 1990 and the fourth since 2013. Both a symptom and cause of government dysfunction, government shutdowns have become a normal part of American life. And for what?
The very existence of federal government shutdowns is quite an anomaly. Other countries don’t have to deal with them. Belgium didn’t have a functioning government for two years. Yet their national government continued to function. Many other countries have had similar government paralysis without a shutdown. Why? Because in most nations, if a budget isn’t passed, the previous budget is extended indefinitely. Rather than needing to pass a continuing resolution, as Congress does in the United States, other nations automatically continue spending at the previously agreed upon rate. Which seems sensible to me.
That’s not just how the rest of the world operates. It’s how the US operated, at least until 1980. For two centuries, there was no such thing as a federal government shutdown. If a budget wasn’t passed in time, the federal government… just kept on working. Everyone assumed that Congress would pass a budget shortly and went about their work. Because Congress always did pass a budget, or at least a continuing resolution, it wasn’t a problem.
Then, in 1980, Attorney General Benjamin Civiletti of the Carter Administration issued a surprising legal opinion. Civiletti believed that the 1870 Federal Antideficiency Act prevents the government from operating without a budget. Thus, the government must shut down if funding hasn’t been allocated. At the time, this only referred to a shutdown of the FTC, but things snowballed from there. This one Attorney General unwittingly set into motion the problem we have today. Once it became accepted that federal employees couldn’t work without a budget, Democrats and Republicans realized they had a powerful tool at their disposal. And both parties have used it shamelessly ever since.
To be fair, there are disadvantages with the “automatic continuing resolution” mechanism that other countries use, and the US had until 1980. Once a budget is active, a party that doesn’t want to grow the government can stonewall indefinitely by refusing to pass a new one without facing the public pressure that accompanies a shutdown. Especially in the US, without the shutdown mechanism, one could foresee a world where the Republican Party keeps the budget frozen for years by refusing to pass a new one.
On balance, however, the costs of government shutdowns outweigh the benefits of having a commitment mechanism. The exact “cost” of a government shutdown is difficult to determine and requires significant estimation and subjective decision making. When a government agency that does permitting shuts down for two weeks, how much does that cost the businesses that are delayed? There isn’t a clear answer. The 2018-2019 government shutdown, which at 35 days was the longest in US history, may have cost the US economy half a percentage point of growth. On the other end of the spectrum, the Congressional Budget Office calculated the 2018-2019 shutdown only cost the economy $3 billion in permanent losses.
Regardless, government shutdowns are a sign of political dysfunction. They are unpredictable in timing and duration. Nothing unpredictable is good for the economy. There is always uncertainty in the business community, but the government should not be a source. Government should be a rock of stability in the dog-eat-dog world of capitalism, not another stressor that business owners can’t predict. Even an unhelpful government, if predictable, can be managed. Uncertainty is the killer of economic growth.
Looking at the bigger picture, the current government shutdown is emblematic of a disturbing trend in American politics: the focus on winning over governing. Our politicians are no longer focused on good governance. Instead, their main goal is to win. To win reelection, to win power, and beat the other party. I’m not sure when this us vs. them attitude took hold, but it openly became the dominating motivation in politics during Obama’s first term. In 2010, John Boehner said of Obama’s agenda, “We’re going to do everything — and I mean everything we can do — to kill it, stop it, slow it down, whatever we can.” Then Senate Minority Leader Mitch McConnell went even further, saying, “The single most important thing we want to achieve is for President Obama to be a one-term president.”
This is horrible government. The number one goal of any elected official should be to serve his or her constituents. To make the country a better place. I’m not under any illusion that before 1990 Democrats and Republicans all linked hands and sang Kumbaya every evening. Politicians have always been deceitful and dishonorable. However, looking at the rate of bipartisan legislation over the decades, it is clear that members of both parties were much more willing to negotiate in the before times. Members of Congress regularly worked across the aisle and would vote for bills they believed were good for America, regardless of who proposed them. Civil servants were largely apolitical. Now, the number one question isn’t, “Is this good for my constituents and my country?” It’s become, “Is this good for me and my party?”
Today, it’s the Democrats who are focused on winning over governance. In 2022, the Dems controlled the White House and both chambers of Congress. By a margin of one vote, they passed the Inflation Reduction Act. The bill had little to do with inflation, but did have a lot to do with healthcare. One provision of the bill allocated $64 billion in subsidies for health insurance plans purchased under the auspices of the Affordable Care Act, also known as Obamacare. Those subsidies were to last for three years.
Now those three years are up. The subsidies are about to end. The Democrats’ response? Shut everything down. This, again, is horrible government. The Inflation Reduction Act was a Democrat bill. It was written with no input for Republicans, who in their own pique of self-interest wouldn’t vote for anything Joe Biden wanted, and passed along party lines. The Dems could have made the subsidies permanent. For reasons unclear to me, they didn’t. Now, in a time when the Republicans are in the White House and hold a majority in both houses of Congress, the Democrats have decided the subsidies should continue beyond the sunset date they themselves advocated for, and are holding the budget hostage until the Republicans play ball.
This is not about governance. This is about winning. And we deserve better.