Answers to some questions on the shutdown:
So why is the government shut down?
Because of the Republicans. Unwilling to accept that both Houses of Congress, the Supreme Court, and the electorate have signed off on the Affordable Care Act (“Obamacare”), the Republicans – notably the House GOP and the Koch Brothers™ – have decided to take the US government and the global economy hostage to demand that health care be defunded.
But, wait, aren’t the Democrats refusing to negotiate?
Yes, in the sense that when your teenager threatens to burn the house down unless they can go out past 10 pm, you don’t “negotiate” with them. No, in the sense that the Democrats aren’t actually demanding anything in this situation except, well, that the GOP not drive the car off a cliff. Also, no, in the sense that President Obama has made the quite reasonable decision that if he caves on anything substantial now, then the Republicans will simply use the “Temper Tantrum” method every year.
Are you done with the parenting metaphors?
Hang on, what’s this about the global economy?
Well, the shutdown crisis is now stretching into the other potential crisis, which is the debt limit crisis. Congress has to vote to raise the US debt limit on a regular basis. This, despite the fact that they’ve already voted to spend the money that is breaching the ceiling. This is the equivalent of charging something on your credit card and then potentially deciding not to pay the bill when it comes. In previous years, this has been the opportunity for some political spectacle. People could vote against it (including a Senator Obama way back when), knowing that the adults in the room would save them. Well, now the children have taken over and are threatening to default on US debts.
Another parenting metaphor.
Will this have serious consequences?
The sane people seem to think so (by sane people, I mean economists who are not funded by the Vast Right Wing Conspiracy, Think Tank Edition, people who are not GOP Representatives, and people who are not Ted Cruz). Treasury bonds are the safest investment in the world at the moment because the US has a sterling record of repaying its debt. Not repaying its debt would throw that reputation into doubt and cause the interest rates that the US has to pay to soar. Also, the US dollar’s position as the reserve currency for the world would be thrown into doubt.
Would anybody benefit from this?
China. Japan. The European Union. Any indictment of US financial reliability would cause investors to look elsewhere and only the largest economies can absorb that kind of capital flow.
Why are the Republicans doing this, really?
There’s a germ of rationality in Republican objections to the increasing debt. US debt as a percentage of GDP is pretty high by historical standards (although shrinking over the next few years), but the GOP is apparently trying to destroy the village in order to save it. They’re threatening to ruin the US financial standing because they’re worried that excessive debt will ruin the US financial standing. If you can find the logic in that, then you’re a better person than I.
So you’re saying they’re crazy?
No individual Republican is clinically insane – though Ted Yoho of Florida tests that evaluation – but the combination of Presidential ambitions (Ted Cruz), weak House leadership (John Boehner), fantasizing Tea Party Representatives (the aforementioned Ted Yoho), the epistemic closure of the right wing media machine (Fox, Rush, Glenn Beck), and the vast sums of money pouring into GOP coffers (Koch Brothers™) have created a situation where the GOP as a group is acting irrationally. Even more, the GOP is acting in a way that works against the Constitutional structure of the government. The “checks and balances” of the US government are designed to force compromise on various factions, and if a faction that holds a choke point refuses to compromise, it prevents the government from working in the way that the Founding Fathers intended.
What’s the solution?
Besides the Republicans regaining their sanity? Well, moderate Republicans in the House (yes, there are a few) could join with the Democrats to pass a budget and a debt limit increase. John Boehner could decide to bring a clean CR/debt limit increase to the floor in defiance of the Tea Party. If something like that passed the House and GOP Senators tried to filibuster it, Harry Reid would almost certainly go nuclear and break the filibuster.
Absolutely, but that requires the moderate Republicans/John Boehner in the House to develop a spine, something for which there are few positive indicators.
Oh. Other solutions? What’s this platinum coin thing?
Aha! Obligatory self-linkage.
Short answer: No.
Longer answer: The Federal Reserve has already said they won’t accept a platinum coin, Obama has said he won’t use it, and as someone whose name I can’t remember pointed out yesterday, the effect of using such a coin on America’s financial reputation would hardly be less catastrophic than actual default. “Look, magic coin!” is just not that convincing to financiers.
Sob! 14th Amendment, maybe?
Part of which reads “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” So – the theory goes – President Obama could announce that he is unilaterally raising the debt limit by invoking the 14th amendment and, hey presto!, the US is safe.
Short answer: Probably not.
Longer answer: This would create the mother of all political storms, likely leading to impeachment and law suits. Is the rest of the world likely to buy bonds that have to be certified at some future point by Justice Antonin “I’m Pretty Sure I Know Some Of Teh Gays” Scalia and his fellow Justices?
You’re not being very helpful.
I’m NOT here to be helpful, I’m here to make sure you clean your room, young lady!
So how is it going to end?
No idea, but anything that relies on John Boehner/House moderates doing something positive…
Meanwhile, in the “yes, I know this isn’t a particular major effect of the shutdown” department, many of my students are sitting around, twiddling their thumbs. Nothing like practical experience in how the government (dys)functions.