Tuesday, November 5, 2013

Government Shutdown—FY 2014

Dr. Skogstad is a brother Marine and an economist. This short piece just came to me, a few weeks late, but is worth reading. Posted here with his permission. ~Bob

Government  Shutdown—FY 2014
Samuel L. Skogstad, Ph.D.                                                                                            

I.   What It Means

The U.S. Constitution requires that an annual budget law be passed each year to permit the government to spend money in support of its operations.  Like any other law, the budget law must be approved in the House and the Senate, and signed by the President in order to become law.  But the constitution further requires that spending laws originate in the House of Representatives.  If a budget law is not passed by the house and the senate, and signed by the President, the Government cannot spend more than it takes in under existing arrangements, and it cannot spend on new programs or projects (such as “Obamacare”.)  This is what is called “a government shut-down,” and it is what occurred this October.

II.  Who Caused It?

This year, as in each of the past several years, the House passed an initial budget law and several compromise versions.  President Obama repeatedly announced that there would be no negotiation and no compromises on the budget he preferred.  Democratic Senate Majority Leader Harry Reid dutifully refused to allow a vote in the senate on the compromise versions offered by the House.  No compromise offers were made by the Senate or the President and none of the House versions was accepted by the President or the Senate.  Once it was clear that the President would permit no negotiations, the Republican-led House stopped offering compromise bills.  In such cases in the past, there has usually (though not always) been a last minute agreement on a temporary, “band-aid” measure, passed to allow continued operations of the  Government while negotiations proceeded.  This year, however, that did not happen until the government had been “shut down” for a few weeks. 

This “shut-down,” according to several public opinion polls, has been blamed by most on Republicans.  But it is hard to make sense of this result.  A law requires approval of the House, the Senate and the President.  The House did its job, passing a timely Budget act.  The Senate did not accept it.  The House offered several compromises, giving up successively more of the positions to which the Senate and the President objected.  The President and his Senate obstinately announced they would neither negotiate nor compromise.  Negotiation and compromise are the essence of Democracy.  But the President demanded all or nothing. The entire episode, almost sure to be repeated in January, is a frightening case of an arrogant “tyranny of the majority.” Reason dictates that it was caused by the proudly heralded unwillingness of the majority Democrats to negotiate or compromise.  Only ignorance of the constitution and abhorrence of reason can support the opposite conclusion.

1  It is important to note that, during a “shutdown” of government, tax revenue continues to flow in to the government daily, and that these funds can be spent. The law provides some flexibility to the President as to which activities and expenses will be continued and which will be “shut down.” However when government expenditures are financed in part by borrowing, this source of funding is subject to a debt limit imposed by the legislative branch. That limit is expected to be reached tomorrow, October 17, 2013.   

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