The idiomatic expression “doing a number” doesn’t require a number, but let’s start with a number: $24 billion.
Standard & Poor’s (S&P), known for its credit ratings of various securities, including the mortgage-backed securities for which it is being sued for fraud by the U.S. Department of Justice, put out a press release within hours after the partial government shutdown ended late on the evening of October 16. The press release was picked up by many media outlets, Democratic Party leadership (Nancy Pelosi on This Week October 20, also used in that program’s interview of members of public in Lima, Ohio), and Beth Ann Bovino, U.S. Chief Economist for S&P’s Rating Services, was interviewed on the evening of October 17 on PBS’ NewsHour. The headline was that the 16-day partial government shutdown cost the U.S. economy $24 billion.
Mark Zandi of Moody’s Analytics, another credit rating company, appeared on the same PBS program. He had made an estimate of the cost to the economy of a shutdown a few days before the shutdown. Both Bovino and Zandi spoke in terms of an estimated reduction in the estimated annual GDP.
What are some of the components of this estimated reduction in economic growth? These two economists identified just three:
- 800,000 furloughed “non-essential” civilian federal government employees and “essential” (or “exempt”) civilian federal government employees working without pay, all of whom, although scheduled by Congress to receive their pay, were hesitant to spend money during the shutdown and will be hesitant to do so after the shutdown; (here is a chart breaking down the 40% of federal employees furloughed by agency;
- less tourism in the national parks; and
- suspension of loaning activity by the Small Business Administration and the Department of Agriculture.
(Of course there are additional components to the cost of the shutdown not identified by these two economists.) The two economists acknowledged that much economic activity would bounce back.
Mr. Zandi concluded his part of the PBS interview by alerting us that we will see when the jobs report for October is released whether the shutdown caused business to curtail hiring. (He didn’t refer to government, including the federal government, in this context. Perhaps he had read that federal postings for jobs increased during the shutdown.) So, if the jobs report for October for the private sector doesn’t meet the pre-shutdown expectations, Mr. Zandi concluded it will be due to the shutdown.
I do not want to suggest that there were no economic effects from the shutdown, including small businesses near national parks and businesses needing federal permits. But what we learn in a demonstrable way from this partial suspension of federal government activity is, first, that our lives do not end when non-essential federal government activity is suspended, and second, how pervasive federal government activity is and how dependent upon it we are.
No free people should tolerate the pervasiveness of federal government activity in our daily lives even if we benefit from it in some fashion. It is a matter of human dignity and self-respect. And it was House Republican insistence on this very point that resulted in the shutdown.
We got to the October 1 shutdown, and to the October 17 time for a raise in the debt ceiling because the Democratic-controlled Senate has not passed annual appropriations bills and a budget. This situation is what required a “continuing resolution” to finance federal government activities at 2013 levels into the new fiscal year that started October 1, 2013. But that condition precedent was hardly mentioned in recent days by the media. Then when the House, constitutionally responsible for originating financial legislation, insisted that current levels of spending could continue for all federal activities except Obamacare, President Obama and Senator Reid stubbornly insisted that Obamacare be funded because they characterized Obamacare as “settled law” although the President has undermined that characterization by delaying key provisions, without lawful authority to do so.
According to President Obama, in remarks he made on October 17, the day the shutdown ended, he won the election and, if the Republicans want their way, they need to win an election.
I guess Obama won the only election that mattered. Why not just elect the president and skip the others? Why not be efficient, no gridlock, and elect just a president?
Before, during and now after the shutdown, the media pretend that the shutdown has been the big story. It’s not. The media see the speck in the House Republican eyes and miss the log in the Democrats’ eyes. (Matthew 7:2-3) The log is this: 40% of every Social Security check is borrowed, and China is the principal foreign borrower (now $1.5 trillion). The log is this: 40% of our soldiers’ pay and 40% of the cost of every new ship and plane and tank is borrowed, and China is the principal foreign borrower.
And the truth is that, although the interest on this debt may be relatively low and make money seem cheap, that interest rate is artificially and historically low due to the activity of our Federal Reserve. The interest rate will eventually double, even triple. And our children will be taxed at high levels to pay interest, not even principal, to China. Meanwhile, the savings of our retirees generate no interest and cannot keep up with even minimal inflation.
In all the talk about the debt ceiling, did you catch the amount it was as of October 17 ($16.7 trillion) and the amount it was raised? It wasn’t raised to a specific number, but was allowed to grow to meet spending demands through February 7, 2014.
The Democrats and the media portray the House Republicans as stubborn, obstinate, close-minded, obsessed. Hogwash. It’s the Democrats who are stubborn, obstinate, close-minded, obsessed. The Democrats will continue to borrow and borrow and borrow, so they can spend and spend and spend. Actually, they don’t really spend all of the money expended by the federal government because the word “spending” assumes that the government is getting goods and services in return. Instead, the Democrats give gobs of money away without getting goods and services in return. Take a look at the list prepared at the end of this Heritage report: So, instead of referring to the “tax-and-spend” Democrats, we can refer to the “borrow-and-give away” Democrats.
The Democrats and their media friends ignore the lessons of Greece. Ignore the lessons of Detroit. Ignore the lessons of Chicago and Illinois. Obama and the Democrats do indeed believe in a type of American exceptionalism. They think the United States federal government can borrow with impunity. See Tracy Mehan’s assessment of this situation on this webpage. Their big lie is that the United States is simply too big, too good, to fail. Their big lie is that the government shutdown was bad, bad, bad, but the normal federal government operations are good, good, good – for the people and for the economy. As Treasury Secretary Jack Lew said on Meet the Press, Sunday, Octcober 20, the sequestration’s “deep spending cuts” are hurting the economy by about 0.5% but the tax hikes effective January 1, 2013, helped cut the deficit (and did not hurt the economy). Taxes are invariably good. Federal expenditures are invariably good.
Meanwhile, the media’s coverage of the continuing effects of the 2008 recession caused by the Democrats and President Obama is minimal. The recession is blamed on President Bush (not Congressman Barney Frank’s ridiculous conscription of the private housing market to provide risky loans to people who could not pay) and the continuing effects are not ascribed to President Obama and the Democrats. So, we don’t hear about continued long-term unemployment, continued unemployment of new college graduates, continued unemployment of men and women over the age of 55, jobs lost to the delay in permitting the XL pipeline, the intent to destroy the coal industry – any one of these stories is bigger than the shutdown. And as for Obamacare’s effect on the economy, the law restrains employers from hiring additional employees in order to remain under 50 employees and the law encourages employers to limit the number of hours worked by employees to under 30 per week. By the way, for those employers who provide the best health insurance and for those employees who benefit from this, the Obamacare tax on these policies hasn’t yet kicked in.
The topic of this piece evokes a phrase from President Kennedy’s Inaugural: “the slow undoing” of our liberty. Here is the full context:
We dare not forget today that we are the heirs of that first revolution. Let the word go forth from this time and place, to friend and foe alike, that the torch has been passed to a new generation of Americans—born in this century, tempered by war, disciplined by a hard and bitter peace, proud of our ancient heritage—and unwilling to witness or permit the slow undoing of those human rights to which this Nation has always been committed, and to which we are committed today at home and around the world.
Yes, our liberties can be slowly undone by the Democrats and the media who continue to do a number on the American people.
I have always been impressed, since the time I first heard it, of the story of the frog. If dropped into hot water, the frog will jump out. But if placed in cool or warm water and the temperature slowly rises, the frog will cook slowly. Each and every American must ask herself/himself, “Am I a frog in ever-hotter water?” Continued borrowing from China will cook us! Is it possible to fix? Canada did. Can we?