The US Government has shut down. For anyone who isn’t from the US, and who is confused about how this happens, and what it actually means, I thought I’d write a short post outlining the basics of the situation – because it’s very important to understand it correctly. It isn’t something that can reasonably happen in any other system but the US system.
Firstly – what actually causes a shutdown?
1 – Part of the job of Congress is to leglisate spending. Congress passes laws to decide how much money the federal government can spend on all the things it needs to do. This includes defense, the postal service, pensions, etc. The Executive Branch (essentially, the President) cannot spend more (or less) money that this. If the President does so, the President is breaking the law, and would be impeached by Congress. This is a very important part of the US system. It’s Congress, not the President, who decides how much money to spend and on what. The President can veto a proposal that has a majority in Congress, but a super-majority (2 to 1 in favour) can supercede such a veto. As a result, the President is involved in negotiations as to what to spend – but the final decision rests with Congress.
2 – Another part of the job of Congress is to raise taxes. Congerss passes laws to decide how much money the federal government can collect from the citizenry. The Executive Branch cannot collect more taxes (this includes pension contributions and federal levies etc as well as basic taxes) from the people than mandated by Congress. To do so would also be to break the law.
3 – If Congress mandates that more money is to be spent than collected – then the Executive Branch, in order to avoid breaking the law, has to borrow money in order to make ends meet.
4 – Congress can set a legal upper limit on the amount of money that the Executive Branch is allowed to borrow. This limit cannot be exceeded. The borrowing has to be authorised by Congress and it simply won’t arrive if the President attempts to borrow above the limit.
5 – A shutdown occurs when Congress decides to spend enough more than it decides to collect in taxes that the amount of money that would have to be borrowed in order to make up the shortfall would push the borrowing total over the amount that Congress has decreed as maximum.
6 – In short: A shutdown occurs when Congress passes enough contradictory laws that the President literally cannot come into work without breaking one of them, and therefore has to shut down the government. This, in the past, has happened because Congress and the President simply cannot agree over how much to tax and spend and borrow before time just ran out and the limit was reached. This is not what has happened this time.
Second – How did this one occur?
1 – For quite a while now, Congress has mandated that more money be spent than collected. This went particularly haywire during the early Bush years, due in a large part to the wars in Afghanistan and Iraq and the huge tax cuts for high earners that occured around the same time. The financial crisis also really, really didn’t help. In any financial crisis it’s natural that you’re going to have to borrow some money to help sort things out, and hope to pay it back later when things have recovered. As a result, the US economy has been, for a while, in a situation where it really needs to borrow more money for a while. If it raised taxes enough to make up the shortfall then people would be so poor that the economy would pretty much collapse and that wouldn’t really help anyone.
2 – Congress is currently controlled by a bunch of nutters from what remains of the Republican Party who have a stated aim of simply disrupting the government of President Obama. They haven’t passed a meaningful law in years – they literally just sit there complaining, and reading recipie books to each other (I’m not kidding). As John Green, one of my favourite YouTubers, has said “If Congress were [sic] on fire, Congress couldn’t pass the “pour water on Congress” act”. The entire aim of this Congress, as openly stated by it’s leaders, was to make sure Obama can’t do anything, and hopefully discredit him enough that he lost the 2012 election. Unfortunately, the US populace, as a whole, just about saw thorugh the facade and gave Obama another chance. Unfortunately they also gave this mad Congress another chance. Doubly unfortuantely, instead of deciding that they had failed in taking down Obama and getting back to the business of passing laws and just basically doing their jobs, they decided to double-down on their former strategy of just holding up the process of government and hoping people would blame Obama.
3 – This has come to a head with Healthcare reform. A while back, Obama and Congress agreed to move the US to a system of healthcare more like pretty much every other civilised country, in which if you get ill people will treat you, and it won’t bankrupt you and ruin your life. The fact that people don’t have to hoard their money away, saving up to make sure they don’t get bankrupted by accident or illness, and therefore don’t spend that money in the economy, has been a drag on the US for ages, and finally they were able to agree that it’s just a better, happier, more prosperous society and economy when people don’t have to resort to becoming a meth cook if they get lung cancer. Unfortunately, the mad Congress of today has decided that it’s not so happy with that in retrospect. Unfortunately, a changing back to just letting the poor die requires the agreement of Congress and the President (notwithstanding 2 to 1 agreement by Congress, which is not going to happen). If the President thinks one thing and Congress another, then things just stay the way they currently are. Normally, one side or the other eventually gives up the fight, otherwise they become disastrously unpopular and lose all negotiating power on future deals. Obama has made it clear that he’s not going back on his flaship policy, that has already agreed and become law. Congress has passed laws to repeal “Obamacare” about 40 times, and each time the President has said no. He made that a big part of his 2012 election, and he won comfortably. In most cases Congress would just move on, but this congress is about disruption, not government.
4 – Congress then did something that no Congress has done before. It deliberately passed a series of tax, spending, and maximum borrowing laws that meant the government must shut down. There is no way the President can act without breaking the law. This was not, as was the case with the 1996 shutdown, a failure of the Executive and Legislative Branches to reach an agreement on how much to tax, spend, and borrow. This is a shutdown caused deliberately by Congress, on purpose, in order to blackmail the Presdient into agreeing to retrospectively repeal a law that was passed a few years ago. Congress have deicded that they would rather stop the US government from funtioning (a few things continue on emergency money, such as the postal service and the military, but pretty much everything else shuts down) than give up on repealing a law that has already been passed. Such actions are unprecedented in democratic history. It’s the natural end-game for their strategy of making the government ever less and less effective in order to discredit Obama and hope nobody notices they actually did it. They’ve actually gone the distance. They’ve shut down the government completely. It is not a disagreement over budget terms – it is blackmail. Congress wants to change a law that it, by itself, does not have the power to change. It needs Obama’s co-operation to change it. It has not got Obama’s co-operation. As a result, Congress has deliberately passed enough contradictory spending laws to mean that the government can no longer operate.
What does this mean for the US?
The last government shutdown cost 2.1 billion dollars. About 800,000 people are going to stop being paid this time. If it continues for more than a week or so, the entire US economy will meltdown. The fragile economic recovery that the last few years have given the US will be wiped out. The knock-on effects of a US meltdown could crash the planet. Congress has given the President an ultimatum. Either agree not to give poor people health coverage, or we’ll destroy the entire country, maybe even the world, and nobody will have jobs or homes or money at all, let alone health coverage.
I happen to see this as a pretty clear-cut case of who is to blame. House Republicans have been trying to destroy the effectiveness of the US government for years, hoping that people would blame Obama. They’ve finally reached end-game. They lost the presidential election of 2012, meaning they can’t do a lot of the things they want to do (like repeal universal healthcare). So they’ve decided that if they can’t run the country, then there will be no country to run. The Republican Party is now, without a shadow of a doubt, deliberatly destroying the USA.