Last month – February, the shortest month of the year – the federal government spent $223 billion more than it took in as tax revenues. That’s right; billion with a “B”.
It’s the largest monthly deficit in history, and it is the 29th straight month that the federal government has operated in the red. Not a record the Obama Administration will likely beat its breast over. Team Obama is on track to spend $3.8 trillion this year and will run a cumulative deficit for the year of $1.6 trillion in doing so.
Yet when the Republican-controlled House of Representatives proposed to cut $61 billion – i.e. 1.6% of spending – Senate Democrat leader Harry Reid howled, accusing Republicans of using a meat axe instead of the scalpel cuts he and the White House want. Their proposal? Somewhere between $6 billion and $10 billion. That’s the most they can find in $3.8 trillion of spending!
Federal spending has increased 24% over the last four years pushing the national debt over $14 trillion. The Republicans propose cutting a penny and a half out of every dollar spent during this fiscal year and all the Democrats can cut is decimal dust?
Obama said he would veto a bill if it has cuts of $61 billion, which the House Republicans want to pass. And unless John Boehner and his 87 freshman Republicans are willing to renege on the pledge they made to cut $100 billion – the pledge they believe got them elected – the government will shut down.
The game of chicken is on.
Recall that the cowardly Democrat-controlled House of Nancy Pelosi’s 111th Congress failed to pass a budget for the fiscal year ending this September. The Republicans, even though they were the minority, kept insisting on deep cuts and so were some swing state Democrats who realized they were in deep trouble with the voters. After ObamaCare, many Democrats weren’t willing to drink Kool Aid again. So Pelosi punted. No budget.
Absent a budget, the government has been kept running with continuing resolutions – the appropriation chicanery that gives the House an escape exit when it fails to perform one of its most important duties – to produce a budget. When the Republicans took control of the House and it became their turn to play the continuing resolution game, they changed the rules. No CR without a cut in spending, and the targeted $100 billion in cuts was the equivalent of $2 billion per week. Prorated for the months remaining in the fiscal year, the Republicans target became $61 billion. The Dems could only agree on $4 billion in spending cuts, so that bought two weeks – kicking the CR can down the road from March 4 to March 18.
This process will get harder and harder. It was relatively easy to come up with enough low hanging fruit to cut $4 billion this time. It will be harder to find the next round of cuts. Sooner or later Congress will run out of “planned” spending and pork earmarks that can be cut and will have to face hard choices in cutting real ongoing spending. Then what?
Reid and Obama can sit on their hands and make no further spending cut concessions, forcing Republicans to fold or fight. If they fight and the CR deadline expires, the government “shuts down.” The Democrats think they can make hay with that, and it makes a lot of Republicans nervous. Both sides remember the last government shutdown in 1995 and think Bill Clinton took them to the woodshed. But did he?
Clinton was reelected – true – but Republicans lost only nine House seats in 1996 and still held their majority. Not bad since they had picked up 54 in 1994 in the Contract with America election. And Republicans gained two Senate seats, pushing their majority from 53 seats to 55.
Moreover, the Republicans were able to force through budget restraints that held spending growth to less than 3% during all of Clinton’s first term, which turned a $164 billion deficit in 1995 – the year of the shutdown – into a $126 billion surplus in Clinton’s last year in office. And the Republicans got a big tax cut through in 1997. The idea that “Clinton won” the 1995 government shutdown battle simply isn’t borne out by the facts.
This year, things are considerably different than they were in 1995. Then there was no alternative media – no Internet, no Fox News, no conservative talk radio, no tweets and blogs – that competed for the hearts and minds of listeners in the political debate. The news in 1995 was the Democrat-speak of CBS, CNN, the Washington Post and New York Times, and public broadcasting, that paragon of objectivity.
In 1995 Clinton was deeply engaged in the budget negotiations. There were many meetings at the White House. Today, in contrast, Obama is not engaged in the process. He is characteristically aloof and has delegated the negotiations to Harry Reid, just as he delegated ObamaCare to Reid and Pelosi. It’s unlikely that Obama will have to veto a bill because no bill will get out of the Democrat-controlled Senate. It’s unlikely a bill will even make it to the Senate floor for a vote.
Today’s news is a stream of fiscal horror stories – federal, state, local, and international debts, deficits, and crises. Unlike 1995 when the economy was growing and voters didn’t understand the need for spending cuts, now voters are in a cutting mood. And they want to see big cuts, not decimal dust.
People want to see the government operate like they have to operate. They are cutting back their spending and doing without. Why can’t government do the same? Since the recession began in 2008, the private sector lost eight million jobs; yet the federal government added almost 600,000 jobs. Clinton’s deficit for the entire year in 1995 was $164 billion. Obama’s deficit in one month was $223 billion. Under Clinton federal spending grew less than 3%. Under Obama it has grown 24%.
Spending is out of control. Period! If deficit spending is ever to be brought under control the government must stop trying to solve every problem. It must stop trying to “stimulate” the economy – hundreds of billions of dollars have been wasted to prove that government stimulation is a fool’s errand.
If the Democrats can only find $10 billion dollars to cut out of $3.8 trillion in spending, how can they ever expect to find the spending cuts in Obama’s jaw-dropping 2012 budget? How can they expect to slow down the ever-increasing national debt, not to mention begin reducing it? Obama’s Simpson-Bowles deficit commission recommended that discretionary spending cuts of more than $1 trillion were needed over the next ten years to put this country’s fiscal house in order. So far, no serious consideration has been given to those recommendations. It’s apparent that the deficit commission was a hood ornament in Obama’s publicity campaign for restoring fiscal discipline.
The Democrats and Republicans are now working on their proposed spending cuts in order to extend the continuing resolution when the current one expires on March 18. If they can’t reach an agreement, the government technically runs out of money and parts of it begin shuttering. In the political world of sub-optimal second-best and third-best choices, that may not be a bad thing to let happen. Running the government’s spending programs in multi-week extensions by CR is an insane way to do government. So the deficit hawks have to have the spines to take negotiations over the brink if the Democrats refuse to get serious about cost cutting. If they do, it will set the tone for future budget battles – the 2012 budget this spring, the debt ceiling battle this summer, and the appropriations fight this fall. If the Republicans cave on March 18 it will make these fights much harder and less likely to be successful. The average American – not the politicians – will be the losers.
A new Rasmussen Reports national survey finds that only one-third of Likely Voters would rather have Congress avoid a government shutdown by authorizing spending at the same levels as last year. Almost two-thirds (58%) says it’s better to have a partial shutdown until Democrats and Republicans can agree on what spending to cut.
There were 15 government shutdowns in the 18 years from 1977 to 1995, the year of the last shutdown. Most lasted just a few days, but some dragged on for up to two and a half weeks. None were the horrible disruption that the term “government shutdown” implies. The government, in fact, doesn’t shut down. The mail gets delivered, Social security checks still go out, air traffic controllers remain on the job, the Border Patrol continues to patrol. Certain essential services are required to continue operating even if there is no Congressional authorization to pay for them. That means 90% of Americans will never know the government is “shut down.”
So what is shut down? Non-essential services and employees. Interesting term. If it’s non-essential, why does it exist at all? But non-essential services include national parks, monuments, and passport processing. In other words, your vacation may be spoiled.
The few Americans inconvenienced by a shutdown will blame Washington, of course. Will that blame fall on the right side of the aisle or the left? Both sides equally, say the pollsters in surveys over the past two weeks. Public Policy Polling, a Democratic firm, says 41% would blame Republicans and 39% would blame Obama. Gallup says that 42% say Republicans are doing a better job of reaching a budget agreement, while 39% say Democrats are. The Hill says 29% would blame Democrats for a shutdown and 23% would blame Republicans. The Washington Post says 36% would blame Republicans and 35% the Democrats.
Notwithstanding the blame game, the Middle East is being roiled and oil prices are causing pump pain for most Americans. The economic recovery, if there is in fact one going on, is at a fragile stage. Unemployment remains high at 9.5%. There is an election next year. Democrats got hosed at the polls last year and the handicappers say it isn’t over yet. That news isn’t lost on the 23 Democrat Senators in tight 2012 races and Obama is by no means a shoo-in if Republicans can find someone who can fog a mirror.
Does Reid really want to risk a government shutdown over $57 billion – the difference between the Republican goal of $61 billion in spending cuts and the $4 billion already agreed to when the CR was extended to March 18? Does he really want to send a signal to an already nervous business community that bloodier fights are down the road when the debt ceiling, 2012 budget, and fall appropriations are fought out – delaying whatever hiring plans business has in the works?
Clint Eastwood’s character Harry Callahan (Dirty Harry) told the wounded bank robber reaching for a gun to ask himself one question: “Do I feel lucky?” That’s the question Reid ought to ask himself before forcing a highly symbolic shutdown.
The problem is what John Boehner and the Republicans do. They seem terrified by the prospect of a government shutdown. If only they had the spine to look Reid in the eye and like Harry Callahan say, “Go ahead. Make my day.”
The game of chicken is won by the person who keeps his foot on the gas pedal last. My guess is that the Republicans will cave. If they do, the voters ought to replace them and Boehner next year and keep replacing them until we get better government – and less of it.
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