Shutdown on Pennsylvania Avenue

The US government is facing shutdown tomorrow unless Congress and the White House can agree on a continuing resolution that allows it to keep spending. Such an outcome is likely to be narrowly averted, but this alarming situation will arise regularly until they can settle on a budget. They haven’t been able to since this fiscal year began on 1st October 2010, and have since skirted the issue with a series of short-term budget fixes.

What actually happens when government shuts down? Firstly, non-essential federal employees have to go home. The last time it happened, in 1995, around 800,000 people had to stop turning up for work. Secondly, government services that people rely on, Medicare, Medicaid, social security and many others, cease. Thirdly, and perhaps most dangerously, the US flirts with defaulting on its debt. In 1995, treasury secretary Robert Rubin had to borrow $91bn from pension funds just to try and make sure this didn’t happen.

Why does the government of the largest economy in the world have to countenance a fate more commonly associated with somewhere like Greece? Comparing the respective political systems of the UK and the US in The English Constitution (1867), the constitutional theorist Walter Bagehot pointed out that in the US system, the problem is that the people who decide spending are not the same as those who raise the taxes. “The tax imposers,” he wrote, “are sure to quarrel with the tax givers.” This is particularly true at times when the White House faces a hostile opposition party with a majority in the House of Representatives as it does now, and did in 1995. Bagehot, also pointed out that in the UK, the Cabinet gets to go vote on the budget they ask for in parliament. Many here might wish that the government had to work harder to get the budget they wanted, but in terms of government’s efficiency, there is no contest.

The continuing resolution being voted on today, which allows for another three weeks spending with $6bn of cuts, will definitely pass the Senate. The hard work was done on Tuesday when the House of Representatives passed the bill. Fifty-four Republicans from the right wing of their party voted against the measure, wanting to see a budget that makes $60bn of cuts rather than stop gap measures. For many more, this may be the last continuing resolution they’ll vote for.

Obama, even though he has expressed his desire to make some cuts, may soon be forced into holding his nerve when presented with a vast swathe of them, many deeply ideological. That is without even considering the attempts to kill his healthcare plan by removing its funding.

The longer the stop gap resolutions continue, the more cuts and spending may come to define his bid for re-election next year. As it happens, the man who shut down the government in 1995, then Speaker of the House Newt Gingrich, is likely to run for president. Gingrich does so unabashed, despite seeking Clinton’s impeachment over Monica Lewinsky while conducting an affair himself. He is now on his third wife.

Obama is facing serious pressure to cut many areas he sees as key, but he can perhaps draw inspiration from Clinton. When threatened by Congressional Republicans that a shut down would end his administration, Clinton railed that he wouldn’t let them have their budget:

“Even if I drop to five per cent in the polls. If you want your budget you’ll have to get someone else in this chair.”

Al Gore later told him that he should have said zero per cent.

“No Al,” said Clinton; “If we drop to four per cent, I’m caving.”

Clinton was fierce in protecting spending that he believed was progressive. The complaint from both Democrats and Republicans is that Obama has been absent from the debate so far, perhaps understandably; this issue is potentially toxic for him. But there are opportunities. Moderate Republicans have recently complained about the recklessness of their more extreme colleagues. The risks to the White House may be great, but so are the rewards.