Shut It Down: Act II

It's time to Break It Down!

As I was growing up in agrarian North Carolina, adults, who thought they had a corner on the smarts and common sense markets (and who probably did), repeatedly assured me and others of my tender age that one of the principal defining qualities separating men (and women) from animals was the capacity to learn from our mistakes.  This meant more than the ability to avoid taking an action that previously led to getting hit with a newspaper, or acting in a way that had resulted in earning a treat.  No, this was about developing and using ones considerable mental prowess to think, critically analyze, and solve complex problems.

For most of my life, I have accepted that conventional wisdom as writ.  But I concede there are a number of poignant examples that give me pause.  To use a prominent baseball metaphor, another case is waiting on deck.  For the last couple of months I have been a casual observer to what appears destined to become the next American governmental docudrama.  If the Godfathers of Government don’t start exhibiting some of that agile, problem-solving skill, post-haste, the Federal Government will Shut Down Friday.

Now, I realize that there are a number of anti-government activists who are convinced that’s a good thing.  Suffice it to say, I disagree.  But that, in and of itself, is not the point of this post.  Rather, I’d like to remind gentle readers of the most recent precedent for this approach to resolving the compelling questions about the federal budget, and consider briefly the lessons drawn from that 1995 misadventure.

The main actors, in what I shall refer to as Shut Down I, were President Bill Clinton, and Speaker of the House, Newt Gingrich.  The Cliff Notes version of this misapplied act of machismo was Mr. Gingrich, even now considered a stout intellectual dynamo in GOP circles, acting at the behest of the Republican majority in Congress, attempted to extract more budget cuts than President Clinton would accept.  Mr. Gingrich, certain that the President would blink, miscalculated, and persuaded Congress to refuse to raise the debt ceiling. 

The end result of this ill-conceived game of Chicken was played out between November 14, 1995 and January 6, 1996.  The Federal Government was shut down twice, for a total of 4 weeks; so-called non-essential government workers were furloughed, and the corresponding non-essential services those workers provided were suspended.  The economic consequences of a government shutdown, then, as now, include a loss of investor confidence, which in turn means it costs more for the government to borrow money.

Not surprisingly, active finger-pointing ensued.  The President blamed the Speaker; the Speaker blamed the President…and the people were left to “eat cake,” figuratively, of course.  Ultimately Republican resolve melted.  This occurred in part because of factions tied to Presidential politics, and in part due to an untimely gaffe by one of the key players.

Both Speaker Gingrich and Senator Bob Dole harbored ambitions of running for President.  As a result, Senator Dole favored “ending the hostilities” sooner rather than later.  Gingrich, on the other hand, having devised the idea, and served as the face of the movement, was content to not only to shut it down, but to nail it up, indefinitely. 

The Senator's position would prevail.  A couple of days after the shutdown ended, Mr. Gingrich was quoted citing a Clinton snub as the basis for his doggedness on the issue.  His complaint was widely reported, and almost instantly, he and more important, Republicans lost any semblance of moral high ground on the issue.  The sequence of events would later be considered significant in a classic double-whammy sort of way.  If deflated Republican energy and momentum in advance of the 1996 Presidential Election; alternately, President Clinton’s ratings soared, and he went on to secure reelection.

Fast-forward to the here and now of the 21^st Century.  Another Republican Speaker and another Democrat President; at odds over budget matters.  Democrats have moved significantly from their original position; Republicans are vowing to remain steadfast, citing their mandate as the cause to which they must be true.  In fact after reach a tentative agreement on budget cuts, they subsequently increased their demands.  There is much to differentiate the current and past Speakers, starting with Speaker Boehner’s Trademark ultra-tan, and Speaker Gingrich’s ascribed intellect.  Mr. Gingrich flew hard-charging into the 1995 Shut Down.  Mr. Boehner spoke against the idea, consistently, until recently.  Few would confuse the savvy populism of President Clinton with the reserved professorial demeanor of President Obama.  Once again, active finger-pointing is the order of the day.  As a result, not surprisingly, here we are, poised to for a Shut Down redux.

When reflecting back to 1995, one may have a temptation to cast one side as the protagonists, and the other as either the sympathetic victim(s), or more ominously, the bad guys.  I do none of the above.  Looking in the rear view mirror that shut down looks the same now as it did then; like a lame idea, the repercussions of which threatened to punish the masses in general, and the poor in particular.  Looking ahead, nothing about Friday’s potential Shut Down scenario has changed.  In an already tenuous economy:

• Hundreds of thousands of employees will be sent home
• The masses will be denied the benefits and services those employees provide
• Markets will react badly due to increased uncertainty
• Borrowing money will cost the government more
• Consumers will find borrowing more difficult
• Without public sector demand, the private sector & entrepreneurs will compress
• Unemployment up; benefits down

And so it goes!  If there is no agreement by Friday, it’s hard to say who will win, but the losers are already evident.  It was a bad idea in 1995; if political operatives decide take a walk down Memory Lane and in effect, “Shut It Down: Act II,” it will further erode my confidence in the elders who taught me to believe our species was special, adaptive, and inclined not only to learn from our mistakes, but to put that new insight into practice when faced again with similar obstacles.  It is not too late, but, reports suggest both sides have taken steps to put all concerned on alert that a shutdown is imminent.  Definitely not a good sign, as omens go. 

As in 1995, it is impossible to miss the implications for the coming Presidential campaign.  On one hand, the scorched earth, “cede this President no victories” strategy resides at the center of this madness.  Meanwhile, this malicious tack is countered by an equally injurious effort, intended to show the people how detached the Republican leadership is from the day-to-day struggles of the working class who rely on the jobs and services that will be lost…during the most challenging period of economic distress the nation has seen since the Great Depression.  All the while, as the professional politicians hone and refine their moves, like manipulating pieces on a Chess Board, the people wait…and prepare to suffer.  It is hard for me to imagine that supporters of the Left, Right, or Center view this as a desirable outcome.  Instead, I believe, paraphrasing the patriot, Patrick Henry, "Now is the time for all good men to use their considerable mental prowess to think, critically analyze, and solve complex budget problems.  What do you believe?

I’m done; holla back!

Read my blog anytime by clicking the link: http://thesphinxofcharlotte.blogspot.com.  A new post is published each Wednesday.  For more detailed information on a variety of aspects relating to this post, consult the links below:

http://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_1995

http://www.chicagotribune.com/news/politics/sns-rt-politics-us-usa-budtre7321p1-20110403,0,1005874.story

http://www.reuters.com/article/2011/04/06/us-usa-budget-idUSTRE7321P120110406?feedType=RSS&feedName=topNews

http://news.yahoo.com/s/nm/20110405/bs_nm/us_usa_budget

http://news.yahoo.com/s/ap/20110405/ap_on_re_us/us_spending_showdown

http://www.foxnews.com/politics/2011/04/05/house-senate-leaders-head-white-house-ditch-dealing-budget/

http://www.washingtonpost.com/blogs/federal-eye/post/obama-administration-moving-forward-with-government-shutdown-plans/2011/04/04/AFodFdfC_blog.html

 
http://www.politico.com/news/stories/0411/52615.html

http://onlinejournal.com/artman/publish/article_7742.shtml

http://www.huliq.com/12079/government-shut-down-obama-calls-boehner-irs-plan-take-not-give

http://en.wikipedia.org/wiki/Patrick_Henry