Government Shutdown

[johnakay]

politits and Religions are best left out of forums.
I've seen to many fall outs over who's right or wrong its just not worth it folks.
all it will cause.... eventually is heated arguments and folks getting kicked off.
best to leave there.

 

[SlowSteve]

I completely understand that you guys don't want to talk "Them vs Us" politics, and I have to say I agree with that.

However as a British guy looking in from the outside ( and someone who is in the US 1 week in 4 ) it does seem odd that the focus is still on the furlough, and that even that isn't the top story in many of the papers or on the news.

The thing that is scaring the rest of the world is what happens on the 18th October if the debt ceiling isn't lifted - a default on the bonds ( Treasury bills). Seeing as a vast chunk of the world economy is based around the T-Bill and the idea that it will never, ever default - for example the Chinese economy, the Japanese economy, the european banking system, the US banking system etc etc etc etc. If it does fall over, the crash of 2008 has the potential too look very small indeed.

I don't mean to sound alarmist, but this is something that is worrying a lot of countries around the world, and in the US papers, I just don't see much discussion of it.

Not looking to start a politics debate, just raising an odd fact.

 

[JamesD]

If the govt stops spending money like a drunken sailor we wouldn't have to raise the debt ceiling... end of problem.

(with apologies to drunken sailors who stop spending when they run out of money)

 

[OldJeff]

A drunken sailor does stop spending money when he runs out, but the yahoos in DC just print more or borrow more. 23% of GDP is spent on just servicing the US national debt... Can you run your household that way? for how long? yeah...

 

[dduelin]

If the govt stops spending money like a drunken sailor we wouldn't have to raise the debt ceiling... end of problem.

(with apologies to drunken sailors who stop spending when they run out of money)

Maybe the next time but this time raising the debt limit is to pay for what Congress already spent in the past. If we don't do it and pay our bills on time the world economy will endure the unthinkable. There is really no telling what will happen but it won't be good.

Raising the debt limit is not exactly like asking the credit card company for a higher card limit.

 

[Dannodog]

I've been out of work since the beginning of the shutdown. I'm not considered "Essential". Fine by me. I'd be really bent if I was working for nothing... anyway, this is my first paycheck that is short. I thought this would have resolved by now... I'm staring down the barrel now. If this continues, and we aren't reimbursed of days off (I don't want free pay, just give me the option to use vacation or sick days for the days we've been off! I don't want something for nothing...) soon, I'm going to have to fall back on credit cards for day-to-day stuff. this really sucks.

 

[JamesD]

Maybe the next time but this time raising the debt limit is to pay for what Congress already spent in the past. If we don't do it and pay our bills on time the world economy will endure the unthinkable. There is really no telling what will happen but it won't be good.

Raising the debt limit is not exactly like asking the credit card company for a higher card limit.

The debt limit and paying our debt are not linked.
Tax dollars come into the treasury year round and payments can still be made even if the debt limit isn't raised.
It just keeps the govt from borrowing more money.

 

[Naked_Duc]

Whether or not you agree with the tactics used to get us to this point of the government shutdown, the fact remains - Government spending is out of control and it's not sustainable. If we don't take a serious look at it, the US government/economy will collapse under its own weight.

The debt ceiling will be lifted in the 11th hour, just like all previous instances. There is no way the US Federal Government will default on its liability. But the budget crisis has to be addressed. Overspending $1 trillion every year and pretending everything is alright is nothing short of insanity.

 

[CorEnFa]

Unfortunately, there is a lot of misinformation about what the debt ceiling really is. At the beginning of the fiscal year, Congress obligates funds for their upcoming year. At the end of that year, they make the payments on those obligations. So, by creating the budget last year as it was, it passes the responsibility on to this year's Congress to fund it. You can't simply say - stop spending money and the problem is solved. Most of the money that is spent (by FAR) is on the Department of Defense. I'm one, despite having just left a cushy civilian job and whose wife still works for the DOD (as a civilian, currently furloughed but brought back, forced to work with only the promise of pay) who thinks that the DOD NEEDS to be cut severely. However, when you do that, you cut millions of jobs.

Most of those people don't have the education or relevant skills to enter the job market right now and even if they did, flooding the job market with over a million workers would destroy the economy.

Sadly, our only way out is to spend more money on educating, research, job creation through programs that can be converted to private industry, etc. Our biggest opportunities are in manufacturing, Internet, and green-energy.

Imagine if we spent half of the DOD's budget on education alone. We could take some of the folks out of the DOD, put them in classrooms and have a highly educated country.

Sadly, facts and education are a threat to a large portion of the population who would prefer to live in blissful ignorance.

Sorry...that's my $.02.

 

[MZ5]

Is it not the case that the VAST bulk of DoD's budget expenditures are to private industry at this point? Paid out to contractors and suppliers in the private sector? Private-industry contract providers are the manufacturers of hardware, arms, ammunition, components, machinery, tools, etc., and they also provide an amazing amount of labor, and technical expertise and operations for the military. IOW, DoD's expenditures primarily go directly to the (private) industrial complex Eisenhower warned us about, do they not?

So, the money's already going directly to private industry. What would be achieved by simply 'firing' the DoD employees (and/or soldiers)? If the magnitude of the expenditures are too great (I take no position on the matter either way), simply stopping those expenditures _primarily_ impacts existing private industry, rather than displaced gov't employees. So while I agree with you about the general impacts of such a large-scale cut-back, I believe the general perception MASSIVELY underestimates it, and _also_ very, VERY badly misjudges _where_ the impacts will be felt.

Again, I take no specific position here. I simply point out that the slash-and-burn, we-don't-care-from-where-or-how mentality is, at this point, quite possibly MORE dangerous than business-as-usual. PLANNING for the changes, and implementing them over a period of time, if that is what is decided to be done, is the only way to avoid _genuine_ calamity.

 

[anglachel]

My brief attempt to fact check some of the past few statements... I also don't want to pick sides (kind regret doing so in this very thread earlier) but a few minutes on google for a few of the things that I found slightly dubious:

Overspending $1 trillion every year and pretending everything is alright is nothing short of insanity.

Projected National deficit for FY13 is under a trillion. (who knows what it will look like when the government re-opens and all the damage that has been done is tallied)
US Federal Deficit Definition - plus charts and analysis

Most of the money that is spent (by FAR) is on the Department of Defense.

Looks like we are spending more on health care then defense lately (I do recall that defense spending was cut for the first time in forever in the past couple of years) Granted some of that "health care" is likely defense spending in that it's going to treat vets and combat injuries... Defense spending is scattered through out the other areas, and it's hard to pin down exactly what things are being spend on (is walter reid hosptial defense spending or health care? is federal student load forgiveness for active duty service members education or defense? etc.)
Government Spending in United States: Federal State Local for 2014 - Charts Tables History

...thinks that the DOD NEEDS to be cut severely. However, when you do that, you cut millions of jobs.

As of 2011 the entirety of the US government employed 4.4 million people, 2.7 million of them were civilians in the executive branch, some portion of those would work in defense Millions might be an overstatement there.
Total Government Employment Since 1962

Is it not the case that the VAST bulk of DoD's budget expenditures are to private industry at this point? Paid out to contractors and suppliers in the private sector? Private-industry contract providers are the manufacturers of hardware, arms, ammunition, components, machinery, tools, etc., and they also provide an amazing amount of labor, and technical expertise and operations for the military. IOW, DoD's expenditures primarily go directly to the (private) industrial complex Eisenhower warned us about, do they not?

Even if that is the case, ceasing to pay for those contracts mean that the private sector that is currently paying people to fill those contracts would likely lay those people off...
No link for that one... sorry.

 

[Naked_Duc]

Projected National deficit for FY13 is under a trillion. (who knows what it will look like when the government re-opens and all the damage that has been done is tallied)

Thanks for fact checking. $973 billion is closest enough to $1 trillion in my book.

 

[dduelin]

I understand FY 12 deficit as a percentage of GDP is lower than the year before and projected FY13 is lower still. True?

 

[anglachel]

Thanks for fact checking. $973 billion is closest enough to $1 trillion in my book.

Fair enough but projected deficits for the years going out get significantly smaller, so to your original point that we can't go on spending more than a trillion a year more than we have, currently we don't plan too, so it might be possible that the system is working! (however unlikely that might seem, seriously have you seen the system? functioning doesn't seem like the kinda thing it would do...)

I understand FY 12 deficit as a percentage of GDP is lower than the year before and projected FY13 is lower still. True?

From what I read, yes that is true, however (and maybe some one can explain this to me) the whole concept of "as a percentage of GDP" doesn't make any sense to me.

Gross Domestic Product is the total value of our economy, and it's a shaky number at best, things are counted twice, some things aren't counted at all, it's really a terribly inaccurate number.

Assuming even that it is a measure of economic progress... Wouldn't a better measure for the purposes of of budget talks be to look at tax revenues? Assuming that our tax system works (another conversation) the income of the federal government is a percentage of the income of all of the people and corporations in it (and a few odd ball taxes up and down here and there because of our tax system being used as a carrot and a stick instead of a revenue source... sorry I said that was another conversation) And more importantly the revenue is a fairly solid number, unlike the GDP.

The deficit is also a fairly solid number, we know how much we spent, we know how much we took in, the differance is the deficit... but then we divide it by a fictional number like the GDP to show that we are doing better! Mostly because (even if the GDP were accurate) people are making more money, though it's not making it's way back in as revenue because the tax system isn't working to generate revenue based on GDP... Seems like GDP is just a fun way of making the numbers say what we want them to say.







Personally, I think that increased government spending during a recession makes sense, it bolsters up the economy when people stop spending, and that phasing out that spending after the recession also makes sense, looking at the graphs, knowing what I know about when the economy collapsed and how it started coming back I suspect that we are on exactly the right track... unfortunately the key isn't fighting about the budget right now, it's fighting about what the budget will be in 2015-2018, and it's a damn shame that very few legislatures can look forward to have a 5 year plan every time we make a budget, and only make small changes (unless there is an external need for a large one) along the way...
I personally also think that we need to start fighting NOW over what to do with the surplus when we start getting to the point where we have a surplus, and some point in the near future should* have a surplus (barring any outside influences which will always be there). And for people who don't understand how we can have a national debt and a budget surplus, it's kinda similar to how I have $100K still on my mortgage but when there is a month with an extra paycheck I don't always put that towards the principal on my house, since they aren't sending me a bill I don't feel obligated to pay off the debt early (though generally I do a little of that, and save up the rest until I do something silly like buying a motorcycle.)

*should being the operative word

All this of course is a mute point anyhow... because rational discussions about money rarely ever happen... I'm sure every motorcycle forum is full of examples where two people who generally get along well enough to decide to spend the rest of their lives together can't agree on a motorcycle purchase... trying to get 535-537 (upto and including the president and vice president if he needs to break a tie in the senate) who generally seem to despise each other to agree on such things... Odds don't seem good. (but it's managed to work for over 200 years. *shrug*)

 

[JamesD]

GDP includes govt spending the way it's currently calculated so as the govt budget goes up, GDP goes up.
If you used a GDP like number that didn't include govt spending I think you'd find numbers aren't so good.
Increased govt spending is masking reduced spending in the private sector.

Also keep in mind that the sequester kicked in and reduced the increase in govt spending so the administration couldn't spend as much as it wanted.
This could be misconstrued as more responsible govt spending when in fact it's just being forced.

 

[anglachel]

GDP includes govt spending the way it's currently calculated so as the govt budget goes up, GDP goes up.
If you used a GDP like number that didn't include govt spending I think you'd find numbers aren't so good.
Increased govt spending is masking reduced spending in the private sector.

Also keep in mind that the sequester kicked in and reduced the increase in govt spending so the administration couldn't spend as much as it wanted.
This could be misconstrued as more responsible govt spending when in fact it's just being forced.

Saying the sequester forced anything is like saying you were forced to post on this forum by yourself. Congress and the president passed the law allowing the sequester to happen, congress and the president can repeal that law just as easily.

I don't oppose the sequester, it seems like an almost rational way to cut spending... ask each department of the government to make a certain percentage cut and continue to function... the people who are closest to the department make the decisions about what gets cut, and what does not (instead of politicians in washington) and ultimately spending goes down. Departments that were already functioning with a high level of efficiency will have problems, with any luck they will be noticeable problems, and congress should at that point step in and change how the law works (like they did with air traffic controllers)

To your other point, looks like government spending is between 30-40% (in recent history past ~10 years) of GDP... that includes state and local government spending.
The whole number seems crazy like a way to choose which graph you show to make the numbers match the argument you are trying to make...

 

[MZ5]

Even if that is the case, ceasing to pay for those contracts mean that the private sector that is currently paying people to fill those contracts would likely lay those people off...

We agree; my point was that dramatically decreasing DoD spending primarily impacts the private sector directly, rather than indirectly via displaced ex-gov't employees. The corollary point is that when the common perception that 'the gov't is too large' (again, NOT taking a position on this), and the equally-common reaction is to just slash the budget, the primary impact (in this DoD example) is private-sector job elimination.

I don't oppose the sequester, it seems like an almost rational way to cut spending... ask each department of the government to make a certain percentage cut and continue to function... the people who are closest to the department make the decisions about what gets cut, and what does not (instead of politicians in washington) and ultimately spending goes down.

I agree that the theory seems less-than-horrible. But what actually happens? Do the Departments, Agencies, and other 'groups' set their own priorities, and eliminate programs they've autonomously determined to be of lower priority? Isn't there frequently some sort of statutory requirement for them to do most (all?) of the things they do? If the statutory requirement is left in place, but the funding is cut, how can the Departments & Agencies legitimately (legally?) choose to cut out any particular program? To me, it seems that leaving all programs in place, but simply cutting all their budgets by 20 - 25%, is an absolute guarantee of the kind of thing everyone complains about: Government taking forever to do anything at all. Everyone's unhappy, even the things that people really, really want done don't get done timely, and so everyone hates the government. That's counterproductive on a number of levels.

 

[anglachel]

I agree that the theory seems less-than-horrible. But what actually happens? Do the Departments, Agencies, and other 'groups' set their own priorities, and eliminate programs they've autonomously determined to be of lower priority? Isn't there frequently some sort of statutory requirement for them to do most (all?) of the things they do? If the statutory requirement is left in place, but the funding is cut, how can the Departments & Agencies legitimately (legally?) choose to cut out any particular program? To me, it seems that leaving all programs in place, but simply cutting all their budgets by 20 - 25%, is an absolute guarantee of the kind of thing everyone complains about: Government taking forever to do anything at all. Everyone's unhappy, even the things that people really, really want done don't get done timely, and so everyone hates the government. That's counterproductive on a number of levels.

My understanding is that the departments themselves are responsible for deciding what changes to get to their reduced budget.

I agree the sequester is less than ideal on a lot of levels, but the point I was attempting to make is that it is making the reductions in a moderately healthy way, and really forcing us to identify the pain points when budgets are cut.

If cutting funding to a particular department brings about pain (like the air traffic controllers did) then it can be fixed, HOPEFULLY we'd have the foresight to see that before it happens... sadly we (as a country/government) aren't always smart enough to have the foresight over the vast number of agencies out there to identify what is working efficiently and what isn't.





Though it sounds like this thread might finally be over by tomorrow morning, as the government re-opens and we all can stop worrying about the government until the next major screwup by our elected officials... which should be in a few hours...

Also sounds like those who were furrlowed will be getting back pay. Assuming nothing changes between the news articles I read just now and the ones that will be published tomorrow.

 

[MZ5]

Assuming nothing changes between the news articles I read just now and the ones that will be published tomorrow.

LOL! I think that's funny!

 

[SergeantChuck]

I have not read any of the details about the deal that was struck but wanted to say that I'm glad the federal workers are going back to their jobs. I hope the transition back is seamless and your losses weren't to damaging.