It's probably difficult to find anyone who is happy about the government shutdown. Everyone is mad and blaming Congress, the President, the Tea Party, conservatives, John Boehner, (you fill in the rest). The indignation felt by many Americans over the inability to visit national parks and missed paychecks seems worse this time.
The reality is that tussles over spending bills are not a new occurrence. In the 1960s and 1970s government shutdown occurred but the skirmish stayed within the halls of Congress. You might be surprised to learn that during the Carter administration, government shut its doors 5 times for a total of 57 days. And yes there was a central issue blocking the budget. This time it was the use of Medicaid dollars to fund abortions.
Ronald Reagan had the "Closed" sign 8 times for a total of 14 days. Under Bush 41, government shut its doors once for a total of 4 days. Bush 41 wanted a deficit reduction package as part of the budget (what a concept!) and vowed to veto the bill unless it contained this provision. It did not and he did.
The Clinton administration shut government doors twice for a total of 26 days. The current administration has seen government operations cease since October 1st. This time, of course, the central issue is the Affordable Care Act.
The action making government shutdown a legal issue occurred when Carter Attorney General Benjamin Civiletti legally opined that government could not operate unless Congress agreed to pay for it. Civiletti later softened the opinion by stating that "essential" services could continue. This is the reason that we still see air traffic controllers at work and why social welfare checks are still in the mail - these are considered essential.
So if these shutdowns occurred before, why do they seem more acrimonious now? There really are two reasons. As I noted in Escaping Oz: Protecting your wealth during the financial crisis, Americans are much more dependent on government than ever before. In Chapter 6 of my book, I cited that government grew exponentially in the 100 year period between 1910 and 2010. For example, our funded debt grew by 530,130%. This figure is higher now since our funded debt is now in the neighborhood of $17 trillion where it was $13.8 trillion in 2010. According to the U.S Department of Treasury web site,
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
So in order to tread water, we have to fund $17 trillion. Readers, please also understand that these comments are about funded debt and do not include unfunded liabilities which are many multiples of funded debt. This dependency on government makes any sort of government withdrawal extremely painful. Legislation like the Affordable Care Act will place more burdens on the system and cause even greater pain during the next budget process. Count Reason #1 as the sheer size of government.
The second reason is something else I discussed in my book and that relates to human social cycles. The current cycle is one where there is less harmony. We see this manifested in what I called Fallen Heroes. People once revered were and are currently vilified. The anger turned towards institutions like Wall Street (Occupy movement) and government (Tea Party). But there is an even broader undercurrent.
A Gallup poll revealed that Americans trust themselves less than ever. Just 61% of respondents said they have a great or a fair amount of trust and confidence in their fellow Americans regarding judgements made about important issues. This is down from a peak of 86% in 1976. That figure fell to 78% in 2005. During the stock market fall of 2007 to 2009 it remained in the 70th percentile. Beginning in 2010, however, the figure has fallen. Congress and the President are faring worse in this survey polling 10% and 36% respectively.
This appears counterintuitive that a rising stock market produces less trust and confidence. To me it simply underscores how unhealthy the "recovery" has actually been and how spurious the stock market rally is. Look for the poisonous debate to continue. The malaise is not just in Washington but in the fabric of the country.
Jim Mosquera is the author of Escaping Oz: Protecting your wealth during the financial crisis.
