The Shutdown Cometh

“From the education of a TV station, But look around, hear go the sound of the wreckin’ ball, Boom and Pound When I Shut ’em down. I shut ’em down (shut ’em down, shut ’em, shut ’em down)” – Public Enemy, Shut ‘Em Down

All signs today are pointing to a government shutdown; and the absurdity grows.

First, let me reiterate my stance. We need to cut $500 billion from the budget this year, not the $60 billion the Republicans are proposing or the $30 billion the Democrats have consented to. These cuts are necessary to maintain the integrity of the country going forward. As Paul Ryan has noted, we will either make serious cuts now, balancing the budget, or we will make crippling “austerity” cuts in the not-so-distant future … then the social security and medicare checks will stop flowing, or will be cut dramatically. (Apparently the CBO is also indicating it can’t “conceive of any way the economy can survive past 2037.”)

Now, some will say “no, we need to raise taxes” – yes, I suppose we could. Naturally, I also suppose that this would crash the economy and only extend pain. Furthermore, the U.S. government has never collected more than 20% of GDP through taxation. In 2010 that was $14.7 trillion, making the best revenue we could hope for of $2.94 trillion – $880 billion shy of what is needed to balance the budget. I guess we’ll have to cut spending after all.

Now for absurdity. First, there is rhetoric from the Democrats. Barack Obama complains: “At a time when you are struggling to pay your bills and meet your responsibilities, the least we can do to meet our responsibilities is produce a budget. That is not too much to ask for.” You know, Mr. President, the only reason we’re having a “shutdown” discussion is because there is no budget. We’ve been operating on continuing resolution for some time – because there is no budget for 2011. Why is that? Well, when the Democrats had massive majorities in the House and Senate, as well as controlling the White house, they did not pass a budget!  That’s right, untouchable, indomitable majorities in both houses of Congress – no budget. Quit your griping Obama, and quit your condescension. You are the reason we’re here in the first place.

That’s not the only matter of absurdity though. A government shutdown is another example of how the government can get even simple things flat out wrong.

Let’s flash back for a moment to the “cash for clunkers” debacle. The auto industry was struggling. The government’s solution for an ailing sector of an ailing economy? Destroy serviceable cars. That’s right, if we destroy useful assets the economy will do better. It’s much the same as the logic in the great depression of destroying crops to keep prices up – when people were going hungry.

Fast-forward to the shutdown. Much of the government’s taxing and spending policy is to take money away from productive activities and use it to subsidize unproductive activities. We take money from people who are working (and have earned the money) and use it to prop up those who are not working (whether they are unable or unwilling). Regardless of moral concerns, this is economic idiocy.

Now, in the case of a shutdown, the government is going to stop spending money … well, it’s going to stop some spending. And what spending is going to be stopped? We’re going to take the government spending that actually produces something and stop it. We’re going to take the people who are actually getting up and doing something during the day (no jokes about productivity of government employees, please), and tell them to stay home. Are we going to stop subsidizing unproductivity? Nope – only the productive activities must stop.

Well done guys, well done. We’ll see what the fallout looks like Monday.

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