Live at Wonkblog: What is Actually Shutdown?

Oct 7, 2013Mike Konczal

My weekly post at Wonkblog is: The ‘non-essential’ parts of government that shut down are actually quite essential. Given the way parks and zoo cameras have dominated the coverage of the shutdown, I wanted to step back and summarize what exactly the federal government doesn't do in a shutdown, and how important it is. I also highlight some great journalism being done on the shutdown itself. Hope you check it out.

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My weekly post at Wonkblog is: The ‘non-essential’ parts of government that shut down are actually quite essential. Given the way parks and zoo cameras have dominated the coverage of the shutdown, I wanted to step back and summarize what exactly the federal government doesn't do in a shutdown, and how important it is. I also highlight some great journalism being done on the shutdown itself. Hope you check it out.

Follow or contact the Rortybomb blog:

  

 

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What are Conservative Experts Saying About Breaking Through the Debt Ceiling?

Oct 7, 2013Mike Konczal

There was a fantastic piece in The Atlantic back in 2000 about psychiatrists dealing with people who wanted to have their limbs cut off because it would make them feel more like themselves to be amputees. The doctors’ big dilemma was whether or not to treat “apotemnophilia” as a diagnosable mental illness. If they engaged with it as a mental illness that existed and was recognized by the medical community, they ran the risk of encouraging more patients to identify with it.

I have the same feelings about engaging in a debate over whether or not breaching the debt ceiling matters. I don’t want it to become a debate that people have, because it will get coded as yet another partisan thing pundits fight about, and thus reduce the seriousness with which we should regard the situation. That, in turn, could make a default even more likely. This is a problem we face because of the he-said/she-said coverage of political topics in most U.S. media.

Right now, many House Tea Party members believe that a default is impossible because we can prioritize interest payments to go first. There have been really great pieces written lately about going through the debt ceiling and what it would mean for the economy; Kevin Roose, Greg Ip, and Matthew O’Brien have pieces that are particularly worth your time.

At a baseline, what they tell us is that even if that kind of prioritizing is possible, the legality is in doubt, we could still miss a payment, the economy would go into a recession from the sudden collapse of spending, and even flirting with this possibility has a bad effect on the economy. We also simply don’t know if prioritizing would work.

But I wanted to get a sense of what the right wing is hearing on this topic. In order to do that, I contacted three major conservative think tanks to ask for a comment from their experts “about the economic consequences of the government defaulting on its debt if it goes through the debt ceiling.” Here’s what I got.

Heritage

The Heritage Foundation immediately responded with a quote from this post, stating, “Congress still has some time and options. Even if the debt limit is not raised by mid-October, Boccia writes, ‘the Treasury would not necessarily default on debt obligations,’ as it can ‘reasonably be expected to prioritize principal and interest payments on the national debt, protecting the full faith and credit of the United States above all other spending.’”

They added, “In other words, risk of a default is practically nil—unless the President and Treasury choose to default, an unprecedented and almost inconceivable course of action.”

In short, Heritage’s position is that if there’s a default, it will be because the president chooses to default.

Cato Institute

The Cato Institute put me in touch with their senior fellow Dan Mitchell, who said, “I think the likelihood of an actual default is zero, or as close to zero as you can possibly get, for the simple reason that the Treasury Department has plenty of competent people who would somehow figure out how to prioritize payments.”

But wait, does the Obama administration have the legal authority to do something like that? “From what I understand. I’m an economist, not a lawyer. It’s a gray area.”

But isn’t it complicated to prioritize debt payments? “Interest on the debt is paid out of a different account than other government spending. So the argument that there’d be a lot of difficulty and challenges to prioritizing most payments is true, because it’s automatic.” However, “interest payments on the debt are apparently out of a different account, which presumably means that that it would be relatively simple to make sure that happens.”

But certainly it would cause some financial panic, right? “Will there be some economic repercussions? Financial markets I’m sure would be worried as we’d be in uncharted territory… Yes, I’m sure there’d be some anxiety. Especially if Bernanke or Lew or somebody like that is saying something that triggers concern, and spooks the markets.”

American Enterprise Institute

Bucking the trend, the American Enterprise Institute put me in touch with Michael Strain. What happens if we go through the debt ceiling? “First thing I’d say is that nobody really knows, and that’s the scary thing,” he told me. He referenced and drew on an LA Times editorial he had just written.

“I think you’d see a spike in interest rates. Though others think interest rates might fall because people would be spooked. Either way, we should consider it a catastrophe. If there’s a default it could cause a credit crunch. If the repo markets don’t consider Treasuries good collateral anymore there could be a panic. There really could be something similar to 2008.”

Could we prioritize payments? “What I would caution is that it is not clear we could do that. So, for example, back in the 1970s Congress waited until the 11th hour to raise the debt ceiling, and we were put into default by errors in execution. I’d caution that if we try and do something cute things can go wrong. And we don’t want to invite error. We saw what happened in 2011 - even with a deal and no default, even doing that really hurts the economy in a measurable way.”

So why is there so much fascination on the right with going through the debt ceiling? “When I do interviews with right-wing media there does seem to be a story that goes like this: they said the sequester would be horrible and the sky didn’t fall, they said that the government shutdown would be horrible, and the sky didn’t fall, and now they are saying going through the debt ceiling date would be horrible and why would we believe them this time? I’ve been trying to push back against this.”

Add to that last part the idea that conservatives are “winning” the shutdown, so why not push their luck and go through the debt ceiling, too? Especially when the majority of people doing the intellectual, “expert” work on the right are describing it as either consequence-free or an opportunity to blame President Obama for something.

Follow or contact the Rortybomb blog:

  

 

There was a fantastic piece in The Atlantic back in 2000 about psychiatrists dealing with people who wanted to have their limbs cut off because it would make them feel more like themselves to be amputees. The doctors’ big dilemma was whether or not to treat “apotemnophilia” as a diagnosable mental illness. If they engaged with it as a mental illness that existed and was recognized by the medical community, they ran the risk of encouraging more patients to identify with it.

I have the same feelings about engaging in a debate over whether or not breaching the debt ceiling matters. I don’t want it to become a debate that people have, because it will get coded as yet another partisan thing pundits fight about, and thus reduce the seriousness with which we should regard the situation. That, in turn, could make a default even more likely. This is a problem we face because of the he-said/she-said coverage of political topics in most U.S. media.

Right now, many House Tea Party members believe that a default is impossible because we can prioritize interest payments to go first. There have been really great pieces written lately about going through the debt ceiling and what it would mean for the economy; Kevin Roose, Greg Ip, and Matthew O’Brien have pieces that are particularly worth your time.

At a baseline, what they tell us is that even if that kind of prioritizing is possible, the legality is in doubt, we could still miss a payment, the economy would go into a recession from the sudden collapse of spending, and even flirting with this possibility has a bad effect on the economy. We also simply don’t know if prioritizing would work.

But I wanted to get a sense of what the right wing is hearing on this topic. In order to do that, I contacted three major conservative think tanks to ask for a comment from their experts “about the economic consequences of the government defaulting on its debt if it goes through the debt ceiling.” Here’s what I got.

Heritage

The Heritage Foundation immediately responded with a quote from this post, stating, “Congress still has some time and options. Even if the debt limit is not raised by mid-October, Boccia writes, ‘the Treasury would not necessarily default on debt obligations,’ as it can ‘reasonably be expected to prioritize principal and interest payments on the national debt, protecting the full faith and credit of the United States above all other spending.’”

They added, “In other words, risk of a default is practically nil—unless the President and Treasury choose to default, an unprecedented and almost inconceivable course of action.”

In short, Heritage’s position is that if there’s a default, it will be because the president chooses to default.

Cato Institute

The Cato Institute put me in touch with their senior fellow Dan Mitchell, who said, “I think the likelihood of an actual default is zero, or as close to zero as you can possibly get, for the simple reason that the Treasury Department has plenty of competent people who would somehow figure out how to prioritize payments.”

But wait, does the Obama administration have the legal authority to do something like that? “From what I understand. I’m an economist, not a lawyer. It’s a gray area.”

But isn’t it complicated to prioritize debt payments? “Interest on the debt is paid out of a different account than other government spending. So the argument that there’d be a lot of difficulty and challenges to prioritizing most payments is true, because it’s automatic.” However, “interest payments on the debt are apparently out of a different account, which presumably means that that it would be relatively simple to make sure that happens.”

But certainly it would cause some financial panic, right? “Will there be some economic repercussions? Financial markets I’m sure would be worried as we’d be in uncharted territory… Yes, I’m sure there’d be some anxiety. Especially if Bernanke or Lew or somebody like that is saying something that triggers concern, and spooks the markets.”

American Enterprise Institute

Bucking the trend, the American Enterprise Institute put me in touch with Michael Strain. What happens if we go through the debt ceiling? “First thing I’d say is that nobody really knows, and that’s the scary thing,” he told me. He referenced and drew on an LA Times editorial he had just written.

“I think you’d see a spike in interest rates. Though others think interest rates might fall because people would be spooked. Either way, we should consider it a catastrophe. If there’s a default it could cause a credit crunch. If the repo markets don’t consider Treasuries good collateral anymore there could be a panic. There really could be something similar to 2008.”

Could we prioritize payments? “What I would caution is that it is not clear we could do that. So, for example, back in the 1970s Congress waited until the 11th hour to raise the debt ceiling, and we were put into default by errors in execution. I’d caution that if we try and do something cute things can go wrong. And we don’t want to invite error. We saw what happened in 2011 - even with a deal and no default, even doing that really hurts the economy in a measurable way.”

So why is there so much fascination on the right with going through the debt ceiling? “When I do interviews with right-wing media there does seem to be a story that goes like this: they said the sequester would be horrible and the sky didn’t fall, they said that the government shutdown would be horrible, and the sky didn’t fall, and now they are saying going through the debt ceiling date would be horrible and why would we believe them this time? I’ve been trying to push back against this.”

Add to that last part the idea that conservatives are “winning” the shutdown, so why not push their luck and go through the debt ceiling, too? Especially when the majority of people doing the intellectual, “expert” work on the right are describing it as either consequence-free or an opportunity to blame President Obama for something.

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Daily Digest - October 7: Not So Non-Essential, Still Shutdown

Oct 7, 2013Rachel Goldfarb

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The ‘Non-Essential’ Parts of Government That Shut Down Are Actually Quite Essential (WaPo)

Click here to receive the Daily Digest via email.

The ‘Non-Essential’ Parts of Government That Shut Down Are Actually Quite Essential (WaPo)

Roosevelt Institute Fellow Mike Konzcal breaks down some of the services government usually provides, the absences of which can cause the country real harm. It's not all museums and panda cams: it's trade, research, and critical pieces of the social safety net.

Shutdown Prompts Rare Government Mix: Imagination and Laughter (ProPublica)

Kim Barker reports on one side effect of the shutdown: conferences that scheduled non-essential federal employees as presenters. One analyst for Health and Human Services went so far as to record a presentation before going on furlough, to fill in for himself.

Other Ways to Get Your Jobs Data (NYT)

Thanks to the shutdown, there was no official jobs report on the first Friday of October. Catherine Rampell lists some of the alternative measures, which are usually overshaded by the Department of Labor but are all we have right now.

The Most Often Repeated Fact About US Debt is Wrong (Quartz)

Matt Phillips points out that depending on what definition of a default you use, the U.S. has defaulted on its debt up to three times in the past. But non of those situations look anything like the debt ceiling question today, which would be a "voluntary" default.

Boehner Says He Doesn't Want to Default, But That's 'The Path We're On' (NY Mag)

While Friday's Daily Digest linked to a New York Times piece indicating that Boehner would not allow a default, now Margaret Hartmann reports that the Speaker is saying otherwise. He's apparently no longer willing to step around his own party.

Here's The Uncomfortable Answer To Whether Treasury Can 'Prioritize' Payments In The Event Of A Debt Ceiling Breach (Business Insider)

Joe Weisenthal explains that the Treasury is unsure if it's even possible to priotiize interest payments in order to avoid a default - and even if it is possible, the legality is questionable too.

At a Nissan Plant in Mississippi, a Battle to Shape the U.A.W.’s Future (NYT)

Steven Greenhouse reports on the U.A.W.'s continued attempts to organize Southern auto plants. The union is taking an international strategy, having union members worldwide pressure Nissan and drawing support from Brazil to South Africa to Japan.

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Daily Digest - October 4: Shutdown Reasoning is All Talking Points

Oct 4, 2013Rachel Goldfarb

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The Values Divide (Other Words)

Roosevelt Institute Senior Fellow Richard Kirsch argues that today's partisan divide is based on differing concepts of responsibility and freedom. The right wants freedom from paying for anything that helps another person, while progressive responsibility is to others.

Click here to receive the Daily Digest via email.

The Values Divide (Other Words)

Roosevelt Institute Senior Fellow Richard Kirsch argues that today's partisan divide is based on differing concepts of responsibility and freedom. The right wants freedom from paying for anything that helps another person, while progressive responsibility is to others.

Boehner Tells Republicans He Won’t Let the Nation Default (NYT)

Ashley Parker and Annie Lowrey report that the Speaker has privately indicated that he will work with Democrats to ensure a debt ceiling increase. Since a default would be far more catastrophic than the shutdown, it's good to see at least a little bipartisanship.

Paul Caught on Hot Mic: 'We're gonna win this, I think' (Maddow Blog)

Steve Benen reports on a conversation between Senators Paul and McConnell, caught on mic yesterday. It proves that Republicans are so caught up in rhetoric and talking points that they've forgotten about the basics of governing.

Can Obama Disrupt the Shutdown Narrative? (MoJo)

David Corn asks what the President would need to do in order to shift the media narrative of shutdown from a joint inability to compromise to the Republicans harming veterans, children, and the sick because they oppose a law and can't get the votes to repeal it.

Republicans Are No Longer the Party of Business (Bloomberg Businessweek)

Joshua Green writes that the shutdown is causing some members of the business community to reconsider their support of the GOP. The party is taking actions that have a clear negative effect on the economy, and that disruption is bad for business.

Government Shutdown Hits Native Americans Hard (ThinkProgress)

Bryce Covert reports that since federal grants fund many programs to the tribes, Native Americans are being hit disproportionately hard by the shutdown. Of course, this is on top of the pain of sequestration, which already caused many cuts in services.

What Happens If We Approach the Debt Ceiling? Here's What Happened in 2011 (The Atlantic)

Derek Thompson remembers what happened when we last came dangerously close to the debt ceiling: markets dropped, interest rates rose, and the U.S. credit rating was downgraded, costing taxpayers $19 billion. All that can be avoided if Congress will just raise the debt ceiling.

Too Small to Survive: Inside One Bank's Struggle to Save Itself (The Guardian)

Jana Kasperkevic looks at the opposing side to "too big to fail," and finds that small local banks are hurting. One such bank, which focused on real estate loans to local businesses in Bridgeport, CT, was forced to close by the FDIC.

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Daily Digest - October 3: More Shutdown, Bigger Problems

Oct 3, 2013Rachel Goldfarb

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Republicans Split On Whether To Give Back Pay To Workers Furloughed In Government Shutdown (HuffPo)

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Republicans Split On Whether To Give Back Pay To Workers Furloughed In Government Shutdown (HuffPo)

Sabrina Siddiqui and Dave Jamieson report that while furloughed workers have always received backpay in the past, some Republicans say we might not be able to afford it. That the furloughed employees might not be able to afford rent is apparently irrelevant.

Here's How The Government Shutdown Gets Worse Over Time (Business Insider)

Josh Barro explains the timeline for how things will get worse through the month of October if the government remains shut down. The longer federal workers go without knowing when they will be paid, the more it will affect our economy.

What’s the Fight About? Republicans Struggle to Explain (MSNBC)

Suzy Khimm points out that while the GOP focused on Obamacare in the lead-up to shutdown, that's not what they're talking about today. They've shifted to broader fiscal issues, probably because starting a shutdown over a single law was a dead end.

Shutdown Coverage Fails Americans (AJAM)

Dan Froomkin thinks that by attempting to be fair and balanced in their coverage of the shutdown, journalists have failed in their duties. There's only one party responsible for the shutdown, and attempts at 'balance' conceal that truth.

Why Does the Debt Ceiling Matter? (Economist)

The Economist's daily explainer post tackles the debt ceiling, which doesn't actually involve taking on new debt. Raising the debt ceiling means giving the Treasury permission to let the deficit grow in accordance with other laws Congress has passed.

Why the Shutdown Is Leading to Debt Default; or, What Happens When You Take Hostages Without a Plan (NY Mag)

Jonathan Chait is convinced that Republicans plan to keep the shutdown going up to the debt ceiling deadline. The shutdown isn't giving them enough "hostages" to ensure a win in negotiation, because funding government is now a war.

New on Next New Deal

The Government Shutdown Could Be the Last Gasp of the Reagan-Friedman Agenda

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick suggests that the anti-government ideology of the 1970s and 80s is making another attempt to starve out government functions.

The Shutdown Shows the GOP Can't Accept Defeat in the War on Women

Roosevelt Institute Fellow Andrea Flynn argues that by tying their continuing resolution to anti-birth control measures before the shutdown, the GOP shows that they've already forgotten that they lost women in the presidential election by 36 points.

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The Shutdown Shows the GOP Can't Accept Defeat in the War on Women

Oct 2, 2013Andrea Flynn

When the GOP attempts to deny women access to contraception in the lead-up to a government shutdown, it’s hard to see how the party hopes to regain women’s support.

Yesterday the federal government shut down for the first time in two decades due, in part, to the GOP’s growing opposition to contraception. Republicans are intent on rolling back women's rights, and this time they are holding the federal government hostage in an attempt to advance their agenda.

When the GOP attempts to deny women access to contraception in the lead-up to a government shutdown, it’s hard to see how the party hopes to regain women’s support.

Yesterday the federal government shut down for the first time in two decades due, in part, to the GOP’s growing opposition to contraception. Republicans are intent on rolling back women's rights, and this time they are holding the federal government hostage in an attempt to advance their agenda.

With less than a day until the government would shut it doors, House Republicans put forth a spending bill that would enable employers, universities, and health insurance companies to deny coverage for contraception based on moral or religious beliefs. The bill would delay the “contraceptive mandate” – an Affordable Care Act provision that requires coverage of contraceptive and reproductive health services without co-pays – until January 2015. More broadly, the bill would delay the implementation of most ACA provisions for another year and would repeal a tax central to the law’s financing. Of course, delaying the law by a year is simply an attempt to overturn it altogether. Even Mitt Romney, who as Governor of Massachusetts implemented the very health overhaul on which the ACA is modeled, said a delay is the most strategic path to repeal.

The past few years have been an exercise in Republican tenacity as the party attempts to sink Obama's landmark domestic policy achievement. The fact that Obama won a second term in a decisive victory and that the U.S. Congress passed Obamacare into law and the U.S. Supreme Court deemed it constitutional is apparently meaningless.  

The GOP, hijacked by the right wing of its party, is redefining what it means to lose. Elizabeth Warren said it best on Sunday:

In a democracy, hostage tactics are the last resort for those who can’t win fights through elections, can’t win fights in Congress, can’t win fights for the presidency, and can’t win their fights in the courts. For this right wing minority, hostage-taking is all they have left: a last gasp for those who cannot cope with the realities of our democracy.

Since 2010, Republicans have voted 43 times to overturn the ACA. They have challenged the contraceptive mandate ad nauseam, have protested the employer mandate, and at the state level have refused to participate in the Medicaid expansion that would extend benefits to millions of uninsured, low-income individuals.

And President Obama, to the consternation of some on the left, has made concessions in hopes of advancing his overall agenda. Earlier this year, he compromised on the contraceptive mandate by enabling a broader group of self-defined faith-based organizations to qualify for a religious exemption, creating an accommodation where employees of those organizations can obtain full family planning coverage directly from insurance companies. He has responded to complaints from business lobbyists by agreeing to delay the employer mandate until 2015. (That provision requires employers with more than 50 full-time employees to offer affordable coverage for their workers, including children up to age 26.)

Republicans emphatically insist they are acting in the best interest of the American people. They aren’t. The ACA is good for women and for the entire nation. It has already expanded contraceptive coverage to millions of women, and within the next three years, approximately 13 million more uninsured women will be able to access affordable family planning and reproductive health services. The law will enable the majority of American women to access annual well-woman visits, screenings for cancer and STDs, maternal health care, emergency contraception, and pregnancy testing and counseling. Because of the ACA, individuals with pre-existing conditions will be able to get coverage and gender discrimination by insurance providers will be illegal. This law represents the most significant advancement in women’s reproductive health in nearly a century.

The unfolding debacle goes hand in hand with the reasons the GOP lost the women's vote in 2012 and is partly why they will not seize it back any time in the near future. Earlier this year, I wrote about the party’s self-reflective autopsy examining why and how Democrats carried the women’s vote by 36 points in the presidential election. They blamed their loss on a failed communications strategy but found little to be objectionable in the substance of their arguments. This week’s shutdown starkly illustrates the GOP’s inability to accept that the majority of Americans do not share their vision for the nation.

It’s becoming increasingly impossible for the GOP to argue that they care much at all about the women’s vote. Afterall, 69 percent of Republican women reported being opposed to a government shutdown, and 67 percent of registered voters believe that all workers should be allowed to access health care services regardless of their employer’s beliefs. And it turns out the only place contraception is controversial is in the halls of Congress; it is nearly universally accepted and used by Americans.

The GOP likes to say the "war on women" is a Democratic canard used to manipulate women at the voting booth. If only that were the case.

Andrea Flynn is a Fellow at the Roosevelt Institute. She researches and writes about access to reproductive health care in the United States. You can follow her on Twitter @dreaflynn.

 

Pills and calendar banner image via Shutterstock.com

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The Government Shutdown Could Be the Last Gasp of the Reagan-Friedman Agenda

Oct 2, 2013Jeff Madrick

This latest outrage is just another symptom of an extreme anti-government ideology with roots dating back to the 1970s.

The shutdown of the U.S. government is an outrageous act of ignorance, foolishness, and vindictiveness. History suggests that choosing destruction is usually tragic, but it’s hard to believe the Republican hardliners have any sense of history.

This latest outrage is just another symptom of an extreme anti-government ideology with roots dating back to the 1970s.

The shutdown of the U.S. government is an outrageous act of ignorance, foolishness, and vindictiveness. History suggests that choosing destruction is usually tragic, but it’s hard to believe the Republican hardliners have any sense of history.

The anti-government agenda in the U.S. has had many contributors. The end of the progressive uses of government more or less began in the 1970s, and was given impetus by Ronald Reagan’s scapegoating of government. It was also given impetus by Chicago-style economics, led by Milton Friedman. His book Capitalism and Freedom is basically a political pamphlet calling for governance to be reduced to a function of the Invisible Hand. Many Democratic economists came under his sway. 

Shutting down the government now is just a variation on Reagan and Friedman's "starve the beast" strategy of undermining government by denying it funding.

Friedman and Reagan have now reached the height of their influence, but many joined this march of foolishness. President Obama has consistently paid deference to the party line that reducing the federal deficit is the main economic priority. The Bowles-Simpson fiscal commission captured the self-destructive America temperament of the time by insisting federal revenues not rise above 21 percent of GDP. When Reinhart-Rogoff’s 90 percent bright line of debt-to-GDP was shown to be an artifact of poor research and arithmetic, Erskine Bowles said it was still just common sense.

Lots of moderate Republicans have made budget-cutting their main domestic priority, as have many Democrats. Sequestration is undermining what could have been a strong recovery by now.

The media, in their embrace of the safe middle-way, have done their share to promote general antagonism against government as well. It’s an American journalistic tragedy.

And so here we are. Just enough people feel government is meaningless to allow this crazy betrayal of a democratic nation to occur. How else can you so despise Obamacare that you would go to such destructive lengths? It is a useful program designed to help some 32 million Americans who suffer—yes, suffer—without health insurance.

If the old pre-Obamacare system was better, it would have worked. It didn’t. Health care delivery in America is appalling by any modern standard, and without reform, our society will become not just less prosperous but far less decent. Have these people no shame?

Democrats had also better rethink government. It’s not just a matter of plugging holes due to market failures, a misleading over-simplification of mainstream economic theory.

Government’s duty is to be a vibrant protector of rights and contributor to full lives. The myths about government are endless. Ask the proverbial man or woman on the street who does the most technological, economically vital R&D in the U.S. and they, under the influence of the misled media and economic orthodoxy, will almost always say the private sector and the venture capitalists. But it just ain’t so. Yes, venture capital is important, but government R&D is even more so. Government is the main contributor, even to Silicon Valley, but under sequestration, non-defense R&D is being cut back sharply. This is but one example of the effects of anti-government thinking.

The hope is that this is the last gasp of the Reaganite-Friedmanite brigade. The hope is that the U.S. will awaken to the uses of government and the beauty of a functioning democracy. We started the Bernard L. Schwartz Rediscovering Government Initiative for this reason. We are going to keep at it, telling everyone we can what government can do well, what its purposes are, and how it can be reformed. Ideology, someone said, is a short cut for thinking. When it comes to Reaganite-Friedmanite extremism, that’s an understatement.

Jeff Madrick is a Senior Fellow at the Roosevelt Institute, Director of the Bernard L. Schwartz Rediscovering Government Initiative, and author of Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present.

 

Shutdown banner image via Shutterstock.com

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Daily Digest - October 2: Partisanship Shouldn't Hurt the Party

Oct 2, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

What We Need to Fix Congress: More Partisanship (TNR)

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What We Need to Fix Congress: More Partisanship (TNR)

Roosevelt Institute Senior Fellow Mark Schmitt argues that the Republican party is actually acting in a strongly non-partisan manner right now. A focus on individual power over party power created the divides within the GOP that are fueling the shutdown.

Just What Are the Republicans Thinking? (Atlantic Wire)

Philip Bump looks at four possible rationalizations that Republicans may have used when they cast votes leading to the shutdown. None of these frames quite hold up as logical under scrutiny, probably because there's nothing logical happening here.

House GOP Pushes Piecemeal Approach as Democrats Stand Firm (NYT)

Jonathan Weisman reports that the GOP plans to push piece-by-piece spending bills today, funding just a few non-essential programs. Maybe they think that voters will stop blaming Republicans for the shutdown if the National Zoo's panda cam comes back online.

Democrats Should Reject a "Clean" CR (Slate)

Matt Yglesias suggests that now that government has shutdown, the Democrats should insist on a continuing resolution that increases the debt ceiling, or abolishes it all together. We don't need to go through this again in just two weeks.

U.S. Shutdown Has Other Nations Confused and Concerned (BBC News)

Anthony Zurcher explains why the international community is just so confused by what's happening in the U.S. right now. Almost no other country has a system of governance that makes a shutdown possible - which might be a good idea.

Shutdown Will Cost U.S. Economy $300 Million a Day, IHS Says (Bloomberg)

Jeanna Smialek and Ian Katz explain an assortment of estimates on the cost of the shutdown. There are losses to GDP, furloughed workers cutting spending, and slowed consumer confidence - not to mention market fluctuations.

The Ethic of Marginal Value (Jacobin)

Peter Frase challenges the common idea that labor follows, and should follow, standard models of supply and demand. Labor is not just another good, because labor is people, which requires separating the right to a basic standard of living from the labor a person does.

New on Next New Deal

Challenging the 'New Normal' of Violence in the U.S.

Roosevelt Institute | Campus Network Senior Fellow for Equal Justice Erik Lampmann argues for our ability to change the culture of violence in the U.S. He thinks that the progressive movement can take this on, and in fact has already started a lot of work that can be seen as anti-violence.

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Daily Digest - October 1: Welcome to the Shutdown

Oct 1, 2013Rachel Goldfarb

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Shutdown: The Last-Minute Tactics That Failed (MSNBC)

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Shutdown: The Last-Minute Tactics That Failed (MSNBC)

Suzy Khimm and Benjy Sarlin discuss how Congress failed to move their negotiations forward last night. Boehner has finally proposed a conference, something that Senate Democrats have called for almost as often as the House votes to repeal Obamacare.

The U.S. Government Has Shut Down: Does That Mean the Tea Party Won? (Quartz)

Tim Fernholz suggests that there is a win for the right here: the clean continuing resolution that is being discussed would maintain spending at current austerity levels, obscuring arguments on whether the budget should include more stimulus spending.

48 Ways a Government Shutdown Will Screw You Over (MoJo)

Tim Murphy's list includes everyone from furloughed Federal staffers and people on food assistance to ponies and trees. This comprehensive list shows just how much the federal government does that most Americans aren't paying attention to until a shutdown.

Here is Every Previous Government Shutdown, Why They Happened and How They Ended (WaPo)

Dylan Matthews lays out the history of government shutdowns since modern congressional budgeting began. Highlights include the 1977 "Abortion Shutdown III: Dark of the Moon," the 1982 "Let Them Eat Shutdown," and the 1987 "I Think You're a Contra."

How a Debt-Ceiling Crisis Could Become a Financial Crisis (NYT)

Annie Lowrey says that if the U.S. government goes into default, it could cause another financial crisis. The Treasury would be causing the crisis this time, so all the failsafe tools it developed with the Fed might not work properly.

Fixing Exorbitant CEO Pay: All is Not Lost (Fortune)

Eleanor Bloxham argues that today there is a better chance to change CEO compensation practices then there has been in a decade. Dodd-Frank provisions on CEO pay are starting to take effect, and other proposals would make even greater changes.

New on Next New Deal

President Obama's Best Move is to Force a Government Shutdown

Yesterday, Roosevelt Institute Senior Fellow Bo Cutter proposed that forcing a shutdown would be the most politically expedient option for the President. Today, we get to see if his predictions regarding how the shutdown will play out come true.

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President Obama's Best Move is to Force a Government Shutdown

Sep 30, 2013Bo Cutter

Bo Cutter witnessed the government shutdown of the mid-'90s firsthand as part of the Clinton budget team, and he argues that it's time to let it happen all over again.

This brief commentary is my first for a while. It's intended for President Obama's administration. The message is straightforward: accept the tooth fairy into your midst; welcome the gift that keeps on giving (a.k.a. the Republican House); do not seize defeat from the jaws of victory. Force a government shutdown.

Bo Cutter witnessed the government shutdown of the mid-'90s firsthand as part of the Clinton budget team, and he argues that it's time to let it happen all over again.

This brief commentary is my first for a while. It's intended for President Obama's administration. The message is straightforward: accept the tooth fairy into your midst; welcome the gift that keeps on giving (a.k.a. the Republican House); do not seize defeat from the jaws of victory. Force a government shutdown.

Very few presidents have ever been as lucky in their opponents as President Obama. Now is the perfect moment to leverage that luck and avoid a much harder fight (the debt ceiling) in a couple of weeks. It is the case that all political disputes have to end in negotiation, but when you can choose the terrain and terms for the negotiation, it is folly to pass up the chance.

We are deluged with news about the situation, so I won't belabor the back story. The House has passed a continuing resolution funding the government and defunding ObamaCare (I don't have a problem with the right's name). The Senate will pass a resolution funding the government and taking out the de-funding provision. This resolution will go back to the House, where Speaker Boehner will have to make a decision.

So what should the president do? I argue that now is the time to jam the House. The president ought to make it very clear that he would not regard it as a tragedy if the Senate sent its resolution back to the House at about 5 p.m. today. The Speaker had plenty of time this weekend to decide what he wants to do and could get something done by midnight if he acts. But the extremists in the House won't let the Speaker act sensibly, and they ought to be given the chance to pay a price.

What will happen? The government will begin to shut down. A lot of good, hard-working civil servants will be sent home. Travel will mostly stop, and programs will grind to a halt. Parks will close; bills won't be paid; decisions will be unmade and will pile up. Really essential activities won't stop. It will all be a mess, an enormous inconvenience, a vast waste of money. But it won’t be a catastrophe.

And the Congress - particularly the House, which already has approval levels somewhat less than my shoe size - will be blamed. It will then have to act very quickly, and it will turn around and fund the government with a plain vanilla resolution. More importantly, having made clear its disregard for the wellbeing of ordinary Americans, the House will be standing on very thin ice when it threatens to force default over the debt limit on precisely the same grounds, defunding ObamaCare.

I know that doing all this requires the administration do some things that - to put it gently - have not been their strong suits: thinking strategically, recognizing opportunities, understanding risk, and bargaining at least as well as a good used car salesman. But this all happened before with President Clinton in 1995; it came out pretty well for him then, and the opposition to President Obama today is nowhere near as good as Newt Gingrich was then.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

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