Budgetary Confusion

Given that the Federal shutdown is the topic of the hour, perhaps its not surprising that there's so much confusion on various topics related to this.  But, because I think it important to the discussion, the following things are worth keep in mind.

1. How did the Federal Government shut down?

It has no budget. Congress hasn't passed one, and they haven't passed a continuing budgetary resolution to carry on in the absence of one.

2. Why did that cause a shut down.

There's no legislative authorization to pay anybody or anything.

3.  Does that really matter to me?

Probably.  One of the things people are surprised to find in a time like this is how broad the budgetary reach of the Federal government is.  Some things are no surprise at all.  For example, right now air traffic controllers are working for free. That is grossly unfair to them, as they have to work and they have to eat, their children have to go to school, etc., and there's no money coming in. Same with the BLM, which still has to monitor drilling, mining, and livestock raising on the Federal Domain.  But in other areas, people are finding that various local town and city projects, which seem very local, are suddenly shut down, as they rely on grant money.

4. Does that mean that these things should be budgeted?

Well something should clearly be.  Everything?  Well, that depends on your view.  The main parts of the government must be, really.  Peripheral things, well that's another topic.

5. So the government is shut down as we don't agree on what to spend money on?

No, not at all. The Government is shut down to due to an argument, more or less, over the Affordable Health Care Act.

6.  Huh?

Yes, that's right. This started as a GOP effort in the House of Representatives to defund or at least delay implementation of the Affordable Health Care Act.  To some extent its morphed a bit, as an argument, as at least in the Senate the GOP proposed to basically delay implementation and the Administration disagreed with that proposal, or the Senate Democrats did.

7. What does that have to do with the budget.

One of the oddities of the American political system is that Congress can pass an act which requires funding, but not fund the same thing. Budgeting has always been separate. So, you can get into a situation in which there's an authorization for a program, but no funds for it.

That itself is more common than a person might suppose.  For example, the Federal government at one time required industries under the jurisdiction of the Mining Safety Health Administration to have a certain number of people certified in training by MSHA.  However, Congress didn't authorize funding for that for years, so there was no training offered by MSHA.  In order to attempt to comply with the law, companies would send an employee to a similar course of training conducted by the Occupational Safety and Health Administration.  That wasn't really compliance, but it was as close as they could come under the circumstances.

Or, to give another example, very late during the Vietnam War, after the U.S. had withdrawn, Congress denied funds to provide for US forces to be active in the fighting late war.  This actually could have developed into a Constitutional crisis, but did not as the Administration at the time had low interest in becoming re-involved.  It's always been considered a given, however, that Congress can dispute the deployment of US forces in any one place by denying funding for any one military expedition, but Congress is always very reluctant to do that.

Here, however, we see something else going on.  The GOP members of Congress, or at least a fair number of them, strongly disagree with the implementation of the Affordable Health Care Act and are refusing to pass any budget.  Traditionally, they would have refused to fund the AHCA, if they disagreed with it. That would have caused the President to be presented with a budget omitting funding for the program and then he's have to decide whether or not to sign the budget (I suspect he would not).  Here, however, this started off as a refusal to pass any budget until the AHCA was taken up.

7. That's because the AHCA is so massively expensive, right?

Nobody really knows right now.  You can find estimates running both ways. This is more of a philosophical debate.

8.  And that has everything to do with the debt ceiling, right?

No, nothing at all

9.  Huh?

The debt ceiling is actually a complete different topic.  It is a statutorily created amount which prohibits the US from borrowing money above that amount.  It's perfectly possible to have an argument about the debt ceiling without arguing about the current proposed budget, or the AHCA.  Indeed, the only connection between the two is that passing a budget that isn't balanced creates the debt.

10.  So we're really arguing about balancing the budget?

No, not at all.

The current debate would actually make a great deal more sense, from a logic stand point, if the those who oppose raising the debt ceiling did so on the basis that a ceiling is a ceiling, and continuing to raise it is dishonest.  But that's not the topic.

11.  It isn't? Well what up with the debate on the debt ceiling?

The debt ceiling is basically being held hostage to the budget debate.  Last time it was debated the actual topic actually was whether or not we dare go over that dollar amount.  Now, however, its been sucked into the budget debate.

12. Well clearly we must raise the debt ceiling, right?

Probably at least through the end of the year, but raising it every time it comes up is dishonest. At some point, the debt actually has to be addressed.

13.  That's impossible, isn't it?

No, not in the abstract it isn't.  The New York Times ran an article last year showing how even minor adjustments can actually result in a balanced budget.  But neither political party is willing to take the steps necessary to do that. Even the steps discussed are only bandaids.

Balancing the budget, however, is not rocket science.  But it does cause pain.  Simply put, the Federal Government would have to cease funding a lot of the peripheral things it now funds.  Or people have to decide that they do want the Federal government to fund those things.  If they decide that, and indeed in any event, the Federal government is going to have to take in more tax revenue. There's no way to raise the boat of the economy up to where it will ever pay for expenditures at this level.  Even reducing expenditures significantly just wont derive that result.

That doesn't necessarily mean that you need to raise income taxes, and if you do, it doesn't mean you need to raise them on everyone.  There are all sorts of other taxes. But, taxes are taxes. And expenditures are expenditures.  The government is borrowing an absurd amount of money and it really shouldn't be, as that can't go on forever.

14. And that's what the debate will center on the next couple of days, right?

I doubt it.