We’re well into the second week of this shutdown, and it’s really starting to matter. How are we going to get out of this?
This has moved beyond a conversation topic. Federal employees are missing paychecks. The Dow Jones has fallen almost 6 percent since Sept. 18. Research projects are at a standstill. In Arkansas, 62 employees of the Division of Children and Family Services, the people who oversee child abuse investigations and foster care, have been furloughed because their salaries are paid at least partly through federal funds.
Perhaps most worrisome, U.S. Treasury short-term borrowing rates doubled Tuesday. Investors financing the $16.7 trillion national debt believe the government is becoming a higher credit risk, especially since the debt ceiling will be breached in a week. Taxpayers will pay for those higher rates.
Americans are waiting for a break in the impasse, but progress has been limited. Having little else to accomplish, Rep. Tim Griffin, R-Ark, is leading tourist groups through the Capitol.
What now? The latest impasse started when Republicans tried to fund the government but not Obamacare, but President Obama and Democrats haven’t budged on the issue, and won’t. According to polls, it looks like a losing issue for Republicans, but no one is escaping unscathed the longer this lasts.
Now the debate has shifted to the federal budget deficit and the debt ceiling. The debt ceiling is the deadline, which will be reached Oct. 17, when the Treasury Department loses its authority to borrow more money. Failing to raise it does not mean Uncle Sam stops going into debt. It just means all the bills won’t be paid for a while.
The consequences would be bad. U.S. debt has been the world’s safest investment. A breach of the ceiling would destabilize the global financial system. Interest rates on the national debt would rise significantly. That means the national debt would rise, too.
Maybe we shouldn’t have a debt ceiling, but it usefully reminds the nation of its financial condition. Just as many families benefit from regular hard discussions about their spending habits, policymakers should have hard discussions about the national debt. The debt ceiling forces those discussions to happen.
Obama won’t negotiate on Obamacare. He believes in it, and his name is on it. Meanwhile, Republicans believe it is a catastrophe worth fighting against. American democracy sent mixed signals by electing Republicans in 2010 after the law was passed and then re-electing Obama in 2012. So we’re stuck on that.
That leaves the shutdown and debt ceiling, and that’s where movement can occur. Obama has said he won’t negotiate until the shutdown ends and the debt ceiling is raised, but Republicans, spooked by the polls, are ready to talk. He has previously indicated openness to some Republican deficit-cutting ideas, such as changing how Social Security payments are annually increased. This could be an opportunity to reopen the government, calm the markets, and reduce the deficit.
So it’s time for a deal: Obama should agree to cut the deficit some, and Republicans should pass a clean funding resolution and then fight the battle over Obamacare in next year’s elections. They get a lot closer to changing it, maybe eventually repealing it, if they hold onto the House and retake the Senate.
If this economy tanks because of Washington’s dysfunction, that’s much of Obama’s legacy. What else does anybody know about President Herbert Hoover than that he was president when the Great Depression began? Republicans, meanwhile, are taking the greater political hit right now. It may be short term. It may be not.
These folks need to talk, and listen, for the country’s good and their own.
Steve Brawner is an independent journalist in Arkansas. His email address is email@example.com. Follow him on Twitter at @stevebrawner.