It’s been a rough month for the government shutdown. With many federal employees affected, the shutdown has prevented the Treasury from processing income tax returns and stopped the CDC (Centers for Disease Control and Prevention) from monitoring the spread of the coronavirus.
The economic and health impacts of the shutdown have been significant. During the last month of the quarter, the economy grew at a rate of 2.2%, the slowest pace in nearly a year, causing the Dow Jones Industrial Average to drop by 11% and the S&P 500 to dive 19%.
The numbers are even more grim when considering the unemployment rate. It currently stands at 12.3%, compared to 4.3% at the start of the year. That’s a lot of Americans left without a job. And although the number of employees furloughed (5.6 million) is less than during the height of the pandemic (7.2 million), it’s still a significant chunk of the workforce. When you combine the number of employees who have been idled (1.7 million) with those who are now out of a job, you get to at least 7.8 million workers who either haven’t been paid or have been financially cut off because of the government shutdown.
Is Government Aid a Necessity?
It’s always a difficult moment when the government shuts down. One of the things that makes it more complicated is the fact that this year, the shutdown has been going on for longer than usual. The last time we saw a shutdown this serious was more than a year ago and it lasted for five weeks. But since then we’ve had four brief shutdowns that together have now stretched into a record-breaking 22-week period. That’s a lot of missed paychecks and financial stress for American families.
The longest government shutdown in history lasted for 21 weeks and ended in mid-September 2019. Since then, the government has been funded (for the most part) via short-term stopgap bills, which are due to expire soon. As a result, there’s been a lot of uncertainty as to when, or if, the shutdown will end. Adding to this pressure is the fact that many Americans are struggling to make their mortgage payments during this time. As a result, they’re turning to the government for help, in the form of mortgage forbearance or loan modifications, which temporarily reduces their debt payments.
But is this really a time for the government to be providing such extensive aid? Could the public health concerns that have emerged since the start of the year (and continue to this day) warrant the needs of a dedicated relief program?
Why Did the Government Shutdown?
When the government shutdown started, a lot of people asked why. Why did the Democrats (now in the majority in the House of Representatives) agree to a Republican proposal that would scuttle Obamacare, shut down the government, and end Planned Parenthood’s funding?
Well, the short answer is that the Democrats (and a few Republicans) didn’t see the proposal, in its entirety. They heard that it would end funding for Planned Parenthood and, fearing that many women in their districts rely on the organization for healthcare services, they were able to use the funding issue as a sticking point in the negotiations. Some representatives even went so far as to say that if the bill passed with no changes, they would vote against it. Ultimately, the Democrats got what they wanted and the government was shut down for the first time in almost a year.
Since then, the parties have been working together to pass short-term spending bills to keep the government open. But these stopgap measures have become a headache for both sides. For the Democrats, the spending bills are an opportunity to get something they have long sought: permanent protection for DACA (Deferred Action for Childhood Arrivals) recipients, a group of immigrants who were brought to the U.S. as children and allowed to stay and work temporarily despite lacking official citizenship papers. The spending bills also provide funding for a variety of environmental and habitat conservation projects. For the Republicans, the issue is how to pay for these spending bills without going over a discretionary budget limit set by the Office of Management and Budget (OMB). The Republicans are loath to increase spending, given their campaign pledges to cut spending and balance the budget, especially at a time of heightened national security and economic uncertainty. But the longer the shutdown goes on, the greater the potential for financial stress to become a problem for American families.
What Will Happen Next?
Well, on January 27, the Republicans (in the House and Senate) abruptly left town for a five-week recess, without so much as a goodbye to their colleagues or a hint as to why they left in such a huff. Some speculated that House Speaker Nancy Pelosi, who is from San Francisco and therefore feels a special kinship with Bay Area residents, had something to do with it. After all, she was the one who suggested the recess, claiming that the Democrats needed time to prepare for the onslaught of special elections in March. Others thought that the Republicans wanted to draw more attention to the government shutdown and make it worse. Still others thought that the recess actually benefited the GOP, as the shutdown had the perverse effect of boosting Trump’s approval rating. Who knows?
Whatever the reasons, the recess didn’t solve the problem of the government shutdown. The Democrats still haven’t delivered on the DACA deal and the Republicans remain unwilling to bend on the topic of appropriations. As a result, the shutdown continues.
We’re in a holding pattern, waiting for either side to blink first. Last month, the Democrats extended the DACA deadline by three months, which allowed them to give the issue further consideration. The upcoming March special elections won’t solve the problem of the government shutdown, either. That’s because one of the things that makes the March elections unusual is that they’ll be held during a time when the government is open. That means the president won’t be in the position of defending a shutdown as he is now. Still, regardless of the political circumstances, the president needs to address this issue soon, before the economic and financial stress puts a significant dent in the quality of life for many American families.