Half a Cheer for the Shutdown Deal

Sanity may reign for a day, but crisis-mode could be back in the New Year.

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It seems likely now that the national shutdown and debt ceiling nightmare will come to an end as it should have weeks ago: with Speaker of the House John Boehner passing an all-but-clean continuing resolution and debt ceiling increase with mostly Democratic votes. The deal, which was crafted by the Senate, will fund the government until January 15 and suspend the debt ceiling until February 7. The only "concession" made to the GOP is that income verification measures for Obamacare will be strengthened somewhat.

On the one hand, it's good news that the shutdown mess will end without House Republicans extracting anything real. However, the short-term nature of the deal sets up another opportunity for hostage-taking just a few months from now, and it's unclear whether, by early next year, the tea party will have learned enough of a lesson to let another potential point of "leverage" pass it by.

[See a collection of political cartoons on the government shutdown.]

And the costs of continual government-by-crisis should not be discounted. According to an analysis released this week by the research firm Macroeconomic Advisers, the perpetual budget stand-offs of the last few years have hurt the American economy in a big way. Here are some highlights:

  • Since late 2009, constant budget battles have lowered gross domestic product by 0.3 percentage points per year and raised the unemployment rate by 0.6 points, which adds up to nearly 1 million lost jobs.
  • The two week government shutdown will shave another 0.3 percentage points off of fourth quarter growth in this year alone.
  • Reductions in discretionary spending since 2010 have reduced growth by 0.7 points and raised the unemployment rate by 0.8 points, a loss of 1.2 million jobs.
  • "Based on this report's findings, we can assert confidently that the crisis-driven fiscal policies of the last several years have damaged our still-struggling economy," said Macroeconomic Advisers' Joel Prakken.

    [See a collection of political cartoons on the economy.]

    Not only does the deal set up another potential mess in just a few months, but it sends both houses of Congress back into the sort of fruitless budget negotiations that set up the so-called sequester: the across-the-board budget cuts that were supposed to be so painful that lawmakers would have to craft some other deal, but that have been allowed to go into effect with nary a peep from anyone, severely damaging the economy and programs upon which many Americans rely. Despite reaching an accord on the government shutdown, the deep differences between Democrats and Republicans when it comes to revenue and entitlements haven't gone anywhere, and certainly won't be solved by January.

    The most ironic part about this whole sordid business is that, had Republicans just accepted the Senate's funding bill before the shutdown began, they could have easily claimed victory. After all, that bill locked in spending levels far lower than either President Obama or Senate Democrats wanted. But the right-wing fringe pushed the GOP leadership into a fruitless attempt to blackmail President Obama into dismantling his signature domestic legislative achievement, even when the GOP acknowledged that it had taken a hostage in the debt ceiling that it wasn't willing to shoot.

    So while sanity will briefly win the day today, the structural problems leading to constant government-by-crisis are going nowhere. (In fact, The Nation's George Zornick already noticed Rep. Kevin Brady, R-Texas, threatening default next time should Democrats try to undo the sequester during any upcoming negotiations.) Come January, it's likely that we'll be right back here, having this same discussion all over again, and the American economy will be worse off for it.

    • Read Susan Milligan: Why a Higher Minimum Wage and Obamacare Help the Economy
    • Read Robert Schlesinger: More Gibberish From Debt Ceiling Default-Deniers Like Ted Yoho
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