Government shuts down over policy, not money

The longest federal government shutdown on record is over, but another shutdown appears possible, even likely, in less than a month.

The December-January shutdown ended with President Trump announcing he would sign a bill reopening the government after 35 days and two federal paydays that didn't pay off. He agreed to a deal that he could have had 35 days earlier, but he thought it advantageous to play brinkmanship with federal agencies and employees.

What is confounding about this shutdown is that it wasn't about debt limits or federal budget deficits or excessive spending, all of which were at the heart of earlier shutdowns. Conservatives have decried the economic stupidity of spending more money than you take in, year after year after year since before Ronald Reagan decried socialism. A government shutdown over excessive spending at least reduced spending for the period of the shutdown.

But this latest shutdown, which Trump said he would proudly take responsibility for, had nothing to do with federal spending or the deficit. It wasn't about money, although Trump was insisting on $5.7 billion for a border wall or else! It was about policy, the policy of building walls to keep people out of the United States. Trump had led cheers of "Build That Wall" at his campaign rallies and had insisted that Mexico would pay for the wall. No payments came from Mexico, and Democrats in the House also refused to insert payments for a physical wall into pending budget bills.

Both sides of this debate have some reasonable points. Trump says there is a crisis on the southern border with Mexico; flows of immigrants, most of them crossing in violation of federal laws, are overwhelming federal border security. He wants a solid wall to halt the "invasion."

Democrats point out that any wall can climbed over, tunneled over or blown up by determined migrants. They are willing to increase border security spending on enforcement and surveillance. More border patrolmen and immigration judges can expedite the refugee and asylum backlog and make immigration more manageable. They will give Trump the money he wants, but not for a solid wall that doesn't really address the problem.

A congressional committee will look for a compromise that will keep the government open after the mid-month deadline, but Trump might reject their proposal. A long-term solution to the immigration problem has to involve improvements in Central American economies and law enforcement in order to give desperate citizens opportunities and hope in their native countries rather than north of the border. Combined with better U.S. border security and crackdowns on corruption south of the border, the "crisis" at the border will be resolved without a solid wall.

 

Wow! We avoided default!

OK, so we beat the debt ceiling deadline by a few hours and will cut spending by more than $900 billion over the next decade. Problem solved? Not at all.

The debt ceiling agreement, which President Obama signed Tuesday, calls for a 12-member commission to cut another $1.2 trillion from the next decade's deficits. But here's the problem. Our annual deficit right now is more than $1 trillion. Cutting a trillion over 10 years amounts to cutting one tenth of the deficit each year. That's the equivalent of paying the minimum payment on a credit card that you've just used to buy a $10,000 vacation. You'll never pay it off!

The commission, to be composed of an equal number of Democrats and Republicans, will have to tackle some spending that no one wants to touch — Social Security, Medicare, federal pensions (including military), defense spending, ethanol subsidies, farm subsidies, federal salaries and other big, popular programs — and it will have to address revenues. There is no way the United States is going to dig its way out of the hole it's in with spending cuts alone. We could eliminate the Defense Department or decimate Social Security and still not have a balanced budget. Increasing revenues will be a necessity, and the Tea Party conservatives have to realize that, regardless of how many "no new taxes" pledges they might have signed.

Revenues can be raised with minimal impact on the middle class. Tax reforms, eliminating some wasteful business deductions and expanding the tax base can generate some additional revenue. Increasing the tax rate for the highest earners can also be done without touching 95 percent of all earners. The home mortgage deduction can be modified so that it doesn't apply to vacation homes or to $1 million mansions.

Perhaps the biggest challenges will be Social Security and Medicare. These popular programs have strong lobbying support, but you cannot effectively reduce the deficit without addressing the programs that consume more than half the budget. These issues should have been addressed 20 years ago; each passing year makes resolution more difficult. Whether the solution is higher payroll taxes, higher full-retirement age, adjustments to cost-of-living increases or some combination, the issue will have to be faced.

Washington's goal should be to eliminate the budget deficit. That won't be done by a couple of trillion dollars in cuts over a decade, and it won't be done without increasing revenues. Rep. Paul Ryan's austere budget proposal does not eliminate the deficit, nor do any of the other plans currently being discussed. A balanced budget amendment will not achieve that goal without monstrous cuts in spending or large tax increases. But unless the goal of eliminating the deficit is addressed, the current $14.3 trillion federal debt will keep on growing.

Coming next week: financial cataclysm

Six days from a fiscal cataclysm, Speaker of the House John Boehner can't keep enough of his GOP colleagues in the fold to pass his own legislation to raise the debt ceiling. Over on the Senate side, Majority Leader Harry Reid has thrown in the towel and is offering a half-hearted bill to raise the debt ceiling in return for some ephemeral spending cuts and no increases in revenue.

I watched President Obama's and Boehner's Monday night addresses — Boehner's live and Obama's via the Internet — and thought Obama came across more genuinely. Boehner made his political points but wasn't entirely honest in talking about a "bipartisan" House proposal and accusing Obama of wanting a "blank check." Boehner probably fired up the right wing while Obama was seeking a broader appeal, and he likely succeeded. His call for compromise was one most Americans would welcome, and although he couldn't resist parroting the Democrats' catch phrase about the rich paying their "fair share" of taxes, Obama's overall point was well taken. Obama was on much sounder ground and more persuasive in arguing that all Americans should share in the sacrifices necessary to get our fiscal house in order — the wealthy should feel the pain just as much as the poor who lose federal services or the middle class who pay more for college loans.

If this impasse continues and we get to next Wednesday with no debt ceiling bill in place, we will all regret it. America's credit rating will fall, and interest rates will rise. Our payments on the national debt will rise, and that will create even more federal debt or dismembering cuts to federal spending, including Social Security. Interest rates on mortgages and consumer loans will also rise, and that will throw us back into a deeper recession as home sales and car sales collapse. Business loans will be more expensive, and that will curtail jobs. The dollar will fall, and that will mean higher prices.

To the freshman Republicans who have vowed not to raise the debt ceiling, no matter what, and have fought any inclination Boehner might have to compromise, I can only ask: Are you happy yet? If all of this transpires, Democrats will be able to run in 2012 under the slogan "We're not crazy!" Of course, remembering Democratic congressmen Weiner and Wu, Republicans can counter with "We're not perverts (or at least haven't been caught at it)."