Posted by on October 18, 2013 in Blog

By Isaac Levey
Legal Fellow

The United States awoke Thursday morning to something it hadn’t seen in over two weeks: a fully operational Federal Government. Late Wednesday night both Houses of Congress finally agreed to a bill authorizing appropriations to reopen the government, and raising the nation’s debt limit. The “continuing resolution” (CR) was signed by President Obama shortly after midnight, and federal employees were instructed to return to work on Thursday morning. The government shutdown which began on October 1 is over, and by raising the debt limit and becoming able to borrow more money, the United States avoided the possibility of an unprecedented default on its loan obligations.

The CR reopens the government and funds it through January 15, 2014. The debt ceiling is raised through February 7, but the Treasury Department will be able to use some accounting tricks to continue borrowing for a few weeks after that. Federal workers, who suffered the most during this manufactured crisis and had no income for the last two weeks, will get back pay in their next paychecks for the time the government couldn’t pay them. And a bipartisan committee of Senators and Congressmen was established to negotiate a long-term budget; recommendations are expected by December 13. The Patient Protection and Affordable Care Act (a.k.a. Obamacare), which was ostensibly the driving force behind the shutdown, is almost completely unchanged.

The Politics

It’s crass to talk about the political ramifications of something like this. As a visibly exasperated President Obama put it Thursday morning, “There are no winners here. These last few weeks have inflicted completely unnecessary damage on our economy.” Congress played a breathtakingly irresponsible game of Russian roulette with their constituents’ lives, using the global financial system as ammunition, and to argue that the Democrats “won,” because they come out looking better, risks implying that there was anything positive, for anyone, about this saga. There was not.

Still, this definitely ended worse for some people than others, and while no one comes out looking particularly good, the zero-sum game that is American politics means that what’s bad for one faction is, by default (no pun intended), good for another. And so in this case, there are clear winners and clear losers, and most of that analysis divides neatly along party lines. The Democrats won, not because they were so wonderful, but because, beyond any doubt, the Republicans lost. It would require the most willful blindness to conclude that this episode, for the GOP, was anything other than an unmitigated disaster.

The damage to the Republican brand has been staggering. Poll results uniformly and unambiguously indicated that the public blamed the Republicans for the shutdown more than the Democrats. Multiple polls found that the GOP was less popular than any major party has ever been since they started asking that question decades ago. A full 70% of respondents in an NBC/Wall Street Journal poll said the Republican leadership was putting politics ahead of the good of the country. The Democrats’ numbers weren’t great either, but they didn’t hit such historic lows. Despite the insistence of some Members of Congress, and the strange, circular arguments of some ordinarily intelligent commentators, the public squarely fastened blame for the shutdown on the GOP. That, undoubtedly, led the Senate Republicans to stand up and say, “Enough,” – and it finally forced House Speaker John Boehner (R-Ohio) to give in and admit defeat.

Worse, the GOP got nothing in exchange for all they lost. The only change the CR contains to Obamacare is a provision requiring individuals whose health insurance is federally subsidized to verify their financial need (a provision the President didn’t particularly oppose). Obamacare launched as scheduled on October 1 (just as the government shut down), and the cruelest, bitterest irony of it all was that the law’s introduction was just as troubled as many predicted. It’s been seventeen days, and the website still doesn’t work. There are administrative problems fitting perfectly into every Republican narrative about the bloated bureaucracy that is the Federal Government. Ezra Klein, a wonky liberal blogger for The Washington Post who is often sympathetic to Obamacare, has called the launch “disastrous” and “awful.” This should have been a field day for the Republicans, but they could capitalize on none of it. Indeed the GOP’s pathological opposition to the ACA, and the public’s disgust with the GOP, may have even led the law to become more popular. The closest thing the Republicans can claim to a victory is that the across-the-board sequestration spending cuts remain in effect.

Conversely, the Democrats come away with a win. President Obama’s refusal to negotiate on the shutdown or the debt ceiling was severely criticized by some pundits, but the strategy turned out to be correct, and he had a willing ally in Senate Majority Leader Harry Reid (D-Nev.). As a matter of abstract theory, Obama’s simple silence as the Republicans fought each other and collapsed might not have been the most shining example of presidential leadership, but it was the right politics. And quite clearly, future Presidents won as well. Obama’s successors will see his 2013 success and his 2011 blunder, and they will never negotiate over the debt ceiling again.

The Lessons and the Future

The most obvious lesson we learned from the last two weeks – if we didn’t know it already – is that governing from crisis to crisis is unsustainable. Everyone seems to agree on that, but no one seems to know how to fix it. One problem, clearly, is the gerrymandered congressional districts that make dozens of Republican House members far more afraid of a primary challenge from their right than losing a general election: for many, shutting down the government and pushing us to the brink of default was the most logical thing they could do. The House of Representatives is supposed to be the body most responsive to the American people, but the current gerrymander has produced strikingly undemocratic results: Democratic candidates for the House got 1.3 million more votes nationwide than Republicans, but Republicans won about 54% of the seats. Over the next decade, Democrats would probably have to win about 55% of the vote overall to get a House majority. The troublingly undemocratic nature of the House was also reflected in the machinations the GOP undertook in order to prevent, until yesterday, a simple up-or-down vote by a majority of its members on a clean bill to reopen the government.

Will the new CR fix our ridiculous political system? Doubtful. The budget conference it creates is almost identical to the “supercommittee” from 2011, which helped cause the sequestration by utterly failing at its mission to come up with a deficit-reduction compromise. There’s no reason to think it’ll do better this time, even if it has a different name. Klein makes an interesting suggestion that the Democrats could achieve their goals and contribute to growth by focusing less on taxes; whether a good idea or not, it would certainly be a change, and a change couldn’t hurt. But at least as long as the American people continue electing Members of Congress with no real agenda other than to destroy the President, this state of affairs seems likely to continue.

The other lesson that we might take from this is that the debt ceiling, at least in its current form, is a terrible idea. The question of whether our nation should have a constant debt or not is an ancient one dating back to the founding of the Republic, but setting an arbitrary, artificial limit by statute is quite clearly the wrong way to approach the problem. Indeed it may even be unconstitutional, since the Fourteenth Amendment forbids Congress to break the promises it makes when it borrows money. But either way, the markets shouldn’t have to go into convulsions every few years based on arcane questions of constitutional law, such as whether the President has emergency power to raise the debt limit on his own, or who would have standing to sue him if he did. This is a fun constitutional debate that erupts every time we have one of these crises, but whatever the correct answer is, it’s no way to run our financial system. Yes, Congress decides whether to borrow and spend money – but it should let the President be the judge of exactly how that money should be spent, and how those loans should be repaid.

At least in the absence of major structural changes like this – alterations of fundamental positions of the Democratic and Republican parties, or moving control over borrowing to the Executive Branch – we might well find ourselves in the same situation in a few months when this new CR expires, and the Treasury needs to borrow more money. And we’ll have to see whether the Republicans have learned their lesson, or whether they so drastically overplay their hand again. It would be exciting if it weren’t so destructive; we’d laugh if we weren’t crying.

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