Behind the ongoing government shutdown

With so much back and forth between Republicans and Democrats, the issues behind the government shutdown tend to get lost in the chaos.

Understanding the key political motivations at play and the potential economic side effects can be hard to do amidst all of the “he said,” “she said” in Washington.

Economic Fallout

Pattie Bradley, senior research economist in the Center for Economic Development and Business Research at Wichita State, said speculating on economic outcomes can be challenging when so many factors are not yet determined.

“As far as the economic impact of it goes, as it evolves, it is difficult to say exactly what it will be long term,” Bradley said. “It depends a little bit on how it plays out.”

The national budget is divided into two categories of spending — discretionary and non-discretionary spending. Non-discretionary spending is non-negotiable; everything in this category receives guaranteed funding. This includes programs such as Medicare and Social Security, among other expenses.

The deadlock in Congress is about discretionary spending. These funds are allocated for defense, research grants and many programs that are government-funded, but not considered “essential” to the government’s day-to-day operations.

“In general, if they actually shut down and no one gets paid, there’s an impact from that,” Bradley said. “But that’s not really the reality of what’s happening.”

Congress has been working since the shutdown to present various side deals to keep government operating as much as possible. One bill being considered offers back pay to furloughed employees affected by the budget deadlock. However, it remains to be seen which of the side deals will be agreed upon.

For Bradley, the immediate concern for the economy depends on what deals are reached and how soon, as those fluctuations in the economy determine long-term effects.  She said even small changes could affect economic activity in the long run.

“Every time there’s a decrease in spending, there’s a decrease by a multiple of that,” she said. “Every time there’s an increase in spending, there’s an increase by a multiple of that. It directly affects the government employees that won’t get paid, but then it also indirectly affects all those other people that would have been impacted by those pay checks.”

Bradley was hesitant to say for certain what the fallout of the shutdown would be in the immediate future.

“I would say for the most part, this is a political issue more than an economic issue,” she said. “If it goes on, if it gets severe, there can absolutely be consequences of it, but anything on what those would be, would be speculation at this point.”

The Politics of it All

With no definitive determinations on the state of the economy, both sides standing firm in their positions and no clear end in sight, it begs the question, just how did this mess begin?

“Well, there are two basic factors at work,” WSU Political Science Professor Melvin Kahn said. “First of all, this is sort of a preliminary thing for the battle over the debt limit which is coming up soon, in a couple weeks.”

Kahn said in the debt ceiling debate, there is a potential to reach a deal where only the interest on the debt gets paid.

“If that would occur, it would just affect the economy in general,” he said. “They’re artificially keeping interest rates low now, and we’re having a very slow, anemic recovery, and so it’s very important that we try to avoid getting into a situation where we look weak.”

Additionally, the second factor at work behind the budget debate also references the potential for apparent weakness.

“You have some very high stakes politics here involved, where both Obama and Boehner do not want to look weak, so as a result, neither one of them is willing to give at the present time,” Kahn said.

A large part of the battle on Capitol Hill is over the Affordable Care Act, more commonly known as Obamacare. Kahn said Republicans initially wanted Obama to roll back his Obamacare program because many of them see it as an awful program.

However, Kahn also said, Obama is not willing to take such measures because Obamacare is his “only, really big accomplishment that he’s made in his administration; it’s his legacy and history.”

While Republicans are taking the majority of the blame in the deadlock, Kahn said pressure is mounting for both sides to work out a deal. The unwillingness to compromise may partially be a side effect of today’s political culture.

“Part of it is the culture that we have now,” Kahn said. “It used to be that people with extremely different viewpoints would work out deals. And we’re in a situation now where members are often considered very weak if they’re seen ‘dealing with the enemy,’ so to speak.”

While the disagreement between parties over discretionary spending is front-page news at the moment, Kahn said a bigger fight is coming. The debt ceiling debate is a separate debate with the potential to do more extensive damage to the economy if a deal isn’t reached.

“The big battle is coming in two weeks,” he said. “This is just a skirmish compared to what’s coming, because both sides are going to be more on equal footing there.”

No matter the topic, it seems more and more these days that Congress cannot unify on any one subject, an unfortunate development in politics over the years that Kahn spoke about with regret.

“The main thing is that the culture we live in is not conducive to negotiation and working out deals,” he said. “This is not a good situation because politics really should be the art of compromise.”