Government Shutdown: How the Heck Did We Get Here?

Photo Credit: Google Images

Photo Credit: Google Images

When I tell people I work for the Homefront United Network, a blog for military families, I am asked questions about current events affecting our readers. Lately I’ve been fielding many questions about sequestration and the looming government shut down.  I have to explain that I am not an economist or an expert on the federal government, so my knowledge of its inner workings is limited.  And to be honest, this latest crisis has me baffled.  I began researching several months ago, hoping someone wiser than myself could put it all into plain language, without the political rhetoric that often accompanies a fiscal crisis that may or may not begin October 1st.  After several chocolate brownies and a glass or two of wine, I’m no closer to understanding the multilayered nuances of it all.  But here is what I have figured out:

  1. Government is to blame for Government shutting down.
  2. A government shut down will affect the military and military families most directly.
  3. As a nation, we’ll never be out of debt.

So let’s start with who’s to blame, and for that answer it’s going to get political up in here so buckle up!  Let me start by explaining that although Democrats blame Republicans and vice versa, everyone is to blame. Anyone who has taken a government class in high school or college can explain, our government is designed so that no one branch has complete control, we call it a checks and balances system.  There is the executive branch which is the President, his cabinet and the Department of the Treasury among other departments who influence the budget.  Then there is the congressional branch which is Congress made up of the Senate and House of Representatives.  Finally we have the Judicial branch which is the Supreme Court and departments who enforce our laws.

What is supposed to happen with government spending is that the President creates a budget and presents it to Congress for approval.  Think of this as sitting down with your spouse and deciding how you’re going to pay your bills, not just the short term bills like utilities and groceries, but also how to set aside money for long term spending like a mortgage. What usually happens is that like a married couple the President and Congress negotiate a reasonable budget and with that agreement government runs itself with very little hardship to the American people.  Since 2009, Congress has failed to approve the President’s budget. President Obama has had to contend with a partisan congress, a majority Republican congress.  Many of the currently elected members of congress are Republican Tea Party members, which vowed to cut taxes and spending by half.  So we have to think of this crisis as that married couple trying to work out a budget, in the middle of a divorce.  Congress wants their agenda met, while the President wants his agenda met…and as in divorce, it’s the children who suffer.

The issue isn’t only that we can’t pay our bills, it’s in deciding which bills to pay.  So here is where it gets convoluted and political.  Right now the government spends more than it makes.  Here is a handy chart to explain it in reasonable terms:

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From this we can see that as a nation we have a significant amount of debt, debt we owe ourselves, foreign investors and corporations.  If the banks who hold our debt suddenly weren’t getting paid and we weren’t eligible for credit-well, it would be safe to say that the government would shut down to the point that conditions we see in shows like “The Walking Dead” or “Revolution” would be more reality than fantasy. The possibility exists that our government could default on its loans if the “debt ceiling” isn’t raised.  The “debt ceiling” is determined by the Treasury Department, think of them as our national accountant.  Raising the debt ceiling is their way of saying this is how much we’ll allow the government to put on a “credit card,” because we only have “this” amount available in our national “checking account” to cover it.  The government makes money by collecting taxes and selling bonds, this amount in our “national checking account” is far less than what we spend.  When President Bush cut taxes, he wasn’t able to cut an equal amount of spending, so we are spending more than we’re making. As long as we’re making money, creditors will extend us credit. It’s a vicious cycle many Americans find themselves in as well.

So similar to a married couple going through a divorce, Congress is saying-we don’t like President Obama’s policies.  President Obama is saying, I don’t like Congressional policies.  Rather than either side backing down both are using the budget approval and raising of the debt ceiling as leverage against the other.  Now most sources agree that a government shut down won’t occur, Congress has the power to pass resolutions to fund specific things like military paychecks.  The simple fact remains that unless both branches of our government create a bipartisan budget, military families will be effected, up to an including no pay.

For more details, here are two articles that explain the specific effects of the government shutdown:

http://paycheck-chronicles.military.com/2013/09/24/as-always-prepare-for-the-worst/

http://www.cnn.com/2013/09/23/politics/government-shutdown-daily-life/

 

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Comments

  1. Lisa White says:

    It's never been explained to me so clearly before. Great article!

  2. Excellent article, Amanda! I love the simple graphic. I so wish we were not in debt. It’s unreal; hard to fathom. From a personal perspective, life is so much better debt free.

  3. Shay Fowler says:

    Not a bad article and it does help clear things up. But I have to add this:

    The Republicans didn't take over the House until January of 2011, after the 2010 election. For two years, the Democrats controlled both the house and the senate and the White House. It was Democrats who couldn't agree (they didn't need one R vote in the Senate to pass whatever they wanted) and who dismissed the President's proposal.

    So, for the first two years, it was all on the Democrats. The Republicans were actually physically shut out of meetings, discussions and negotiations.

  4. Dhana Yarbrough says:

    This is the best and most concise item I've ever read on this subject. Good job!

  5. Amanda Cherry says:

    thank you for that clarification- my research suggested that no budget has been passed since 2009.

  6. Shay Fowler says:

    Amanda Cherry You are correct, ma'am! There has been no budget passed since 2009.

  7. Dennis Soh says:

    As with anything, it depends on what the debt and deficit are financing. Equating the national debt to credit card debt insinuates that it's irresponsible, because credit card debt is irresponsible. However, it depends on what the debt is used for. No one is going to call a 142K home mortgage debt irresponsible. Also, the US government doesn't really play by anyone else's rules when it comes to debt and money management, because the rest of the world doesn't seem to care that the US can print its own money to finance its own debt. (You may call this cheating, but i'm pretty sure that if the bank let you print your own monopoly money to pay back your mortgage, you'd jump at the opportunity. The US doing this is dictated by other people letting us.) This, of course, makes the shutdown threats completely ridiculous for both parties, because it's completely trivial for us to deal with budget deficits and debt.

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