Hey guess what? The government is still shutting down — in slow motion
by digby
A little needed perspective from dday, in TNR:
You could argue that the recent shutdown inflicted much more damage than sequestration. You would be wrong. Standard and Poor’s estimated that the shutdown cost the economy $24 billion over its 16-day stretch. Sequestration, meanwhile, will be in place for ten years unless Congress does something, and the spending cuts over that time total $1.2 trillion—50 times the economic impact of the shutdown. And that doesn’t include the knock-on effects to the economy—reduced purchasing power by federal employees, fewer contracts for private companies doing business with the government, and generally lower consumer spending as a result.
According to the Congressional Budget Office, sequestration cuts will cost as much as 1.6 million jobs if kept in place through the 2014 fiscal year, with a reduction in GDP of 0.7 percent. The continuing resolution funds the government at sequestration levels through January 15, 2014, so we’re well on our way. As veteran Congressional observer Norm Ornstein wrote, “Damaging as the shutdown is for governance, it is minor compared with the long-term damage of the sequester.”
[…]
This represents clear, self-inflicted damage, mostly achieved due to Republican control of one house of Congress. Their demands for smaller government have succeeded—the budget deficit has fallen at the most rapid pace since the demobilization following World War II—but it has come at a massive cost to the country’s economic fortunes. The economy was simply too fragile, with aggregate demand too low, to withstand the blow of shutting down the government. Unemployment would be far lower, and growth far higher, without these wounds.And sadly enough, leading Democrats egged on the pivot to austerity, including President Barack Obama. Insufficient stimulus, measures like a federal employee pay freeze, and the inability to counter-balance forced budget cuts from the states led government policy to harm an economy that needed help. Indeed, Goldman Sachs’ macroeconomic analysis showed that federal fiscal policy—not just state and local—began to drag on growth in the middle of 2010, when Democrats still controlled Congress. That has been borne out by subsequent analyses, and it puts us in year four of an unnecessary, damaging partial government shutdown.
But by all means let’s keep patting ourselves on the back for being such big winners in the budget wars.
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