Barry Ritholtz with some Historical Perspective on U.S. Government Shutdowns

The good news is that so far, all we have is political posturing. History suggest that nothing happens until at least 12 hours after our September 30th midnight deadline. No one gets serious about any sort of deal before noon on October 1. At that point, political pressure on the House Republicans ”” from constituents, from Business leaders, and from elder statesmen ”” will start in earnest. A few days later, it can become more intense. We see the same sort of patterns with the debt ceiling limit as well (that’s schedule to hit at midnight October 17).

As NBC’s Pete Williams have reported, we have had 17 prior government shutdowns over the past 40 years, including 21 days in 1995 (table below). So while this feels like its new and unusual, it is actually more commonplace than most of us believe.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Economy, Ethics / Moral Theology, History, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate, The U.S. Government, Theology

16 comments on “Barry Ritholtz with some Historical Perspective on U.S. Government Shutdowns

  1. Archer_of_the_Forest says:

    I don’t see any way the Republicans can come out of this without taking the major fall in public opinion for a government shutdown because they are horrible at public relations. This happened in the Clinton administration, and that was pretty much the political end of Newt Gingrich.

  2. Br. Michael says:

    I disagree. The House is passing funding legislation. It is the Senate Democrats and President that are threatening a shutdown.

  3. Militaris Artifex says:

    Br. Michael,
    I would like to concur, but the results of recent national elections give me little hope that enough of our fellow voters are familiar enough with the use of logic to produce the result you seem to envision.

    Pax et bonum,
    Keith Töpfer

  4. tired says:

    The media have already been portraying this as a failure of the house republicans – hence, there has been no willingness on the other side to even open discussions. They have nothing to lose. I have yet to see an MSM piece even raising a question as to the absolute refusal of the president and senate to negotiate. Note the reference here to political pressure on house republicans – why not pressure on Harry Reid? Heh. The president enjoyed a game of golf this weekend.

  5. dcreinken says:

    #2, #3, that’s reverse logic.

    The house passes a funding legislation with poison pills. The Senate sends back straight funding legislation. The House adds poison pills. Again, the Senate sends back straight legislation. The House wants to negotiate. The Senate says “Negotiate on the budget resolutions we both passed. We’re not negotiating on the resolution to extend funding at current levels.”

    The Republicans need to hope and pray they lose this one, or else when the situation is reversed (and, or course, one day it will be), the Democrats will have every right to play the game by the same rules the Republicans are playing by. Divided government doesn’t mean an intransigent minority wing of one party gets to take the whole system down.

  6. David Keller says:

    I just heard Obama give a speech in which he said the GOP doesn’t like one piece of legislation but refuses to focus on all the 100s of really good things we have done. They are fixated on that one thing–the ACA. What is down right laughable about the speech is after Minneapolis that was the EXACT party line used by the liberals regarding Gene Robinson. “We did 1000 things at Minneapolis and all you want to do is focus on one thing you didn’t like. Focus on the other 999.” Of cousre, I have always said the TEC General Convention is a mere microcosm of the Democratic National Convention. I just seldom hear the Dems stealing lines from TEC. Too funny.

  7. Pageantmaster Ù† says:

    I cannot comprehend the complacency of this foolish president and legislature. The extraordinary and unrecovered downgrade in the credit rating of the US last time should have acted as sufficient warning to mend their ways.

    This is playing with fire.

  8. dcreinken says:

    #7, the “extraordinary and unrecovered downgrade in the credit rating of the US” had a virtually negligible effect on the cost of the government’s ability to borrow. Some could say that Moody’s downgrade is a colossal joke on S&P’s credibility.

    The US is still considered the safest place to park one’s funds. That said, I agree – one doesn’t mess with a a default.

    But this President has an intractable minority faction in one House of Congress that is determined to get their way whatever the consequences. Perhaps that’s what they were elected to do and what their constituents want, but this gridlock is the result.

    That said, the current conflict has nothing to do with the debit crisis and everything to do with reconciling differing budget legislation passed by both Houses. Since there has been no reconciliation, there is no budget, and thus no authority to spend money as of Oct 1. This mess is about whether or not the government will be funded temporarily at current levels so reconciliation can take place.

    The debt crisis will be the mess in two more weeks. Give us time. 🙂

  9. dcreinken says:

    That should read “S&P’s downgrade . . .on S&P’s credibility.” Fitch and Moody’s haven’t touched our credit rating.

  10. Pageantmaster Ù† says:

    #8&9 Thanks dcreinken
    The Irish Times pretty much sums things up today. The fact that in one sense the US ‘got away with it’ last time it had a downgrade is not definitive. If you look at what happened to the European economies, there were a number of warnings about their credit ratings, before they plummeted. The fact that the US had a shock last time should have acted as a warning to its executive and lawmakers. A president who oversaw such a debacle to the formerly unipeachable credit rating of the US, should have had his ears boxed.

    Similarly that this is a budget rather than borrowing crisis [which follows as you say in 2 weeks] belies the issue that the markets are already conflating the two, saying if this is how this is dealt with, what prospect is there that anything will change by the time this executive and legislature are talking about debt ceilings? A number of legislators are already linking the two.

    These things are about confidence, and what is on show to the world and the markets is that the adults have left the building. I also appreciate the internal US issues and the minority concern, but we do not care about the spats the children are having in the sand box. We only care about the quality of decision-making and the myopic concentration on domestic issues. There is no apparent plan or leadership on the problems which the US has. We are just appalled.

    But who knows, I may be wrong and it will all be over by Christmas…as they said in 1914.

    Please also note that I make a point as a non-American of not commenting on US internal politics, the exception being when it will affect the rest of the world and its economy. I take no sides on the domestic issues, but I do strongly take issue with the foolish leadership on display, which places everyone round the world at risk.

  11. David Keller says:

    #8–Harry Reid has refused to send any Senate delegation to meet with the House for reconciliation. The House reconciliation committee met, as scheduled yesterday but no senators showed up; so I would agree with your statement that an intracrable minority in one house of Congress is at fault. Bill Clinton, who is no favorite of mine, negotiaied with the House even after the shut down occurred until it was resolved–of course he was “meeting” Monica Lewinski in a side room in the interim, but that’s another story. Our current president will negotaite with nuclear terrorists but won’t talk to the Speaker of the House. It sounds like the plot of a Peter Sellers movie.

  12. dcreinken says:

    #11, Reconciliation on what? On the budget? The Republicans in the Senate have blocked Reid from sending a delegation for reconciliation since April.

    Reconciliation on the CR to keep funding the government? Reid has made it clear: Clean bill to fund the government for a limited time so that budget reconciliation can take place (assuming Senate Republicans don’t block it again).

    I would stand with Reid. There is absolutely nothing to negotiate on the CR. All negotiation means is which Poison Pill gets attached to the CR. If Republicans really wanted to negotiate, they would negotiate on what matters – the Budget. Instead, they are determined to use the CR (and presumably the debt limit ceiling) to hack at already established policy/programs.

    Any spin that suggests that Republicans aren’t the ones causing the shutdown or the obstructions is a different kind of Tea Party – the one in Wonderland.

  13. Pageantmaster Ù† says:

    I am just watching a delegation of Democratic Senators in a news conference, whining about the behaviour of the Republicans, and cynically wheeling out a laid off government employee to back them up.

    Cynical politicking – we do not care about the party political points scoring from these delinquent adolescents. #11 and #12 I understand how much all this means in domestic terms, but this is not the way to deal with things. Obama and all the politicians are so concentrating on their own fights they cannot see what everyone from Tokyo to London to Paris to Frankfurt to Beijing can see. It is recklessly foolish in the extreme, and risks unforeseen consequences which no one can predict, not least is whether lenders will take seriously that a country which does not care about paying its own employees can yet be trusted to pay those who are shortly going to be asked to lend to it.

    It is the Obamination of Desolation.

  14. David Keller says:

    #12–Thanks for making my point. Obama is totally checked out and Reid won’t even talk to Republicans unless they do what he says first.

  15. Pageantmaster Ù† says:

    #9 dcreinken

    “Fitch and Moody’s haven’t touched our credit rating.”

    [blockquote]Fitch Ratings, one of the Big Three firms that grades countries ability to repay their debts, warned Tuesday that failure by U.S. Congress to raise the debt ceiling in a “timely” manner could prompt a lowering of the country’s score…….

    Fitch’s opinion is important because the U.S. already has lost its triple-A rating with Standard & Poor’s, which downgraded the country’s creditworthiness in August 2011 after politicians nearly missed a deadline to raise the borrowing ceiling.

    In the aftermath of that decision, the Obama administration sought to isolate S&P as an outlier, emphasizing that Fitch and Moody’s, the other major credit-rating agency, left their ratings intact.

    A decision by Fitch or Moody’s to side with S&P could cause international investors to rethink the prevailing opinion that U.S. debt is the ultimate secure investment.

    “If you can’t govern yourself, how strong can you be?” said Jonathan Lewis, chief investment officer at Samson Capital Advisors LLC, a New York firm that manages investments worth $7-billion (U.S.).

    The shutdown “is disheartening for anyone care about good governance in the United States of America,”[/blockquote]
    If you Google news for US shutdown and world reaction, it shows what the world is making of all this – here is one

  16. dcreinken says:

    #14, Good to know that you will have zero complaints when the tables are reversed and a progressive Democratic minority caucus in a Democratic minority in the House holds the Republican Senate and White House hostage over budget/debt ceiling negotiations for their pet issues . . .

    Oh no, I forgot: Republicans can do no wrong, Democrats can do no right, and Obama is responsible for everything bad in the world . . .