Notes on the government shutdown

Notes on the government shutdown

I have a post on the housing market pending at Seeking Alpha. If and when it goes up there, I will link to it here.

In the meantime, here are a few important notes on the shutdown.

I can’t find the quote now, but about a week ago it was floated that Trump could “save face” by declaring an emergency, starting to build the wall, and then allow the government to open. Then Trump indicated that if he declared a state of emergency, that wouldn’t mean that he would open the government even then. This is a win-lose capitulation transaction, and Trump is bound and determined to show dominance over the Democrats.

Aside from the fact that there is a large portion of the GOP that is taking advantage of this to “drown the government in a bathtub,” now that a Federal judge has turned down government workers’ “involuntary servitude” challenge, Trump has a ready-made force of de facto slaves that he can recall — or not — depending on whether he wants a particular government program to work or not:

Rank-and-file Democrats reject Trump’s invitation to shutdown talks, back Pelosi in opposition to border wall

The nearly 50,000 furloughed federal employees are being brought back to work without pay — part of a group of about 800,000 federal workers who are not receiving paychecks during the shutdown, which is affecting dozens of federal agencies large and small. A federal judge on Tuesday rejected a bid by unions representing air traffic controllers and other federal workers to force the government to pay them if they are required to work.

Don’t hold your breath waiting for SEC workers or those necessary to issue food stamps to be recalled.



I’m not the only one who is questioning the Democrats’ (lack of?) strategy here, in failing to frame this as a horse-trading negotiation:

One way that the shutdown might end is if enough of the “essential” workers who aren’t being paid go out on strike:

But apparently more and more insiders are coming to the same conclusion I came to a number of days ago. It will take a preventable disaster to force an end to the shutdown:

Meanwhile, the longer the shutdown goes on, the more likely it is that the economic slowdown that I’ve been writing about for months turns into a  recession:

 Shutdown’s Economic Damage Starts to Pile Up, Threatening an End to Growth

Mr. Hassett said on Tuesday that the administration now calculates that the shutdown reduces quarterly economic growth by 0.13 percentage points for every week that it lasts — the cumulative effect of lost work from contractors and furloughed federal employees who are not getting paid and who are investing and spending less as a result. That means that the economy has already lost nearly half a percentage point of growth from the four-week shutdown. (Last year, economic growth for the first quarter totaled 2.2 percent.)

I’m guessing about 10 to 12 weeks of a shutdown would be enough to do the trick.

Finally, the focus on MItch McConnell is only half-right:

This is false. Unless Pelosi can round up over 50 GOPers in the House — and there’s no sign that she can — even a Senate bill passed 100-0 would not be enough to overcome a Trump veto.