At the moment, the 2013 government shutdown has taken over headlines and will likely dominate until the budget crisis is resolved. The inability of Congress and President Obama to reach a compromise or demonstrate any shred of leadership has led to uncertainty on Main Street, but the markets
have responded relatively tamely.
Budget debates were the driving reason the government closed up shop. While Congress has not been able to pass a formal budget since April
2009 and has kept the government running via continuing resolutions, the implementation of “Obamacare” has caused those on both sides of the aisle to put their respective feet down, which has led us to this.
The Wall Street Journal reports that more than 800,000 federal employees have been furloughed. What this means is that until a budget or a continuing resolution is passed, these employees will be on unpaid leave, although they will likely receive back pay for the time that they were out of work.
CNN and Slate posted fantastic graphs and tables outlining which departments were going to be most affected by the furloughs. Slate reports
that NASA, HUD, Department of Education and the EPA will all see more than 90 percent of their employees furloughed, while the SEC, Federal Reserve, State Department and Postal Service will remain untouched.
CNN reports that the IRS will see nearly 86,000 furloughed workers, and almost 59,000 workers associated with National Parks/National Wildlife Refuge Systems will be sent home.
While this shutdown draws attention, let us not forget that shutdowns are not entirely uncommon. The U.S. government has seen 18 total shutdowns since 1977 lasting anywhere from one day to 21 days. An interesting fact: Only under one president did his party control the White House and both chambers of Congress, yet still suffer a shutdown. That was under President Jimmy Carter and it happened five times from 1977-79.
A major cause of the shutdown was that the Democrat-controlled house refused to cave to the Senate’s wish to allow Medicaid dollars to be used for abortions. I guess 1970’s Democrats are equal to today’s tea party.
There are two factors that the reader needs to understand. First is that this is all due to a lack of leadership from both parties. Second is that this is all by design.
President Obama is supposed to unite Congress and help achieve compromise, which he clearly has not. Vice President Biden is the president of the Senate and has done nothing to help achieve compromise either. Speaker of the House John Boehner has drawn his own lines in an attempt to keep the currently embattled Republican Party united. Not one person who was elected to lead is actually doing so.
The reality is that both sides wanted a shutdown so that they could blame the other party. By making the shutdown as apparent to the public as possible, politicians can use the crisis to their advantage.
Before we go making assumptions on how sad and unfortunate this all is, let’s remember the World War II vets who were nearly barricaded out of the World War II Monument. There were federal employees present attempting to keep them out of an outdoor public park, yet we are to believe that any nonessential employees have been furloughed and are suffering? That is a clear and direct message to the American People from Washington: We have just enough money to make your lives miserable until this is resolved.
Ben Treece is a 2009 graduate from the University of Miami (Fla.), BBA International Finance and Marketing. He is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and licensed with FINRA through Treece Financial Services Corp. The above information is the opinion of Ben Treece and should not be construed as investment advice or used without outside verification.
