Cross-posted from Real Economics.
A big tip of the hat to Rortybomb, which pointed me to this very timely and important interview concerning the looming shut-down of the federal government. New Deal 2.0 interviewed Roosevelt Institute Senior Fellow Bo Cutter, who was Director of the National Economic Council and Deputy Assistant to the President from 1992-1996 during the Clinton Presidency and was one of the key bureaucrats who managed and directed the shut-down of 1994.
It is a rather long interview, but well worth reading. Below, I will highlight the most important points Cutter makes.
First, is that a shutdown is real, and has effects the American people can quickly discern, such as being unable to visits national parks and monuments, and being unable to get any questions answered from the myriad of government departments and agencies. (That's right, there won't be any assistance to be had by calling the IRS). In 1994, the howling began almost immediately, quickly discomfiting the smug, ideological Republicans, and fracturing their unity in negotiations. As Cutter puts it:
I always thought that the Republican Congress basically thought none of this was real and therefore they could have it both ways. They could politically posture by saying that by god they were going to shut the government down and they were rough and tough and all of that, but in their hearts they kind of knew nothing would happen. So some of them were the most surprised people of all when actual things actually happened and when their constituents suddenly didn’t get services because the government was shut down. It is quite real.
Second, there is a law, called the Anti-Deficiency Act, that imposes criminal penalties personally on government officials who direct work be done when there’s no money to do it. However, there is also legal agreement that certain "life or death" government functions must be carried on. Cutter explains what happened in 1994:
So the military continues to function, although there are functions of the military and the civilian side of the defense department that have to begin to stop. The veteran’s hospitals continue. Walter Reed, that has the wounded from Afghanistan and Iraq and now maybe Libya, continues to function. Social Security checks do get mailed out. A lot of the stuff that is really immediate and involves immediate transfers of critical services like health or income will continue. Every agency has a plan. Employees are distinguished between those who are critical and essential and those who are not, and there’s a process that involves the legal counsel of each agency. The distinction is people who are required to keep the basic infrastructure of government going and people who aren’t. The critical people work without pay.
Third, about three quarters of the way through, Cutter discusses why today is more dangerous than 1984, because Gingrich had much firmer control of the Republicans in the House then, while Boehner is dealing with relatively crazier people:
Today the circumstances are really different in that Boehner does not have control over the Republican caucus. Large numbers of the tea party members don’t have any interest whatsoever in figuring out the rational answer to all of this. So you have a really fundamentally different condition of political management.
Finally, Cutter argues that this showdown over a government shutdown is actually a much smaller political crisis that the next showdown, over increasing the federal debt limit. Cutter said
This [shutdown] is small potatoes. But we are about to see the debt limit debate. And there are people on the Republican side who actually believe that risking a default isn’t a bad thing. I think it’s an awful thing. I think it’s really, really reckless. And I don’t have any confidence that the Republican tea party members are going to come to that realization soon enough. . .
You really need to read the entire interview, especially the part at the end, to realize how dangerous is the brinkmanship the tea-hadists and the Republicans are engaged in. But, in my opinion, the tea-hadists and Republicans, and especially their rich masters, had better be careful here, because they are forcing a debate that has not been heard in the United States for over a century: what is the nature of government debt, and why do we even need to go into debt if we are a sovereign government that can issue its own money? At the beginning of the year, beowulf pointed to Coin Seigniorage and the Irrelevance of the Debt Limit, and just a few days ago, letsgetitdone on CorrenteWire renewed the push for this idea with Use Coin Seigniorage Now! These are exactly the kind of ideas that strike at the very heart of the banksters' power, and which can be expected to surface more and more as the economic depression continues.
One more excerpt from the Cutter interview, below:
Bryce Covert: What does the average American feel when the government shuts down?
Bo Cutter: First of all, there’s the disappearance of all of the things that are really visible like forests and parks. I don’t mean the forests disappear, obviously. But people who’d planned trips are the ones who get hit first. The TSA will be there, but that proverbial family that is in Washington really can’t go to the Air and Space Museum and they don’t believe it. They think this is crazy, why would anybody close down the Air and Space Museum? So they yell and scream, and they’re right, they should be mad.
The second thing you notice is a real slowdown in everything. There’s no place to call and find out what’s happening to a particular grant. If you’re Caterpillar and you sell heavy earth moving equipment and you had a contract in competition with others being considered by the Department of Transportation, your contract isn’t going to get looked at. So the people whose jobs depended on that work lose their jobs.