kinder, gentler debt ceiling discussion

[Felix]

There were rumors of gold selling by the Bank of France (which were later denied), I guess that was an influence.

[JohnnyH]

@workathome: Pretty much, seems like 4/5 NY openings are large gold selloffs recently... Might be a tradeable edge like the "overnight gold" that worked so well for years but has been reversed this year... Or might just be bear market action. I might have to export to excel to find out!

[vivacious]

For anyone who thinks this is achieving something, it isn't.

Despite the Republican party's insistence on fiscal responsibility, a government shutdown would "likely add to the budget deficit," according to Bank of America Merrill Lynch economist Ethan Harris.

[jacob]

Some historical/mathematical perspective ...

Things to consider going forward:
The main focus seem to be on the 800,000 gov workers who have been furloughed.
But compare that to the 155,000,000 in the work force. It's only about 0.5%.

If you see any numbers in the news, compare that to the $11B/day it otherwise costs to run the government.

Looking backward:
Remember the sequester. That was supposed to be some mutually assured horrible problem to ensure that politicians wouldn't let it happen. Yet it happened, and yet nothing happened. We no longer hear about the horrible sequester or the consequential suffering. This might be why the market shrugged it off today.

The consequences seem to be concentrated on the <1/3% of the population who are directly affected for now, namely government workers, those who arranged to have a wedding at the Mall, Statue of Liberty tourists, and those who watch panda cam. (I'm sure it goes deeper than this, but this is what the MSM focuses on.)

[vivacious]

What is interesting is the Vitter amendment. I don't know why Republicans are pulling for it. As I understand it it cuts subsidies to lawmakers and their staff for the healthcare exchanges.

It sounds like the right thing to do at least for the politicans. Shouldn't they have to play by the same rules as everyone else? It may hurt the staffers though.

I don't understand them cutting their own fat. I thought most politicans loved their cusyhy lifestyle and were trying to increase it or at least maintain it? Unless they want to hurt their own staffers or something?

[vivacious]

The consequences seem to be concentrated on the <1/3% of the population who are directly affected for now, namely government workers, those who arranged to have a wedding at the Mall, Statue of Liberty tourists, and those who watch panda cam. (I'm sure it goes deeper than this, but this is what the MSM focuses on.)

Yeah but it could get worse. Things can float along for awhile but an extended shutdown wouldn't be good.

[jacob]

@vivacious - WRT Vitter, it's a strategic R move intended to hurt D staffers and expose the congressional double standards in putting themselves in one health care system (which I understand is pretty good) and putting everyone else in ACA/Obamacare (which I understand is not as good as the former). This way they can take the moral high ground and say that "if you think ACA is so good, why don't you want it for yourself". Consequentially public opinion of D would decrease.

All part of the game.

[vivacious]

Boehner fought for the subsidies behind the scenes though, not against them.

I would argue the Vitter amendment is a good thing. If the lawmakers have to use the same healthcare as everyone else it gives them more incentive to make it work well.

It's also an implied argument for single payer if the system they have is so good.

[Felix]

As far as I understand it, this is merely a government shutdown so far. Since there's been money coming in recently, the projection for time of default is October 17th. The shutdown may prolong this wiggle room, but it may be already part of the projection, which would be my guess.

[Spartan_Warrior]

Some historical/mathematical perspective ...

Things to consider going forward:
The main focus seem to be on the 800,000 gov workers who have been furloughed.
But compare that to the 155,000,000 in the work force. It's only about 0.5%.

If you see any numbers in the news, compare that to the $11B/day it otherwise costs to run the government.

Looking backward:
Remember the sequester. That was supposed to be some mutually assured horrible problem to ensure that politicians wouldn't let it happen. Yet it happened, and yet nothing happened. We no longer hear about the horrible sequester or the consequential suffering. This might be why the market shrugged it off today.

The consequences seem to be concentrated on the <1/3% of the population who are directly affected for now, namely government workers, those who arranged to have a wedding at the Mall, Statue of Liberty tourists, and those who watch panda cam. (I'm sure it goes deeper than this, but this is what the MSM focuses on.)

Some agencies were affected by the sequester more immediately than others. There are federal employees who have already been forced to take weekly unpaid furlough days due to the sequester. However, we have yet to see the full impact. The Budget Control Act of 2011 (the sequester bill) allowed for a reduction in budget authority, not a reduction in actual cash outlays for 2013. Since much of the FY2013 budget goes toward contracts that would be paid over subsequent years, it did not necessarily affect every agency's ability to meet immediate, present obligations for this fiscal year. This absolutely does not mean that sequestration will not have more serious, ongoing impacts in the future, especially moving into 2014, when the reduction in budget authority will really start taking effect.

http://en.wikipedia.org/wiki/Budget_seq ... ic_effects

I think it's naive to discount the effect of a government shutdown based on the ratio of public workers to total work force. One thing I think we will all agree on regardless of political orientation--the U.S. government is very deeply entwined with private and corporate enterprise. It really does have its fingers in pretty much everything. For instance, I wonder how the extreme right-wingers will feel when they go to buy a new gun and there's no one to perform the background check.

That's just the beginning. For every government worker there are probably ten contractor employees who work on everything from software development to facilities management and also derive their income from government spending. Without federal contract officers to approve the (non-existent) funding, these people will slowly lose their jobs as well unless the corporate contractor is able to continue paying them out of their own coffers in the absence of contract funding (not likely).

If 800,000 seems like a paltry number, keep in mind that represents almost 5 times more jobs than were added to the work force in August. (169k) Unemployment still stands at over 7%. Furloughed federal workers in many states will be eligible to apply for unemployment and I for one will consider it if this lasts longer than a week. Wonder how the politicians will spin the increasing unemployment rate.

[Spartan_Warrior]

Also, as far as "compare that to the $11B/day it otherwise costs to run the government"... If you refuse to pay $11B in interest on your credit card for a few months, do those obligations suddenly go away? Or do they get drastically more costly?

[Dragline]

Something about this reminds me of Clevon Little taking himself hostage in Blazing Saddles:

http://www.youtube.com/watch?v=upvZdVK913I

[Spartan_Warrior]

Something about this reminds me of Clevon Little taking himself hostage in Blazing Saddles:

http://www.youtube.com/watch?v=upvZdVK913I

"Ooh, baby. You are so talented. And they are so dumb!"

-- Congress.

[jacob]

@S_W - Not to worry. In this case, we're talking non-essential workers (a pretty demoralizing job description, eh?) so presumably they're not doing anything important for the economy

[Chad]

I'm one of those contractors SW mentions. Two days without pay, so far. No danger of me not paying rent, but for some that could be an issue. I'm not suggesting the government can't or shouldn't cut spending, but this childish tantrum is a rather weak way of going about it. Especially, when the House Republicans are only focused on one thing.

It would be nice if this would permanently fracture the Republican Party and help create a third party. I'm dreaming I know, but even my friends and relatives that support the party think this is a rather stupid.

@Felix
You are correct. October 17 is the drop dead date for debt default.

[workathome]

I wonder if the same argument could be used at the bank. "What do you MEAN you're not raising my credit card limit? Don't you understand I will need to shut down the open bar and fire the bathroom renovator? Ridiculous! This is all your fault!"

[Spartan_Warrior]

@Jacob... I'm not sure if you're trolling me or not. If only for the viewers at home, "non-essential" simply means they're not involved in matters of national security/life and death ala air traffic controllers, food safety inspectors, national firefighters, etc. Yes, it is a demoralizing job title (what part of working for the government isn't demoralizing?) but it hardly means what the hardcore anti-government folks want it to mean. It certainly doesn't mean these people don't contribute to the economy. Again, like I said, the contract manager who runs the ten million dollar contract for some new software widget that collects public health info (or whatever) is not considered "essential", but that's still ten million dollars that won't be going to those contractors or the economy.

[Chad]

@S_W - Not to worry. In this case, we're talking non-essential workers (a pretty demoralizing job description, eh?) so presumably they're not doing anything important for the economy

Yeah, nothing important. I'm sure that's what a lot of people think (I know that you are being facetious). Lots of disease research not being done right now at NIH and potentially at colleges/universities that receive the grants (could be a ripple effect going forward if this goes on too long).

[Dragline]

Yes, there are many more serious "unintended consequences" like this one: http://www.wtop.com/959/3469839/Shutdow ... ood-supply

On the other hand, you could pick up an easy $10-spot for some of your precious bodily fluids, Chad.

[Felix]

I agree with Jacob that the current numbers are not so bad, they would need to add up for quite a while to do enough damage.

Taking Riggerjack's numbers from the White House, after October 17th, when spending goes down to balanced budget mode, the average daily loss of net income in the private sector would be 2.665 Billion dollars, that's 26% of total government payments cut assuming no changes in the underlying economy.

Compare this with the sequester of 85 Billion dollars a year, or 2.3% cut while still being a net payer.