Whopper Tales from the “Shutdown”

November 25th, 2013 by

Raleigh – Now that some time has passed since the early October “shutdown”/debt limit crisis of the federal government it is time for facts to emerge. Why? The next time this crisis occurs we will know better how to deal with it and how to understand it.

Here are some commons myths:

MYTH ONE: The government “shutdown” in early October 2013.

  1. Not really. State and local governments, with which most citizens have the most direct contact, were humming along at 99%. A few cases of federally funded programs were interrupted briefly.
  2. The federal government was humming along at about 70%. The expenditures that consume most the budget are on automatic pilot. By statute they continue even in the absence of a new appropriations bill. There are some limitations on this. For example, the Constitution specifies that no appropriations for the military may extend more than 2 years. Within that 70% of programs that continued on automatic pilot the matters that affected the people the most are Social Security, Medicare, and Medicaid. . . .

MYTH TWO: During the “shutdown” essential services were shutdown.

The President acting under 31 US code 1341 and 1342, the Antideficiency Act, designated essential services and those persons continued their work unabated. Even those deemed nonessential were protected. When the continuing resolution was approved, which they all knew it would be, the workers were guaranteed to be paid in full. There was a disruption in cash flow to these workers but not to their balance sheet. Federal workers are at the top of the pay scale generally so their ability to handle this was enhanced.

MYTH THREE: October 17th deadline for extending the debt ceiling – that after that day the U.S. would have defaulted on its debt service and payment of treasury bonds.

Not really. The ability to borrow after October 17th would not have been repealed – only a statutory limit at $17 trillion (Article 1, Section 8, Clause 2 of the U.S. Constitution, the “Borrowing Clause”.) After that date revenues were still coming in at the annual rate of $2.7 trillion a year since there was no moratorium on citizens paying taxes. The “debt ceiling” is a  statutory statement that the total amount of debt will not exceed that figure. Annual debt service this year is $415 billion. Only if the President had violated the law and not paid debt service first would those treasury transactions have been interrupted.

MYTH FOUR: The President wisely chose which government services to halt while continuing essential services.

No. It is widely observed that President Obama chose on the basis of the services that would cause the most pain, disruption and publicity in order to create the atmosphere of crisis. For example, no one is required to monitor the World War II Memorial on the National Mall. It is an open-air exhibit without moving parts. Only President Obama would think to spend money to close it down during the “shutdown”.

MYTH FIVE: The “shutdown” was caused by the irrational opposition of Republicans to the Affordable Care Act.

See the attached October 14, 2013, statement. The shurtdown was in fact caused by th eirational stubborness of President Obama and Senators like Harry Reid and Kay Hagan who refused to allow even a single vote on the slightest change to the Affordable Care Act.



10-14-13 The Federal Government Shutdown Separating Fact from Fiction

CRS_Debt Limit

CRS_Economic Effects of Shutdown

CRS_Shutdown Causes and Effects