The World Ends in 17 Days

On Sept. 30… in a mere 17 days…

The United States government will “shut down” barring fresh congressional funding.

Uncle Samuel’s doors will swing shut — and Pandora’s notorious box will swing open.

Horror upon horror will ensue.

The ranger patrolling the National Park of American Samoa will be thrown into idleness…

The Federal Theatre Project will be thrown into darkness…

And the visiting seventh-grader from Topeka, Kansas, will be thrown from the Washington Monument.

These are merely examples. Many additional privations would enter existence.

How the nation can possibly endure such dark days… we do not know.

Yet take some solace…

A Glimmer of Light

Federal workers deemed essential to the safety of the Republic will remain on in event of shutdown — the customs official at Ketchikan, Alaska, for example.

The Transportation Security Agency will continue guarding the aerial ways against infants, great-grandmothers, wheelchair-riders and related hellcats.

In event of armed invasion, we are assured the Marines will leap from their barracks.

Social Security checks will still go issuing through the mails.

That is, the nation will peg along substantially uninterrupted.

Yet we are warned we stand perched upon the devil’s shovel — unless the two political parties at Washington can sink their differences — and agree to keep the government in funds.

Warns Goldman, for example:

A government-wide shutdown would directly reduce growth by around 0.15 [percentage points] for each week it lasted; including modest private-sector effects, the hit to growth could be around 0.2 [percentage points] per week. In the quarter following reopening, growth would rise by the same amount.

Yet would a government “shutdown” — again, the quote marks are necessary — represent the devastation it is presented to be?

We harbor the gravest doubts.

Any discomforts would likely be brief.

And we hazard the long-term rewards would outdo whatever short-term hells that attend it.

Government Is a Parasite

It is claimed that federal expenditures constitute some 25% of GDP.

Government at all levels is credited with a thumping 36% of United States GDP.

Yet we must return to a fundamental understanding. We must recognize that governments lack all resources.

Imagine a parasite dining on a host. Now imagine a government.

You have imagined the very same thing.

You may argue that portions of government’s parasitic enterprise are useful… even necessary.

The parasitic arrangement obtains nonetheless.

Before government can ladle out one meager dollar for guns, for butter, for bread, for circuses… it must first pluck it up from private pockets — directly or indirectly.

That is, directly through taxes or indirectly through credit — borrowing.

That is, through taxes or taxes.

Pay Me Now or Pay Me Later

The dollar borrowed is merely a delayed plucking, a plucking at one remove.

It is a plucking nonetheless. It represents a future plucking of the taxpayer’s pocket.

Explains “Austrian” school economist Peter St. Onge:

We have to remember where [the money comes] from. The government, after all, doesn’t actually create anything. Every dollar it spends came out of somebody else’s pocket. Whose pocket?

Part of the [money is] bid away from private borrowers like businesses, and the rest [is] siphoned from people’s savings by the Federal Reserve creating new money.

And if this money is not siphoned away? If it stays unsiphoned and in taxpayer pockets?

This means that, yes, GDP would decline sharply. But wealth would actually grow, perhaps substantially. The businesses would be able to buy things they need, while the savers keep their money that was doing useful things like paying their retirement.

So GDP drops, wealth soars…

Kind heaven, can it be? Wealth soars as the gross domestic product drops?

Who is this St. Onge heretic?

Paul Krugman would denounce him as an arm of Satan, rope him to a stake and set him aflame.

Yet like a Hollywood movie set… a false set of teeth… or a politician’s word… GDP often gives a deceptive appearance.

The numbers tell fantastic lies.

GDP and the Torture of Statistics

Assume the government pays a fellow to shovel a hole. Assume further this government pays him to shovel it back in.

In the official telling, you have just witnessed an increase to the gross domestic product.

Have you? Or have you merely witnessed an idiocy?

You have witnessed an idiocy.

You have witnessed a juiceless pursuit.

You have witnessed a squandering of time, of effort, of resources.

We maintain that vast amounts of government enterprise sort into this category.

Take the example cited. What if the resources to fund this idiocy had remained in rightful hands?

The world would be that less idiotic. The world would likewise be that much richer.

Alas, this is not the world we inhabit.

Yet we begin to stray from the central topic under consideration. Let us then come back.

Will the federal government “shut down” on Sept. 30?

Three Possibilities

NBC news sketches three possible outcomes:

1) Congress does nothing and shuts down the government at midnight on Sept. 30;

2) Congress passes one or more continuing resolutions (“CR”) that extend FY2023 funding at current levels until a certain date, moving a potential shutdown date further down the calendar, likely around the Christmas holiday.

3) Congress passes some or all of the 12 separate appropriations bills to fund the government through Sept. 30, 2024, averting a shutdown for some or all of the federal government.

Which will it be?

We wager high on outcome 2. Congress will hand down another continuing resolution, so-called.

That is, Congress will boot the soda can further down the roadway.

“Never underestimate the ability of Washington to kick the can down the road,” affirms one Republican congressman.

We do not, Congressman. We do not.

They’d Never Allow a Real Government Shutdown

Congress will never allow a true government shutdown worthy of the expression.

Too many would stand to lose too much.

There are simply too many angling to get a bucket in the stream. To get a snout in the trough. To catch a penny…

To pick a pocket… or two pockets… or 330 million pockets.

Thus the combats before us reduce to theater.

They resemble a professional wrestling bout — with its artificial blows and false blood.

They are a staged affair.

In the congressional example one fellow attempts to wring concessions from the other… to make his eyes blink first.

The other fellow pursues an identical result.

Each knows that to get, he must give.

And so horses are traded, backs are scratched, palms are greased.

A deal is reached.

Honest Men Need Not Apply

What about the honest few who demand a square and honest accounting?

Their arms are twisted and their skulls are bashed.

Thus we expect a continuing resolution to come issuing on Sept. 30.

That is, we expect another can-kicking on Sept. 30.

If you expect officials to make courageous choices guided by principle… if it is statesmanship you seek… you will not find it in Washington.

It is the wrong address.

The Daily Reckoning