Tuesday, April 5, 2011

Will There Be a Government Shutdown?

There probably won't be a government shutdown (unfortunately).  If there is, it probably won't last long.  If there is, it doesn't mean that all troops will be coming home and that Social Security checks will stop.  It means that some government employees won't be reporting for work for a short while.

This whole debate is for show.  The Republicans have to show a little bit of allegiance to the tea party people and the Republican politicians need to pretend that they care about cutting spending and reducing government.

The Republicans originally proposed about $100 billion in cuts.  Much of this turned out to be decreases in proposed spending.  The real cuts amounted to about $62 billion.  This didn't pass the Senate.  Now they are talking about cutting $33 billion below current spending.

This whole thing is a joke.  This is a debate about nothing.  The national debt is over $14 trillion.  The annual deficit is over $1.5 trillion.  The DC politicians are arguing over amounts that total less than 1% of the total federal budget.

This whole thing is symbolic.  What it is really symbolic of is the coming fiscal collapse because the spending in DC is out of control.  The Fed will continue to print money to fund the bad habit.  We will have to wait for high price inflation and higher interest rates before the Fed will consider putting on the monetary brakes.

We will see fiscal discipline forced on the DC politicians, much like we are seeing in many states.  The DC politicians can keep their game going longer because of the central bank.  When the dollar is on the verge of collapse and the Fed has to stop creating new money, then we will finally get to see the show.  Then we might see a true government shutdown where the troops really do come home.  If it is really bad, we might even see Social Security checks stop.

No comments: