What’s At Risk When The Government Shuts Down?

Caution

Let me first say that growing up I learned an important lesson from my father…“don’t be part of the problem, be part of the solution”.  I’ve carried that philosophy with me throughout life and it has served me well.  That said, my blog today provides context on the problem as I see it with our Country’s current state of affairs.  Later this week I will post a blog that provides a solution, or at least a strong direction, that may be viewed as a starting point to making things better.

The U.S. government has now officially been shut-down for a week.  On Tuesday, October 1, 2013, after being unable to reach any agreement between the President, Republicans, and Democrats, the government was forced to shut down…at least partially.  From services required to fund small business loans, to passport processing services, and the suspension of Amber-Alerts,  many of the “Congress deemed non-essential services” have been stopped.  Unfortunately the one service that should have also been stopped wasn’t…paying Congress!  Instead, it is estimated that nearly 800,000 of the 3.3 million federal employees will be furloughed – the remaining employees being viewed as “essential”.

How did we end up in this situation again?  It seems we have reached this same impasse a handful of times over the past 5 years.  Gridlock and deadlock have plagued this 113th Congress and it shows in their “disapproval” rating which is currently hovering at 80+%.  Think about that…8 in 10 American’s do not approve of how Congress is acting…or not acting depending on your viewpoint.  Relative to the President, his approval rating is just a bit better at 50%…half approving and half disapproving.  No matter how you slice it, or which polling company’s data you prefer, it’s clear we have our work cut out for us as a country.

There are two issues looming on the horizon that will most certainly present additional challenges for the U.S.  The first being our debt ceiling, and the second being the implementation of the Affordable Care Act, more specifically the health exchanges.

Our debt ceiling is set to expire on October 17, 2013.  If no action is taken, what we risk, is the general default by the U.S Government to its bondholders.  And while the U.S. Treasury Department has some wiggle room as to prioritizing what and who to pay first, the reality is that because the numbers are so huge something or someone is likely to come out on the short end of the stick.  If forced to make a trade-off, the Treasury is likely to pay the bondholders before paying Social Security recipients.  Unfortunately there is no easy solution.  Some say just raise the debt ceiling…print more money, while others suggest slashing budgets and eliminating many of the current public or entitlement programs. It’s hard to believe that 536 (535 + 1) people can’t find some common ground that offers up a solution to benefit the country and its citizens.  This current win-lose philosophy if allowed to continue will only hurt us in the short and long-term.

Next up, the exchanges.  We saw this past week websites crashing, call centers overloaded, and millions of questions left unanswered.  To be fair, all new things have their bugs whether it’s Windows 8 or the new iOS7 platform.  We have grown accustomed to anticipating problems.  However, as forgiving as we typically are, there are some things that drive us to shop elsewhere.  As an example, many people I know are considering switching to a DROID-based phone after Apple’s recent iOS7 release that seemed riddled with problems.  Likewise, many folks still haven’t upgraded to Windows 8 as they are not pleased with Microsoft’s new platform.  But where will people go when not happy with the exchanges?  Perhaps a different exchange?  Maybe through their broker?  The fact is, it’s yet to be seen what choice we will really have if completely dissatisfied with the new way we need to secure our health coverage.

The next few weeks will test our patience, as well as, our prior held beliefs.  Those in favor of healthcare reform may have a change of heart and to be fair those opposed to its passing may find they actually like it.  Regardless, our government has some significant challenges it is facing over the coming weeks and given its recent history of being unable to work together toward a common outcome, the likelihood that we will actually get a solution to these big problems is slim to none.  Instead we’ll kick the can further down the road, place a temporary band-aid on our debt problem and more likely be forced to delay another aspect of the ACA implementation.

Perhaps the biggest risk of a government shut-down is psychological.  A loss of confidence, stature, and respect.  A shut down pushes us further away from our once-held position as the leader in the world, a country with great ideas, the best talent, and an unquenchable thirst for perfection and progress.  Shutting things down signifies giving up, and that’s simply Un-American.

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