Government Shutdown Averted. But Is That A Good Thing?

Once again, due to the ongoing lack of fiscal responsibility in Washington, the markets and the economy faced a Government shutdown. After a day of theatrics, Congress passed a “stopgap” measure that will keep the Government operating for 45 days. But is that a good thing?

First of all, while much media hyperbole surrounds Government shutdowns, much like the debt ceiling, there is a long history of shutdowns going back to the 70s. As Katherine Buchholz of Statista recently penned:

“The 2018/19 Government shutdown was the longest in recent U.S. history at 34 days. A timeline shows that government shutdowns have been getting longer in the last three decades, with the second and the fourth-longest Government shutdowns taking place in 1995 and 2013, respectively. Throughout the 1980s, shutdowns were numerous but shorter, while in the 1970s, they also ran somewhat longer but only surpassed two weeks once, in 1978. Government shutdowns aren’t all that rare: Since 1976, there have been 20 shutdowns that lasted an average of 8 days.


While the latest measure provides funding, we will likely deal with this again in mid-November. What is notable, however, is that the Government has stopped functioning normally since 2008. Before the Obama administration, the Government operated on an annual fiscal budget. The House of Representatives would put together a budget for spending, the Senate would make its modifications, and then it would go back to the House for reconciliation. Once complete, it would move to the President for signature. Funding would then be allocated accordingly.

Compound Spending

However, since 2008, the Government has continued to operate without a budget. Rather than passing a budget each year, a “Continuing Resolution” is passed to fund spending. The problem with using “Continuing Resolutions” is that it uses the previous spending levels and increases that spending by 8%. Such is why, since 2008, the debt has exploded as spending is compounding annually.

federal debt