Stand-Offs and Shut-Downs

Crisis in the committee for managing the common affairs of the whole bourgeoisie: US Federal Government Shut-Down of October 2013 

On Tuesday, 1 October 2013 the American Federal Government of the world's currently most powerful capitalist economy went into 'shut-down'. Basically it closed for business, halting all but the most critical government services for the first time since 1996. The US financial year ended on 30 September 2013, a new budget had not been agreed for the 2013-14 financial year and even a 'stopgap' funding deal could not be agreed between the Republicans and the Democrats. Without a budget deal approved by both parts of the US Congress; the House of Representatives dominated by the Republicans and the Senate dominated by the Democrats there is no legal agreement to pay non-essential federal government workers.

The immediate result of the 'shut-down' was an estimated 800,000 workers were sent home without pay and a further 1.3 million federal employees were required to report for work but without any prospect of immediate pay. These amounts were said to be equivalent to the combined workforces of Exxon Mobil, General Motors, Google and US retailer Target. The Pentagon itself sent home 350,000 of its staff. 1 October 2013 at the Federal Center Metro Station in down-town Washington DC was the scene of a mass exodus of federal workers and was effectively unused for the next two weeks.

The 'shut-down' was not unprecedented but it was the first in the 21st century, in fact even though there have been 18 'shut-downs' of US federal government since 1976. The last occasion was when President Clinton and the Republican-controlled House halted services for 21 days in November 1995, a temporary spending bill was enacted, but then the 'shut-down' restarted in December and ran into 1996. During the Reagan presidency in the 1980s there were regular short 'shut-downs', and George Bush Sr had a partial 'shut-down over the 1990 Columbus Day weekend. President Carter, forever stymied by his own party in Congress, ordered the whole government to be ready to 'shut-down' when the budget year ended on 1 October 1980, in case the deadline for appropriations bills was missed.

In the earlier days of American capitalism Congress routinely failed to pass appropriations bills on time but this was smoothed over with a short-term money approval, called a 'continuing resolution'. Even when these were delayed the federal government did not 'shut-down'. It was always assumed that Congress did not want to turn off the lights and send the government go home.

The immediate effect of the 'shut-down' is on the working class, sent home without pay or forced to work without pay, treated like 'indentured servants' according to Jeffrey David Cox, president of the American Federation of Government Employees (AFGE). Cox said nearly half of his 670,000 members had been deemed 'essential workers' and had thus been compelled to keep working without pay while the 'shut-down' continues. Workers who do not turn up for their jobs face disciplinary action and could be fired. The 'shut-down' spread into the American private sector; Lockheed Martin planned to furlough 3,000 workers, engineering contractor URS has furloughed 3,000 workers and defence contractor BAE Systems 1,200 workers. (Guardian 11 October).

Costs to capital

Analysts estimated that a one week 'shut-down' could cost the US economy $10 billion, IHS Global Insight stated that the 'shut-down' would knock $300 million a day off US economic output, Moody's Analytics believed if it lasted one month there could be a reduction of 1.4 percent in economic growth, and Macroeconomic Advisers reckoned that GDP could drop by 0.3 percent in the fourth quarter if the 'shut-down' lasts two weeks. According to the US Bureau of Economic Analysis, current-dollar GDP (the market value of all US output of goods and services) was $16.661 billion in the second quarter of this year. Moody's estimate would result in a loss of about $233 billion (because the economy would increase by $183 billion rather than $416 billion). And Macroeconomic Adviser's estimate would result in a loss of about $50 billion. Bank executives including Goldman Sachs chief Lloyd Blankfein warned that the 'shut-down' threatened to plunge the economy into a 'deep and dark recession' adding that the economic recovery was already 'shallow'. (Guardian 2 October)

The 'shut-down' closed down what were described as 'non-essential services' such as the following long list:; National Parks, Lincoln Memorial, Abraham Lincoln Birthplace national historic park in Kentucky, the Smithsonian Museum, Statue of Liberty, and the National Zoo. Also, the Department of Treasury went into 'hibernation', almost all of NASA closed down except for Mission Control in Houston, the Securities and Exchange Commission (SEC) could not effectively regulate the 'den of thieves' that is Wall Street, the Environmental Protection Agency sent staff home, the IRS stopped issuing the W2 proof-of-income forms for borrowers to secure loans, the Federal Housing Administration was operating with a limited staff, and the Department of Labor had only 3,000 staff working out of a total of 16,000. Furthermore, the Centre for Disease Control was facing reduced ability to detect and investigate disease outbreaks, and the annual influenza programme closed down, the WIC Program which provides low-income pregnant women, new mothers and children up to the age of 5 with healthy food found it had no funding, and on 1 October 2013, 3,000 Federal Aviation Administrative Safety Inspectors were laid off along with most of the National Transportation Safety Board's employees including accident investigators who respond to air crashes, train collisions, pipeline explosions and other accidents,.  Food Safety inspections were also affected, and the Nuclear Regulatory Commission closed down.

Essential services such as social security and medical payments continued, and 1.4 million members of the US military were unaffected, which is no surprise. The state is essentially 'armed bodies of men' and that has to be maintained even if the 'committee for managing the common affairs of the whole bourgeoisie' closed down.

The 'shut-down' is a result of the political system in the USA where the President is the head of state and head of federal government ('the Chief') without a guaranteed majority in the legislative bodies of the House of Representatives and the Senate. All three parts of government; Executive, Legislature and Judiciary are elected appointed separately. This is the famous 'checks and balances' of the separation of powers. American historian Arthur M Schlesinger Jr wrote 'For most Americans the Constitution had become a hazy document, cited like the Bible on ceremonial occasions but forgotten in the daily transactions of life'. Schlesinger is right until the American capitalist class cannot agree amongst themselves what to with the government spending and then it impacts on the American working class. The 1788 US Constitution was heavily influenced by bourgeois philosophers such as John Locke in his Two Treatises of Government and Montesquieu's The Spirit of the Laws, and forms the foundation for bourgeois liberal capitalism.

Interestingly the regularity of 'shut-downs' coincides with the decline in capitalist production since American abandoned the Bretton Woods agreement in 1971, the oil and fuel crises in the 1970s and the now more regular crises in capitalism. American capitalism and thereby global capitalism is hindered by its political system, the capitalist class is effectively unable to pay its bills. This time, the Republican Party in the House of Representatives essentially caused the 'shut-down' by opposing the Affordable Care Act also known as 'Obama Care' with cuts and delays. This is a piece of legislation passed four years ago, ratified by the Supreme Court and effectively endorsed by the electorate at the 2012 Presidential Election which re-elected Obama.

The 'shut-down' also had an effect on the 'debt ceiling' of the US government where it would hit the legal limit of $16.7 trillion on its borrowing in mid- October 2013. The 'shut-down' ate into valuable time for the legislature to fix the debt ceiling. The debt ceiling is the borrowing limit that Congress sets for itself  –, the government funds itself through taxes from people and companies and the issuing of Treasury bonds, and the government pays interest every month. These interest payments are huge; the next one is about $13 billion due on 17 October 2013 and the November 2013 payment is about $25 billion.

Lifting the debt ceiling 

The crisis or 'shut-down' ended after two weeks on Wednesday 16 October when the US Congress passed legislation to rescue the country from the brink of looming debt default. The congressional budget agreement between the Republicans and the Democrats will fund the federal government until 15 January 2014 and lift the debt ceiling until 7 February 2014. 800,000 federal workers will receive back pay for the two weeks furlough and. the federal government returned to work on Thursday 17 October 2013.

Standard and Poor estimated that the 'shut-down' cost the US economy $24 billion or $1.5 billion a day, with or 0.6 percent shaved of the US GDP figure. According to the US Federal Reserve on 16 October 2013 the US economy was sailing smoothly, if not swiftly, before parts of the government shut down. They concluded 'Contacts across districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shut-down and debt ceiling debate'. (Guardian 16 October 2013).

The executive arm of the American capitalist class will may face another crisis  when the 'debt ceiling' limit will have been reached again on February 27th , although there is less political appetite for repetition of the previous stand-off, and there could be another 'shut-down' of the federal government on 1 October 2014 if the budget for 2014-15 is not agreed between the different branches of the legislature. American historian Arthur M Schlesinger Jr believed the 'US Constitution waltzes democracy to the cliff-edge of disaster, peers into the abyss, but always pulls back'. (Guardian 1 October).
STEVE CLAYTON