Fri September 27, 2013
A Trip Down Government Shutdown Lane
CELESTE HEADLEE, HOST:
This is TELL ME MORE from NPR News. I'm Celeste Headlee. Michel Martin is away. Coming up, we'll talk about diversity in classical dance with one of the nation's most recognizable African-American stars, Misty Copeland. That's in a few minutes, but first, the clock is ticking yet again. The deadline to avoid a shutdown of the federal government is nigh. Democrats and Republicans have been trading barbs, coming up with their own budget proposals and of course there's been some posturing, there's been some name-calling. But we were wondering what lessons we could learn from prior shutdowns. And for that, we turn to NPR's senior Washington editor, Ron Elving. Welcome back to the program.
RON ELVING, BYLINE: Good to be with you, Celeste.
HEADLEE: Now we should separate here, there's been many threats of a shutdown, but we're talking about the actual shutdown of the government. That happened in 1995 and in 1996 during the Clinton administration. That's when the government really did shut the door. So what was similar between then and now, and what's different?
ELVING: Well, let's start with what is similar. The power struggle and the ideological struggle that was going on 18 years ago in the Capitol between the Clinton administration - and Bill Clinton's been much in the news in recent days and talking about all this - and the Republicans in Congress - and they had both the House in the Senate at that point. But their more or less de facto leader in the showdown was Newt Gingrich who was the speaker of the house. He's still very visible in the media in talking about this 18 years later.
The struggle between the Democrats who wanted to use government to do this and this and this and this and wanted government generally to be robust and to be fully funded, and Republicans who, in varying degrees, wanted government to be more restrained or even shrunk or perhaps get it out of the business of doing many of the things that the government was doing at the time. Certainly, many of the things the government is doing today, particularly with respect to healthcare insurance and healthcare in general.
HEADLEE: Well, let's go back to mid-December 1995. The government was already in the middle of a second partial shutdown. The Republican Congress, as you say, was asking for cuts. Present Clinton says those cuts go too far. So let's take a listen to what Newt Gingrich, the speaker of the house, had to say.
(SOUNDBITE OF ARCHIVAL RECORDING)
NEWT GINGRICH: For us to walk off now and take a vacation, giving up on balancing the budget, I think would be a tragedy that would haunt us for the rest of our lives. So I think you're going to find among House Republicans a very deep commitment to staying here and getting the job done.
HEADLEE: OK, so how is that different? Number one, was he right? Was it a tragedy that haunted them for the rest of their lives, and do we still have Republicans ready to stay even over a Christmas break, for example, to get the work done?
ELVING: Well, certainly, they did not come back in the midst of the holidays, and so that tragedy that he was talking about that he was imagining, that did not happen. What happened was that they eventually caved to President Clinton, who was surprisingly resolute in vetoing the budget that had come from the Republican-run House and Senate. Now the interesting thing at that time was that the president actually had to actively veto something and thereby shut the government down. If he had just signed that, allowed it to become law without his signature, the government would have remained funded and open. So it looked like Bill Clinton had shut the government down. Nonetheless, while his approval rating went down during the shutdowns in November and December in the first six days of January 1996, it then recovered as soon as the government reopened.
HEADLEE: And he won reelection against Bob Dole a year later.
ELVING: Yes, he did. Yes he did, and Bob Dole had managed not to become the symbol of the shutdown. He let Newt Gingrich do that, and Bob Dole was running busily at the time for the presidential nomination of the Republican party. He did win that, but then he did of course lose to Bill Clinton that fall - many reasons for that. I think would be a mistake to assume that the government shutdown cost Bob Dole the presidency - don't think that happened. But it did not help the Republicans in Congress that they were perceived, generally speaking by the public, polls were pretty much in agreement, as being more responsible for that shutdown, even though Bill Clinton vetoed their budget.
HEADLEE: If you're just joining us, we're taking a trip down government shutdown memory lane with NPR's senior Washington editor Ron Elving. So let's talk about the economic consequences. In fact, I would imagine that one of the reasons Bill Clinton got reelection is 'cause the economy was doing quite well by the time people went to the polls. So what then happened to the economy when the government actually shut down?
ELVING: It was a blip. It was a bad patch. There was less money in the economy for a period of some time. But remember, we're talking about six days in November, and then a period of time from December 16th to January 6th. In other words, the holidays. And the government was shut down during that period of time, and a certain number of people didn't get paid. But eventually, the pay was all made up retroactively...
HEADLEE: Well, wait. Hang on...
ELVING: ...So over a longer period of time...
HEADLEE: ...Just a second. Let's talk about these people who didn't get paid because we have this comment from President Bill Clinton and he - during his 1996 State of the Union address - you may remember this - he told the story of Richard Dean who'd worked for the Social Security Administration. Dean was in the federal building in Oklahoma City when it was bombed, and Dean actually saved three lives that day. So let's listen to Bill Clinton talking about Richard Dean.
(SOUNDBITE OF ARCHIVAL RECORDING)
PRESIDENT BILL CLINTON: The Richard Dean story doesn't end there. This last November, he was forced out of his office when the government shutdown. And the second time the government shutdown he continued helping Social Security recipients, but he was working without pay. On behalf of Richard Dean and his family and all the other people who are out there working every day doing a good job for the American people, I challenge all of you in this chamber - never ever shut the federal government down again.
HEADLEE: So maybe Ron Elving, this is less about the economy and more about politics. Maybe this is the Republican Party looking ahead to 2014.
ELVING: You could hear some groans from the audience as Clinton went there. He set them up, first by setting him up as a hero from the Oklahoma City...
HEADLEE: Yeah, because they applauded him.
ELVING: Exactly. And then, of course, then he pulls the rug out from under them by saying - and he's one of the people you put out of a job last November. He was not put out of a job in any sort of permanent way and the money that he didn't make during the weeks of the shutdown was retroactively paid to him and to other federal employees. So the long-term economic impact at the time was not huge. It should also be noted that at that point many of the appropriations bills for that fiscal year had already been passed, so it was only a partial government shutdown. And this time around, with our continuing resolution wallowing between the House and Senate this weekend, we don't have any such fallback because no appropriations bills have been passed by this Congress - zero. And as a result, it's a pretty much an across-the-board shut down and could affect things like military pay and so on.
HEADLEE: Which would mean it'd be worse. And again, we should remember that we're still under the strictures of the sequester as well. I mean, all of that argues for the fact that if the government did shut down this time, it might be more severe than in the 1990s.
ELVING: I think that that's true if the shutdown is substantial. That is to say, if it lasts for a long time. Now we had a total...
HEADLEE: What's a long time?
ELVING: Well, we had a total of 28 days in this showdown we've been talking about...
HEADLEE: In the 1990s...
ELVING: Back in 1995 and '96. Twenty-eight days total between two shutdowns. That did not seem to have a terrible long-term impact economically and, as you say, the economy was roaring ahead in '95, '96. That was a strong period for the economy. We are not in such a strong period right now. We're in a faltering recovery. It's a weak recovery. And every little blip seems to be capable of giving it pause. So rather than having any further economic stumbles, I think both sides would very much like to have the government continue to function in its normal way.
The sequester was something of a headwind for the economy in the first months of this year. Probably will be through the next couple of quarters at least, as well. We expect there to be some kind of sequester-like cuts, whatever emerges from this whole budget showdown in the long run. So if we had a long government shutdown, weeks in duration, I expect it would have a serious impact on this faltering recovery.
HEADLEE: How is a person who doesn't know much about the interworkings of Washington to separate this debate over the government shutdown from the debate over the debt ceiling, raising the debt ceiling.
ELVING: Related but different issues. The debt ceiling is quite a different thing from the government's budget. The debt ceiling was set about a century ago at the time of World War I where the price of getting into the war for President Woodrow Wilson was that the Republican Senate decided that they wanted him to set a limit on how much the government borrowed to fight World War I. And that limit was a billion dollars - $1 billion - and that seemed like of course a huge sum in 1917.
HEADLEE: Yeah, not so much anymore. I barely bat an eye.
ELVING: What has happened roughly 100 times since is we've gone beyond whatever dept limit they had just set because the country continues to borrow money in wartime and peacetime, good times and in bad times. And very, very few years in the entirety of American history have we not had some budget deficit between the revenues and the outlays. So we have been borrowing money steadily and we've been borrowing money at a higher rate in the last several years since the recession of 2008. So the deficit has risen quickly and - excuse me, I should say that debt has risen quickly, that the accumulation of all the annual deficits.
And that debt is now at such a level that it really frightens people - many people -and it has become a central focus for conservatives and for Republicans, generally. And so they say, we don't want to raise the debt limit anymore. Well, there are obligations coming due all the time, rolling over. These are the debts of the United States, the bonds that have been issued and so on. And they have to be paid when they fall. The next time we hit...
HEADLEE: Or we default.
ELVING: That's correct. If we default then that's the faith in credit of the United States government. It's been considered the gold standard of all forms of debt the world over for many years. The United States has never defaulted and never looked close to defaulting and the only reason we would default is this artificial figure that is set by Congress. What would happen if they didn't raise it this time? Well, most economists, most people on Wall Street, most people in the industry think we would be defaulting on some of our debt. But you will hear some of the people in the Congress argue that that didn't need to happen. That they could just defund parts of the government, send people home and continue to pay our debts, but just don't pay the people who work for the government and don't fulfill the contracts that the government has signed.
HEADLEE: Different from the government shutdown.
HEADLEE: Different debate.
ELVING: Although, in the long run, it could have the effect of shutting down some parts of the government and, in terms of economic effect, they would be quite immediate, as we saw the last time this threat was issued by the House Republicans in the summer of 2011. And even though we did eventually raise the debt ceiling, just talking about it caused Standard & Poor's to lower the credit rating of the United States.
HEADLEE: OK, so we have heard in the past, senators like Ted Cruz, other politicians threaten that if we didn't, for example, defund Obamacare they'd let the government shut down. We have a minute left, Ron. What's your guess? Do you think we are truly headed for another shutdown like we had in the 1990s?
ELVING: It's quite possible, partly because over the weekend, the Senate is going to send a clean continuing resolution, a clean budget without this Obamacare business on it. And the House could then pass that and we'd be fine. But the House probably won't pass that. At this point, they're saying they won't. They're going to send something back with more attachments to it and the Senate will not have enough time to act on that before Tuesday. And Tuesday would be the first day of the...
HEADLEE: Tuesday at 12am, correct?
ELVING: ...The start of the new fiscal year. Exactly.
HEADLEE: Ron Elving is NPR's senior Washington editor, counting down the moments to that deadline. He joined us from - where else - our studios in Washington, D.C. Thanks so much, Ron.
ELVING: Thank you Celeste. Transcript provided by NPR, Copyright NPR.