Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
October 8, 2013 at 10:35 AM
The shutdown’s toll on the economy
Want to find out data on Washington exports? You’re out of luck. The U.S. International Trade Administration’s valuable TradeStats site is down because of the shutdown engineered by House Republicans. But that and such photogenic consequences as closed National Parks count for nothing against the trouble being inflicted on the poorest of the poor.
We pretty much abolished welfare during the Clinton years, replacing it with a paltry program called Temporary Assistance to Needy Families (TANF). It goes out as block grants to states, and the longer the shutdown continues, the more likely TANF will run out. In Washington, benefits will continue through the month, but Arizona halted the payments.
But in today’s America, we don’t care much for the last and the least, for all the theocratic talk. Otherwise, the shutdown’s economic consequences appear to be muted. Not least to avoid a potential Praetorian Guard backlash, the Obama administration made sure “the troops” were funded with no disruption, and last weekend Defense Secretary Chuck Hagel called back almost all of the 400,000 (!) civilian defense workers that had been furloughed. The effect on defense contractors may be similarly softened.
Most analysts are predicting only a limited effect on gross domestic product. Still, it remains to be seen how the stalemate affects, say, housing if federal loans become harder to get. The shutdown is also a serious threat to federal research, which in the past was one of America’s major competitive advantages. And don’t forget the sequester’s ongoing damage to the economy and jobs.
But then there are ramifications that are difficult to put a price on, but are significant nonetheless. For example, President Obama was forced to cancel his attendance at the Asia-Pacific Economic Cooperation (APEC) summit in Bali, the only head of state or government to do so. As others have pointed out, this leaves center stage to China’s President Xi Jinping. It raises questions about the reliability of the United States for all the talk of a pivot to Asia. Throughout the world, people are wondering: Is this a wounded empire in decline? Or is it even worse than that?
The answer will come if the D.C. pols force a default.
And Don’t Miss: How the 1 percent made out on the housing collapse | New York Times
Econ Haiku Filk Lyrics:
Won’t you come home, Mulally
Won’t you come home
You won’t do Microsoft wrong
We’ll boost your compensation, show Bill the door
It won’t be Boeing’s song
‘Member that rainy eve that they threw you out
With nothin’ but a Dreamliner undone
We lost you to Ford, well ain’t that a shame
Mulally won’t you please come home
Sung to (Won’t Your Come Home) Bill Bailey