October 02, 2013


Credit: nirots
As of midnight on October 1, 2013, the U.S. federal government has temporarily been shut down. There is a whole host of reasons for the shutdown and many politicians are already playing the blame game, but the actual reason for the shutdown is that Congress and the President could not agree on a bill allowing the government to spend money going forward. Said another way, the Constitution requires Congress to pass spending bills to fund the government, and when they do not (or the President vetoes the bill), most functions of government come to an abrupt halt until they do.

It’s been a while since the last U.S. government shutdown in 1995-1996 when President Clinton and the Republican-controlled Congress got in a fight over the 1996 budget, but don’t get too excited. It’s not like this is really a rare event. According to the Congressional Research Service, there have been 17 shutdowns since 1977! Most shutdowns last less than a week, but the longest lasted 21 days in 1995-1996. Sure, there could be some stock market volatility, there could be a little damage to the economy, and some national landmarks and small agencies could very well be closed for a while, but most essential government services like air traffic control, the military, Social Security, and Congress members’ pay (that’s essential?!) will continue rolling along until this Congressional lover’s spat comes to an end.

I hope you know me well enough to know that I’m not going to try to convince you how you should assign blame among the House of Representatives, the Senate, and the President (that would be too easy as all of them have egg on their face in my book), but I couldn’t pass up this opportunity entirely. You see, the government shutdown offers some lessons for all of us.
  • If you see that you have an approaching cash flow problem or major expense, pretending it’s not really there until it’s almost upon you is probably not a good idea. We citizens cannot simply increase our debt ceiling, sell some more bonds, or set a new interest rate to get around our problems!
  • If you are facing a difficult or controversial financial decision that is not solely yours, waiting until late the night before the decision is due will probably lead to a verbal altercation. If you get into a disagreement with someone when trying to work out a financial compromise, stay away from name-calling, stay away from blaming, and try to stay focused on the issue at hand as opposed to bringing up all sorts of other issues from the past.
  • If you are trying to successfully plan for something big, say, running a country, providing for your child’s college education, or retiring with the lifestyle you’ve always wanted, you need a long-term plan! Little-bitty, month-to-month, stopgap budget bills finally didn’t work for our country, and little-bitty periods of living within your means, saving, and investing won’t work for you, either! This may sound a little crazy, but a financial shutdown for an individual person or family is relatively more catastrophic than a government shutdown. A normal person can’t just retroactively go back and make things better.

Oftentimes when I try to consider the problems we face in today’s world, I find myself looking to history for answers. When it comes to this current government shutdown, I look to two of my favorite leaders, Abraham Lincoln and Winston Churchill. When addressing the division facing the union in his first inaugural address, Lincoln stated, “If the minority will not acquiesce, the majority must, or the Government must cease. There is no alternative, for continuing the Government [other than] acquiescence on one side or the other.” Lincoln was speaking about a different issue in a different time, but his words ring true today regarding this current government stalemate. Hopefully you’ll be able to sleep easier, like me, if you take the actions of our dysfunctional government in stride and reflect on the words of Winston Churchill: “You can always count on Americans to do the right thing – after they’ve tried everything else.”

1 comment:

  1. Excellent post! Not sure, though, if the powers that be understand what a debt ceiling is. They need to read this!