Gov. Shutdown Is Just Delayed - Not Averted

Yesterday the House of Representatives passed a continuing resolution that extends the funding for the federal government for an additional two weeks (funding was scheduled to run out of March 4th before this resolution was passed). The Senate is expected to pass the continuing resolution in the next couple of days. The Republicans claim they have done well because the two-week continuing resolution cuts about $4 billion from the budget, but in reality there was no real disagreement between the two parties since the money being cut was in programs that the President had already said he was willing to cut.

But don't be fooled. The impending government shutdown has not been averted. The two parties are still locked in a game of chicken -- they just extended the game for two weeks. The parties are still far apart on what can or should be cut, and it's still a matter of which party will blink first in this staring contest.

The main problem is that the Republicans see their return to power in the House of Representatives as their opportunity to force the government to go back to their failed policy of "trickle down" economics and impose some right-wing social issues. They started by giving massive tax breaks to the rich. Now they want to cut government services for ordinary Americans.

They have cut Planned Parenthood (which cuts much necessary medical care for women and children). They then cut off all funds for health care reform, slashed education funds, cut the money for Headstart program, slashed EPA funds, and pretty much cut all programs that could help Main Street Americans who are hurting in this recession -- while denying any new funds for job stimulus and creation.

And they don't seem to care what these cuts will do to the economy as long as the rich can get what they want from government. Goldman Sachs (certainly no bastion of liberal thought) said last week that the Republican cuts would cause a 1.5% to 2.0% drop in Gross Domestic Product (GDP). This week Moody's chief economist, Mark Zandi, added that the proposal would kill at least 700,000 jobs by the end of 2012 (400,000 this year). But that is pain that would mainly be felt on Main Street, not Wall Street.

While cutting programs for ordinary Americans, they are also taking this opportunity to try and undue the major legislation passed by the last Congress. As I said, they are trying to strangle health care reform by cutting all funding for it. But that's not all. They are also trying to stop the implementation of the new regulations passed to keep Wall Street financial firms honest.

The Republicans cut nearly a third ($56.8 million) of the Commodity Futures Trading Commission (CFTC) budget, and also cut $25 million from the budget of the Securities and Exchange Commission (SEC). The CFTC and the SEC are the two agencies that would be overseeing the new Wall Street regulations. To do that, they need a bigger budget -- not a drastically smaller one. For instance, the cuts would mean the CFTC staff would be reduced from 680 to under 440. There is no doubt these cuts are meant to stop the implementation of the new regulations.

So the stand-off continues. The Democrats want to save the social service programs that help ordinary Americans and make the corporations carry their share of the load. The Republicans want to give more money to the corporations and the rich and load the burden for paying for that on working and middle class Americans. So far, there is no indication that either side will back down.

I believe it will take a government shutdown to make the Republicans come to their senses and consider some kind of compromise. They saw the Democrats back down too many times in the last Congress and expect them to do it again (and they might). If the Democrats are going to stand fast and defend ordinary Americans, they will probably have to show the Republicans they are not afraid to go all the way to a government shutdown. The new teabagger Republicans will not back down until forced to do so.

There's another two weeks to argue now, but I believe the shutdown is still going to happen. And this is just to settle the budget to September of this year. It may all happen again when they get to next year's budget (which they haven't even started on yet). I'm afraid we're in for a tough couple of years.