Saturday, September 28, 2013

Government Shutdown a Great Idea!

I agree with Mish at Mish's Global Economic Analysis that a government shutdown is a really great idea.  Consider Mish's quote from Bloomberg:
A U.S. government shutdown means President Barack Obama will have fewer people to cook meals, do the laundry, clean the floors or change the light bulbs, according to a White House contingency plan.

About three-fourths of president’s 1,701-person staff would be sent home. The national security team would be cut back, fewer economists would be tracking the economy and there wouldn’t be as many budget officials to track spending. White House policy decisions on the environment and drug policy might get postponed, as the executive mansion struggles to cope with a shutdown of the government.

The executive office of the president would designate approximately 436 employees as “excepted,” or exempt from furlough to perform their jobs. The remaining 1,265 employees would be sent home.

Top White House aides, political appointees and officials requiring Senate confirmation are permitted to work. Of the total, 438 people work directly for the president. Under a shutdown, 129 could continue working, according to the contingency plan.

Biden, who has a staff of 24, would have had to make do with 12.

Of the 90 people who maintain the president’s family living quarters, only 15 would remain to provide “minimum maintenance and support.”

Obama’s national security staff of 66 would be cut to 42. Similar staff cuts would be imposed at the White House Office of Management and Budget, the Council on Environmental Quality, the Council of Economic Advisers and the Office of National Drug Control Policy, which are all part of the president’s executive office.
Sounds good to me.

Like the sequester, shutdown staffing levels should become permanent.  Soon comes the debt limit battle.  What if the Republicans started chanting in unison, "No More Debt," "No More Debt?"

Since the budget deficit is down to something less than 5% of GDP or about 20% of government spending,  a haircut of this magnitude would sting, but set up a healthy scenario for the country in the long term.

A reduction of 20% of government spending would reduce Federal spending back to 2008 levels or a ratio of Federal spending to GDP of something like 20% of GDP--more in line with the 1980s and 1990s.

Afterall, what part of the phrase "debt limit" do we not understand?

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