Government Shutdown

Government Shutdown: Good for the Economy, Say 1990s Results

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Tim Cavanaugh at Daily Caller with some counterintuitive to most results from Clinton-era government shutdowns:

KAZVorpal / Foter / CC BY-SA

The spending gaps of the Clinton presidency occurred from November 14 through November 19, 1995 and from December 16, 1995 to January 6, 1996.

Despite the greatly ballyhooed furloughs of government employees

, unemployment stayed even at 5.6 percent during November 1995, the period of the first spending gap….

Unemployment

 actually dropped to 5.5 percent during the second spending gap, which was more complete than the first.

Unemployment continued to plummet in the months following the shutdown, as a hamstrung Clinton allowed the rate of government

 spending increases to slow….According to the Bureau of Labor Statistics, unemployment dropped half a percentage point within a year of the first shutdown and had dipped below 5 percent by the spring of 1997.

And how about some other measures of economic health?

gross domestic product increased during both quarters covered by the Clinton-era shutdowns. According to the Bureau of Economic Analysis, GDP began the fourth quarter of 1995 at $7.7 trillion and ended the second quarter of 1996 at $7.9 trillion. By the end of the second quarter 1996 GDP had topped $8 trillion.

Personal consumption expenditures, gross private domestic investment and personal income

 also increased during and immediately after the shutdown.

The GDP numbers are particularly striking because government

 spending is given outsized weight in GDP measures, which assume that every dollar in federal spending results in a full dollar's worth of economic activity. Nevertheless, GDP continued to climb despite the suspension of transfer payments.

Past results are no guarantee of future performance and all that, but every day in America 300 million people wake up with needs and another 300 million people (mostly) wake up with skills and abilities to help meet those needs, and that makes for an economy that, if unimpeded, should be expected to get some things done.

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  1. and another 300 million people (mostly) wake up with skills and abilities to help meet those needs,

    Citation needed.

  2. They were closed that long in 1995? Wow. I remember it being just a couple of days.

    1. It was Christmas. More than likely a great chunk of those Federal employees were already scheduled for vacation for that period.

    2. Yeah, it was barely noticeable. Almost as if government shutdowns have no real impact on anything.

  3. Oh yeah? Liberal Facebook friend disagrees!

    Everyone realizes that if the government shuts down the Affordable Care Act still rolls out tomorrow right?

    This effects NOTHING.

    Except:

    1. The debt. Last time the government shut down it cost an additional $2 Billion in tax dollars.

    2. The Economy. The markets aren’t exactly reacting to this with a whole lot of “hell yeah”. Also, I know since 50% of my income will be on the ropes my discretionary spending isn’t looking to increase.

    Its a good thing I bought my new sword when I did.

    1. Its a good thing I bought my new sword when I did.

      That single sentence says more about this guy than I ever could.

      1. It’s tough. I want to like him more, he’s into video games, weaponry, sports.

        But then he won’t shut the fuck up when it comes to politics. Oh well I guess.

        1. unpolitic.me is great for preserving friendships with liberal doofuses.

          1. But does it work in person too?

            1. Weeeelllllll……

              (last time I had to deal with a bunch of raving liberal derps in person was at a party where one guy kept playing the banjo louder and louder. I later found out – when we went on a date – that he was playing to drown out the derp.)

              1. or drive out the masses – the banjo, unless it is in the hands of a bluegrass mater, is up there with the bagpipes or an amateur violin player.

              2. You went to a party where Sloopy was playing Banjos louder and louder?

                (This is why there are no female libertarians….)

    2. The markets aren’t exactly reacting to this with a whole lot of “hell yeah”.

      I forgot, were Proggies against Wall Street, or were they for “Anything that increases the DJIA is good” economic policy?

      1. I don’t know what a Proggie is, but since pro-Wall Street interests decided to turn everyone’s secure pension into a 401(k) tied to the stock market, people who care about the well-being of other people (not libertarians, not Republicans–Proggies?) have to hope the stock market does well, since all of our retirements depend on it. Great plan guys.

  4. January 6, 1996. That was an awesome day, and week. I spent a whole day drinking beer and watching people cross-country ski up 17th St., NW.

    I guess the Feds went back to work just in time to be shut out by a blizzard.

    1. As long as your power doesn’t go out, huge snow storms are awesome. I had a great time in that one and the big Christmas one in December of 08. The one in February of 09 however was fun right up until my power went out. Then it sucked.

      1. Now that I have a mobile hotspot and a crank battery recharger, a power outage isn’t gonna be bad at all.

        1. I have a generator now. SO I can run a space heater and move into my living room. Between that and the fire place, it won’t be bad. But still would rather have power. When I someday have a house out side of this place, I am going to have the back up power from hell.

          1. The power only goes out in my place in fair weather. Last outage was in absolutely calm and dry conditions, except it was 18 degrees outside. Even during the infamous dorecho-from-hell, my power only went out for about 30 seconds.

          2. it won’t help with the perishable goods, but a wood stove can be used to provide enough heat for a few rooms.

            Of course the last time our central heat went on the fritz, I was able to heat the TV room with just an electric heater. It made for a “cozy” family experience though.

            1. Wood stoves are fabulous. And if your power goes out in the winter, you can store you perishables in coolers outside. A wood stove and a small generator to run your TV and such, and you are set.

      2. I kind of like it when the power goes out. Though no running water gets old fast.

        1. Not quite so fun when the power goes out when it is -15 and howling winds outside, and then the temp in the house drops 8-10 degrees in an hour.

          1. Also not quite so fun when its 100 outside.

        2. You don’t have water when your power goes out? What kind of hellish dystopia do you live in?

          1. I was about to say…

            and my last house, even when the electricity went out, the hot water heater would still work. Never figured that one out…. mechanical thermometer?

            1. Natural gas powered water heater probably.

              1. Yes, my hot water tank is natural gas and it still works when the power is out.

          2. If you live in the country and are on a well, you lose your water.

            1. That’s for amateurs who don’t have a PTO-driven generator to hook onto the tractor.

              1. And, I should add, the well pump is hooked up to the tractor.

              2. That is a good idea. A diesel engine on a tractor will pretty much run forever provided you have the fuel.

                1. The only disadvantage is that unless you have some way to clean up your power, you end up with power that fluctuates in time with the rotations of the generator. You can actually see the lights pulsing slightly in time with the generator.

                  1. it’s hypnotic.

            2. Yup.

              And with the new high-tech well pumps with tiny pressure tanks, water pressure goes away really really quickly.

  5. Well the world didn’t end when the Sequester took place, so if Obama and the Democrats make the same argument about a government shutdown and that fizzles it should be fun to watch the reactions.

    1. Some train expert from California. Loves the things. A real creep-o.

  6. Past results are no guarantee of future performance and all that, but every day in America 300 million people wake up with needs and another 300 million people (mostly) wake up with skills and abilities to help meet those needs, and that makes for an economy that, if unimpeded, should be expected to get some things done.

    Wait, you’re telling me that cooperation is possible without coercion? NO WAI

    1. It is almost like there are these things called state and local governments that function independent of the federal government or something. What a crazy idea.

  7. The worst possible outcome of the government shutdown is that no one feels any pain except those in government. I can’t wait.

    1. Not gonna happen with the media’s full-on AnarchApocalypseAgeddon propaganda campaign.

      1. It’s so f’ing annoying. The near hysteria of the CNBC girl is laughable.

        Stay Clam and Carry On already. Geez.

  8. This is just more proof that Reason loves Government! #TeamRedDerp

  9. Cavanaugh’s always full of awesome.

    1. Glad to see he’s still writing somewhere.

  10. tarran,

    You’ve heard of the federal government, right?

    It builds interstate highways, funds cancer research, ensures our water is clean, and protects us from being invaded by other countries’ armies. It’s been in the news a lot lately.

    Wisconsin Senator Ron Johnson, who voted to shut down the government over Obamacare, was just quoted about it: “My suggestion to the American public is stop relying on the federal government to solve your problems. Stop sending politicians to Washington dedicated to growing the federal government.”

    Good call, Senator. Perhaps you think I should open my own nationwide network of air traffic control towers, scientific research institutes, and environmental protection agency so I don’t have to rely on the federal system.

    Here’s an even better idea: How about we just stop sending out-of-touch tea party extremists like Ron Johnson to Congress?

    Help reach our $25,000 organizing goal by midnight tonight so we can work to send progressives to Congress instead of extremists like Ron Johnson. Contribute $5 now.

    1. Here at Progressives United PAC, we’re committed not to electing Democrats, but to electing real, true progressives. Supporters throughout the country have helped us build an outstanding track record of electoral success.

      Last year, led by members no different from yourself, we helped elect strong progressives who are now making an impact in Washington like Elizabeth Warren, Chris Murphy, Sherrod Brown, and Tammy Baldwin.
      But more progressive voters tend to cast their ballots in presidential elections like last year’s, than in mid-term elections like this one. So to succeed, we’re all going to need to unite. As Republicans are showing right now, our federal government itself may be at stake.
      As I write this, we’re only $5,105 away from reaching our fall organizing goal.

      Contribute $5 now, before the midnight deadline, to help reach our goal and send more progressives to Congress.

      The progressives we’ve sent to Congress refuse to strip health care coverage from millions of people, shut down the government, or cut Social Security benefits. We need to elect more of them — and we need to hit our goal by tonight.

      Thanks for uniting as a progressive,

      Josh Orton
      Political Director
      Progressives United

      1. A quick search shows this guy was once on Air America, a writer for HuffPo, a law student at UW-Madison (BLUE CENTRAL) and looks eerily like SadBeard. Suffice to say, he’s too far gone for anything but a meathook and piano wire.

        1. Jesus christ, that motherfucker is sadbeard. Damn that’s uncanny.

          1. And that organization is run by Russ Feingold, so fuck Feingold and anybody who thought he was worth a tinker’s damn for liberty.

            1. Pretty much every email I get from that outfit would is pretty blatantly fascist.

    2. Good call, Senator. Perhaps you think I should open my own nationwide network of air traffic control towers, scientific research institutes, and environmental protection agency so I don’t have to rely on the federal system.

      Well, why can’t you?

      1. There was never any Scientific Progress before government. That explains light bulbs, penicillin, computers, airplanes, cars…

    3. It builds interstate highways, funds cancer research, ensures our water is clean

      Gosh, I wonder if state governments could do this kind of stuff.

      protects us from being invaded by other countries’ armies

      Which could be done with maybe 10% of the current military budget. This is like the guy with 200 guns in his basement claiming that he needs all of them for self-defense.

      1. protects us from being invaded by other countries’ armies

        I thought progtards hated both the military industrial complex and guns?

        1. The MIC allows Senators/Congresscritters to target spending at preferred districts/states. Spending bacon trumps any political principles. This is why, say, Connecticut is Blue Central but loves it some MIC spending (Hooray for GE and UTC).

          1. The worst part is that attacking the MIC means reducing spending and government programs. The Horror! Of course the Soviets weren’t exactly known for their lack of a standing army.

  11. What is the over under on the number of media stories tomorrow about poor children and tourists who can’t get into the museums and the national zoo because of the evil REthuglicans? 100?

  12. http://www.nytimes.com/2013/09…..d=all&_r=0
    On the next fiscal deadline looming in Washington, for raising the federal debt ceiling, over half of Americans believe that doing so should be tied to government spending reductions. But nearly 7 in 10 say they would prefer an agreement they do not fully support rather than for the country to default on its debt. And nearly two-thirds of Americans say that they or members of their immediate family would be affected by government services or programs losing funding because of a failure to raise the ceiling.

    Er what? I thought 70% opposed raising the debt ceiling?

  13. Ah, the ’95 shutdown. I’ll never forget all the million of people who died, all the planes that fell out of the sky, how Canada nearly successfully invaded and conquered us because our military wasn’t being paid on time…

    Oh wait, none of those things happened at all; it was a giant nothingburger.

    1. I was in high school at the time and remember seeing it on the news and in the papers every fucking day, but none of the people I knew personally gave a shit.

      1. No one cared. I mean, I was still a kid in November 1995, but I honestly can’t remember any adults who really cared. I remember my parents being upset about the Oklahoma City Bombing in April, but nothing eventful happened in November.

      2. True, but nonetheless scare tactics work. I fully expect the Republican party to be mercilessly hammered by the media until they cave. And I expect to see President Obama smugly gloating about it for months.

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