Government Shutdown

Reminder: The Parts of the Federal Government Authorized to Shoot You Are Still Functioning

The federal "shutdown" doesn't lead to anarchy. It won't even lead to less government spending.


Boris Roessler/dpa/picture-alliance/Newscom

As the government shutdown dominates the news and partisan posturing today, you might be thinking we're temporarily freer from the oppressive hand of The Man. Don't celebrate. The feds who carry around guns and arrest people are almost all still working.

Bloomberg has gone through the list of federal agencies to determine the breadth of the shutdown. Here's what they had to say about law enforcement:

  • About 83 percent of the Justice Department's 115,000 employees will continue to report to work if the government shuts down, according to the department's contingency plan. Criminal litigation will continue without interruption; non-essential civil litigation is to be curtailed or postponed.
  • The Federal Trade Commission will suspend antitrust investigations not related to mergers. Merger reviews by the FTC and the Justice Department will continue. The agencies say they will go to court to challenge deals if necessary.
  • Federal courts, including the Supreme Court, have enough money from sources like fines and filing fees to continue most operations through Feb. 9, according to Jackie Koszczuk, a spokeswoman with the Administrative Office of the Courts.
  • The Department of Homeland Security will remain largely unaffected, with 87 percent of its 232,860 employees deemed exempt from the shutdown. The department includes the Federal Emergency Management Agency, the Coast Guard and the Secret Service.

The federal drug war will see no reprieve. Nasty, heartless immigration enforcement tactics will continue.

Some libertarians may see any closure of the government as a win, but the Cato Institute's Jeffrey Miron explains that this partial, temporary shutdown does nothing to reduce the size and scope of government power:

To begin with, shutdowns are (presumably) temporary. The average length of previous government shutdowns was seven days. And if history is a guide, then most of the suspended expenditures for salaries, benefits, and the like will be paid retroactively. If you think a shutdown helps keep the budget in check, you're wrong.

Shutdowns also have zero effect on entitlements like Social Security, Medicare, Medicaid, and Obamacare, which continue automatically unless Congress explicitly amends them. Shutdowns only influence discretionary spending that has to be reauthorized every year. Because entitlements constitute the large majority (roughly 67 percent) of federal expenditure, and because this component is growing at an unsustainable rate, shutdowns cannot have any meaningful impact on the budget deficit. And even with discretionary spending, around half is exempt given that many Department of Defense and Department of Homeland Security functions are exempted from the shutdown, because they are considered "essential" services.

I would add that because, unfortunately, large chunks of America's market interactions require permission from federal bureaucrats, extended federal shutdowns end up harming private economic activity. The guys with guns are at work. The guys with approval stamps are not. A shutdown means the government can't give you permission to do things, but it can sure as heck still stop you.

The last time we had a federal shutdown, in 2013, I detailed some of the completely private economic activity hampered because people couldn't get permission to do their jobs. Craft brewers couldn't get labels for their products approved and thus couldn't introduce new beers into the market. Fishermen couldn't get permits for the latest season of crab-catching in the Pacific Northwest. We'll probably see more stories like this if the shutdown drags on. As I noted back then:

The government is so involved in our lives that even basic commerce—simply hiring people—is threatened by political jockeying. Democratic Sen. Harry Reid attacked Republicans as "anarchists" for bringing about the shutdown. Nothing could be further from anarchy than fishing boats sitting idle, waiting for a government functionary to give sailors permission to work. And yet, the common response is anger about the government shutdown, not anger about having to jump through so many hoops in the first place. Even before the shutdown, it would take months for the Alcohol and Tobacco Tax and Trade Bureau to approve permits for craft breweries.

The Trump administration may have scaled back some regulations, but the regulatory state is still enormous. Many, many people will find their private economic activity impaired by the shutdown.