The fiscal stalemate and 16-day federal government partial shutdown have come and gone. Yet the all-too-familiar resolution has been to kick both cans – funding the federal government, and adjusting the federal borrowing limit or debt ceiling – down the road. The resolution, which passed 81 – 18 in the Senate and 285 to 144 in the House (but with only 87 Republican votes) funds the government until January 15, 2014, and raises the debt ceiling until February 7. In other words, things are back to normal for now, but not for long.
With respect to the federal borrowing limit, the green industry’s resident economic expert, Dr. Charlie Hall, recently noted that “there's nothing about debt ceilings in the U.S. Constitution and most modern democracies seem to do just fine without explicit borrowing limits, including Britain, Canada, Germany, Japan, Australia, and France. For what it's worth, there's a long list of experts who think the United States should just abolish its debt ceiling altogether. In a January survey of academic economists by the University of Chicago, 84 percent agreed that having a debt ceiling ‘creates unneeded uncertainty and can potentially lead to worse financial outcomes. But no one listened, so here we are.”
Dr. Hall points out that the debt ceiling, first adopted in 1917, may have been a useful device for controlling the president’s spending. But in 1974, Congress adopted a formal budget process to control spending levels, raising the question why Congress needs to separately authorize borrowing for spending Congress has approved.
Closer to home, the government shutdown seems to have delivered more losers than winners. Certainly, Republicans have not walked away feeling victorious. The economy took a $24 billion hit, according to initial estimates. Meanwhile, green industry businesses in the Washington area reported a direct negative impact on the bottom line. “The phone quit ringing and people said contracts that were ready to go would have to wait until spring to see what the government does next,” reported a northern Virginia-based landscape design and build business owner active in the American Nursery & Landscape Association.
Here’s hoping that behind-scenes negotiation avoids a repeat performance early in 2014.