Eight cents out of every federal non-defense dollar represents a transfer from taxpayer to recipient. Entitlement transfers do not require annual Congressional approval. They can be changed only by entitlement reform, which is not on the table. We cannot, therefore “shut down” a federal government whose primary business is income redistribution.
The entitlement checks and interest payments must go out the door, government shutdown or no government shut down. The social security, unemployment compensation, disability, Medicare, and Medicaid checks go out automatically like the Ever Ready Energizer Bunny. Not to worry on this point.
Discretionary expenditures, which require annual Congressional appropriations, are another matter. They can be shut down.
Here are the numbers on discretionary and mandatory expenditures from the Budget of the United States: For the 2014 fiscal year which began October 1, the Obama administration proposed spending a total of $3.8 trillion of which $.6 trillion is for defense. Presumably, we will not shut down our national defense; so I’ll leave this out of the picture. Even if we shut down national defense entirely (with the exception of the agreed-upon paying of the troops), my basic conclusions remain the same.
This leaves us with $3.2 trillion of non defense spending. $2.5 trillion of this in mandatory spending, which goes for Social Security, Medicare, Medicaid, unemployment insurance, and other transfers, and $.2 trillion goes for net interest on the national debt. (Presumably, the Obama Treasury is not sufficiently crazy to forego servicing our national debt out of the ample funds at its disposal — $3 trillion in projected revenues).
After payment of defense, entitlements, and net interest, we have a grand total of $.6 trillion ($624 billion to be more exact) of discretionary spending that could be subject to a government shutdown. At most, we can shut down 20 percent of the federal government. This hardly deserves the moniker of “government shutdown.”
But the Obama administration has already announced that “essential” personnel will remain on the job to provide “essential” services, which must be paid for. Also some “non-essential” programs, such as food stamps, can be continued under earlier legislation, at least for the time being.
In theory, the President could declare everything the federal government does as “essential” and there could be no shutdown at all! What an embarrassment if Obama declared all that Washington does “non-essential”! He must find some essential items or risk humiliation for himself as a “big government” proponent.
According to my back-of-the-envelope count, at a minimum, $150 billion will be spent on essential services from agencies like Homeland Security, National Nuclear Security, Veterans Affairs, Social Security Administration, and others. Counting these essential services reduces the misnamed “government shutdown” to a reduction of 13 percent of federal spending. I have not included the Health and Human Services “essential” services in implementing Obama Care.
The government shutdown makes clear that our federal government is no longer in the business of providing for the national defense, the legal system, collecting taxes, and other traditional government functions. Its primary activity has become redistribution through transfer payments.
I would not count reducing federal government spending by 13 percent a “shutdown.” A more appropriate term would be a “reduction in non-essential discretionary spending,” or “government slim down” for short. I invite the Republican members of Congress to use this term instead of “shutdown.” In politics, he who controls the rhetoric of political discourse wins. “Shut down” is a loser. “Slim down” is a winner, and it captures the reality of what is going on right now in Washington.
Editor’s Note: This article explains why the Obama Administration is spending money and using “essential” employees to close outdoor walking paths, open-air monuments, and property that they do not own or operate. It also explains why the Sen. Reid and Pres. Obama have oppose funding for cancer treatments and other similar programs. They want to make it hurt and the need to make it hurt. They know that without their gamesmanship, most Americans wouldn’t even notice the shutdown. It is their job to cause as much inconvenience and suffering as possible so that they can blame the Republicans. These are not the actions of good faith leaders. These are not even the actions of good or decent men. These are the actions of tyrants throwing temper tantrums because they have not gotten their way precisely as they demand it. These are the actions of deeply corrupt and deeply dishonest men. Moreover, these are the actions of emotionally immature and intellectually disadvantaged men. Yet, the mainstream media will not report these facts, nor will they connect the dots. They simply complain that the House hasn’t given the President a “clean CR” — code for a budget to the president’s liking.
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Paul Roderick Gregory is a Contributor at Forbes and covers domestic and world economics from a free-market perspective.