http://feedproxy.google.com/~r/zerohedge/feed/~3/n2T65Zn60L8/david-stockman-exposes-shutdown-scam-gop-now-second-big-government-party
The underlying issue behind the appropriations stall, however, is a spending arms race between the two parties. It involves upwards of $500 billion of spending add-ons over two years to an already busted budget that will soon cross the $1 trillion deficit mark owing to 25 years of fiscal profligacy built into the baseline ($700 billion deficit for FY 2019) and the $280 billion revenue loss from the recently enacted fiscal bleeding cure---otherwise know as the Christmas Eve tax cut.
So what's different this time has nothing to do with the fact that it apparently took several days of shutdown to get another two-and-one-half-week CR extension; or that the prospective fifth go-round of "rinse and repeat" since the October 1 start of the current fiscal year is just a prelude to another CR after February 8, and then still another after that (all of which is likely).
Nor does it bear upon the current momentum-driven madness of the stock market, and especially not on the nation's $19.5 trillion economy. The impact of shutdowns in the past has been zilch, and so it likely will be again.
Indeed, the incessant jabbering in the financial media about the purported 0.1% versus 0.2% impact on Q1 GDP is not only a bad joke; it is also a testament to the utter foolishness of the Keynesian "flow" obsessed narrative of Wall Street and the mainstream economic commentariat (as opposed to permanent economic structural and balance sheet conditions).
For crying out loud, not a single dime of the big juice from the Federal budget----entitlements, mandatory and interest expense (75% of total outlays)----will be slowed down by a nano-second owing to the "shutdown".
Likewise, most of the Federal work force reported for "duty" on Monday (whether needed or not). Including the military (which is overwhelmingly doing nothing useful at all), the Federal payroll amounts to 3.6 million employees. During the last shutdown (2013) fully 2.7 million or 75% reported for duty and caused spending in their respective department to largely carry on as normal.
So what a "shutdown" amounts to is that 100% of the 75% of the government attributable to entitlement and mandatories doesn't miss a beat; and 75% of the other 25% mostly doesn't, either. Which is to say, in round terms a shutdown reduces to a miniscule 6.25% of government impact, at best.
But the frosting on the cake, is that even those bureaucrats deemed "non-essential", such as IRS tax auditors, get a retroactive pay reimbursement from Congress within days of the shutdown's end. Every single time without exception.
In a narrow sense, therefore, the market is on point in ignoring the silly scriblings of Wall Street economists and strategists about the short-term GDP impact. To believe there is any impact at all resulting from a delayed biweekly Federal pay disbursement for a minority fraction of Uncle Sam's work force is to assume that the upwards of 800,000 Federal employees who are being "furloughed" don't have any savings or credits cards to support their normal spending habits at Amazon, Giant Food Stores and or Trader Joe's.
Then again, the average Federal pay rate is upwards of $80,000 per year----so we think they got the cushion and then some. Indeed, that obvious fact surely underscores why the Keynesian spending-driven GDP models come up with laughably tiny, rounding errors on the macroeconomic impact of even extended shutdowns.
Needless to say, however, Wall Street is looking in entirely the wrong place for clues as to the implications of the current shutdown scam. The danger does not lie in adverse impacts on current quarter GDP; it lies, instead, in the implicit confirmation that a fiscally driven bond market collision will soon monkey-hammer the casino revilers, who seem to think that paying 26.3X earnings during month #103 of a business expansion is a swell way to make money.
LOT MORE!!!!!!!!!!!!!!
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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