Shutdown Ends, Bad Fiscal Policy Continues

Blog Post
Friday, February 01, 2019

Diane Lim discusses the end of the government’s longest shutdown and the new 10-year outlook from the Congressional Budget Office in the latest “Economist Mom” segment on Facing the Future.

“I think what helped end the shutdown was how unpopular the shutdown went over with the American public,” Lim said. “It was starting to look very worrisome, I have to say, as an economist.” She is a principal at District Economics Group and former chief economist for The Concord Coalition.

“It was unprecedented that the government would be shut down for so long and government workers that were involved would not get paid for so long, and that got to be some serious . . . anti-stimulus going on,” she said. The shutdown covered much but not all of the federal government.

Concord Executive Director Robert L. Bixby, who also joined the discussion, said: “I think the personal stories of federal workers and contractors . . . of what was happening to those people who were truly innocent victims of the shutdown were really beginning to weigh on the conscience of just about everybody.”

“For this reason, government shutdowns have a shelf life, like a piece of fish,” he added. “After a while, they really do begin to smell bad.”

He also said that the shutdown “ended in such a debacle . . . it may put an end to shutdowns as a strategy for a while.”

Both Lim and Bixby agreed that the nation was not quite out of the woods yet, however, since the current budget agreement only extends to Feb. 15.

They also discussed the trends and projections in CBO’s recently released 10-year budget and economic outlook.

This annual report projects 10-year paths for federal spending and revenue under current law. Lim said Congress uses the difference between those levels -- the projected deficits --  “to figure out what policies they want to change in terms of how it would affect the deficit outlook going forward.”

Bixby said the report “confirms what we already knew, which is that the budget is on an unsustainable track. Spending is projected to grow faster than revenues, and we’re looking at trillion-dollar deficits re-emerging in the next couple of years and . . . growing as a share of the economy.”

“The fundamental point to stress, and the CBO seemed to put emphasis on this year, is that it’s highly unusual to be running large and growing deficits at a time of economic growth and low unemployment,” he said.

Lim said, “And they’re going up to a level that means the debt is growing faster than the economy is, and that is what defines an unsustainable fiscal outlook.”

Hear more on “Facing the Future.” I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, elected officials and candidates for public office. Past broadcasts are available here. You can now subscribe to the podcast on iTunes, Google Play or through RSS.