President’s Gov Shutdown Stands To Catapult The US Growing Economy Into A Contraction

 

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It had to happen. President Donald Trump just couldn’t stand being the lucky beneficiary of a growing economy which has now been put at jeopardy, thanks to his idea of forcing a partial government shutdown starting on the 22nd December with no end in sight to force the US Congress to allocate additional funding of $5.7 billion dollars to pay for 200 hundred out of his original request for an 800 mile wall at US SW border.

When the president was talking about taking this very same action in 2017, the cooler heads around him where able to prevent the president from acting on this impulse. But the president has gotten rid of all these naysayers, and so he is now free to do whatever he pleases to do, including as per recent news report, withdrawing the US membership from NATO.

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President Trump figured out that after most republicans with the majority control of both houses in the US Congress had resisted budgeting more than $1.6 billion dollars for his wall during the past two years, that he could now force the new Democratic majority in the US House of Representatives as of the 3rd of January 2019, to give into his demands  for $5.7 billion dollars if he subjected the country to a partial government shutdown despite the pain this would cause to 800,000 public servants who would have to forgo their paychecks or have them delayed.

In addition, he was convinced that this political tactic would benefit him by consolidating his anti-immigration hardliners of his base of voters, plus there was the possibility that he could shift the blame for the shutdown onto the democrats who now had the majority of seats in the US House, causing them some grief.

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As per a 1/15/19 New York Times report by Jim Tankersley, “The partial government shutdown is inflicting far greater damage on the United States economy than previously estimated, the White House acknowledged on Tuesday, as President Trump’s economists doubled projections of how much economic growth is being lost each week the standoff with Democrats continues.”

“The revised estimates from the Council of Economic Advisers show that the shutdown, now in its fourth week, is beginning to have real economic consequences. The analysis, and other projections from outside the White House, suggests that the shutdown has already weighed significantly on growth and could ultimately push the United States economy into a contraction.”

Link to the entire NYT report:  Shutdown’s Economic Damage Starts to Pile UpThreatening an End to Growth

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For those mega corporate donors who think that limiting government is a good thing to where they approve of this shutdown, they may not be pleased with the resulting negative financial pain that they are poised to experience.

The government  shutdown causing harm to the US economy was a foreseeable consequence because the effects extend way beyond those who work for the government.

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TOURISM?

Here is the rest of the story…

On January 15, 2019, Tom McCarthy of the Guardian penned the following report, “America shuts down:how the federal government closure is impacting millions”

Excerpts:

“As per the Guardian report, “An estimated 800,000 federal workers have missed at least one and in many cases two paychecks, creating an alarming number of personal crises in the form of missed rent, car or mortgage payments; spoiled credit ratings; lapsed insurance policies; healthcare and childcare conflicts; and in some cases food emergencies”.

“Affected households are mostly on the lower end of the middle-class spectrum, with average take-home pay of about $500 per employee, according to the largest labor union of federal employees. The pinch is keenly felt by African Americans, who fill the ranks of federal employees at proportions greater than their share of the overall population.”

DCist@DCist

The Capital Area Food Bank is holding five free grocery pop ups for furloughed government workers https://dcist.com/story/19/01/11/the-capital-area-food-bank-is-holding-five-free-grocery-pop-ups-for-furloughed-workers/ 

“Many workers are required to report to work even though they are not being paid, including those who serve essential functions such as airport security and law enforcement.”

Airport lines

“Transportation Security Administration employees are among those whose work is deemed essential, meaning they must continue to report for work – without pay. Coincidentally, TSA employees have been calling in sick in unprecedented numbers, the New York Times reported, creating crippling airport backups. The TSA is reportedly “beginning to close some security checkpoints”.

TSA officers work at a checkpoint at O’Hare airport in Chicago on Friday.
FacebookTwitterPinterest/ officers work at a checkpoint at O’Hare airport in Chicago on Friday. Photograph: Nam Y Huh/AP/

Air travel safety gap?

“Once through security, the air traveler’s shutdown-related woes are not over. Federal Aviation Administration employees also are required to work without pay, adding stress to the overstretched network of air traffic controllers. Federal aviation safety inspections have ended, the Miami Herald reported, leading furloughed safety inspectors to warn about a possible safety gap.”

Environmental impacts

“Pollution inspectors with the Environmental Protection Agency have stopped working, and many routine activities such as checks on regulated businesses, clean-ups of toxic superfund sites and the pursuit of criminal polluters have been paused since 28 December. More than 13,000 employees at the EPA are not at work, with just 794 deemed essential staff undertaking the agency’s duties.”

Eviction threats

“Millions of Americans who depend on federally subsidized housing run the risk of eviction. Funding for major programs such as Section 8 vouchers, which serves an estimated 5 million Americans in 2.2m households, has lapsed.”

Health dangers

“Important health programs have lapsed. The Food and Drug Administration has suspended key functions such as routine facility inspections, food recalls and reviews of new pharmaceuticals. A key program for health services for Native Americans has lapsed.”

Trashed parks

“While some national parks and monuments have closed, others have remained open with reduced staff, only to witness vandalism, delayed emergency responses and an overflow of trash. Joshua Tree National Park closed earlier this week after officials announced the vandalism of its distinctive namesake plants and other maintenance and sanitation problems.”

No zoo, no art

“All branches of the Smithsonian – 17 museums and galleries in Washington DC, the National Zoo, and two museums in New York City – are closed. That includes destination tourism sites such as the African American Museum, the Air and Space Musuem and the National History Museum.”

Security threats

“Among the federal employees working without pay are secret service agents, whose responsibilities include protecting the president; federal prison corrections officers; and agents with the Federal Bureau of Investigation. The head of the FBI labor union said the shutdown endangered national security and could make it harder to recruit and retain agents, and could also cause delays at the FBI lab and in getting or renewing security clearances.”

People bike past overflowing trash cans on the National Mall in Washington, DC.
FacebookTwitterPinterest  People bike past overflowing trash cans on the National Mall in Washington, DC. Photograph: Andrew Caballero-Reynolds/AFP/Getty Images

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Farmers Hurt

“Farmers reeling from Trump’s trade war with China are further endangered by the shutdown. Emergency federal aide to compensate mainly for a sharp drop in soybean prices has been suspended, while crucial end-of-year agricultural data will not be released on schedule, creating uncertainty in planning.”

Immigration backlog

“The shutdown has postponed court hearings for thousands of immigrants, potentially meaning years more of waiting for people asking for asylum in the US and helping others stave off deportation, thus “adding to the very delays the Trump administration has railed against”, the Associated Press has noted.”

Suspended science

“Scientists working in major federal agencies including the National Oceanic and Atmospheric Administration, the National Aeronautics and Space Administration and the National Weather Service have had to suspend research work and have not been able to attend conferences. The National Science Foundation has suspended reviews of grant proposals.”

A worker cleans the floors at NASA’s Marshall Space Flight Center in Huntsville, Alabama, which has been impacted by the partial federal government shutdown.
FacebookTwitterPinterest  A worker cleans the floors at NASA’s Marshall Space Flight Center in Huntsville, Alabama, which has been impacted by the partial federal government shutdown. Photograph: David Goldman/AP

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Emergency response

“The Federal Emergency Management Agency, which helps with emergency response and rebuilding efforts after major natural disasters, has not been able to pay contractors.”

Hungry families

“The largest federal food aid program – the Supplemental Nutrition Assistance Program, or Snap – which helps to feed about 40 million Americans, is due to run out of cash by the end of January, the New York Times reported. A food assistance program serving about 7 million women, infants and children, known as WIC, is suspended.”

Stalled markets

“The negative economic impact from the shutdown goes beyond the crippling uncertainty felt by global markets. The Security and Exchange Commission has stopped reviewing loan approval applications for public companies, the federal reserve may be hampered by a data shortage and economists warn that economic growth is threatened.”

Traders at the New York Stock Exchange keep an eye on the effects of the federal government shutdown.
FacebookTwitterPinterest  Traders at the New York Stock Exchange keep an eye on the effects of the federal government shutdown. Photograph: Justin Lane/EPA

Stalled home loans

“Both the Federal Housing Administration and Department of Veterans Affairs offer federally subsidized home loans – or they used to. The shutdown has stalled that loan activity, potentially affecting thousands of borrowers. The Navy Federal Credit Union is offering no-interest loans, meanwhile.”

Justice delayed

“The justice department has requested delays in responding to civil litigation including, for example, a challenge brought by Senate Democrats to the legitimacy of acting attorney general Matt Whitaker.”

Tech device hurdle

“Telecom companies have warned that a Federal Communications Commission shutdown of its device approval process has threatened the rollout of 5G phone service. The FCC has also taken down databases including the Electronic Comment Filing System and Universal Licensing System.”

Beer-mergency

“The Alcohol and Tobacco Tax and Trade Bureau receives a whopping 3,000 applications every week for approval for new alcohol labels, which must comply with alcohol content and serving size listing requirements, according to NPR. Those applications currently sit neglected.”

10 comments

  1. Dear Gronda, gday mate. Previously (after Helsinki) I commented upon your post regards that inexplicable behaviour of an American president. Please, go back and re watch the two persons coming from a secret meeting of 2.5 hours to a televised Q+A by the press. Watch it without sound. Analyse what you see in body language and facial tells. By both of them. Truly remarkable, given what we know today… hugs mate.

    Liked by 3 people

    • Dear Gary J,

      I just don’t want to believe that the US Intelligence community didn’t figure out a way to somehow secretly record any and all conversations between the Presidents Trump and Putin. It’s our national security at stake.

      I have absolutely no doubt as to who had the upper hand in that Helsinki Summit and it wasn’t President Trump.

      President Trump was definitely not the Alpha-dog in this tete-a-tete. He got eaten alive.

      Hugs, Gronda

      Liked by 2 people

  2. If the economy was growing like Mr Trump keeps asserting would someone explain why the national debt increased by 2 trillion dollars in Mr Trump’s first two years as President. (Google the US Debt clock for the update and see if you can guess how much deeper the debt will get after one minute watching!!) After all the whole world heard the President promising during the campaign that he was going to do away with the American national debt, and through the years we have learnt to trust the word of politicians.

    It must have been an oversight that Mr Trump apparently forgot to tell the voters that the debt promise going to be put on hold until he fulfilled his Inauguration promise to make the streets safe again (Oh dear …..gun deaths went up!!) or was he waiting until the Mexicans coughed up the Trump promised cost of the wall? At least we know how that has turned out.

    I haven’t quite caught up with the modern method of accounting that borrows to put us into profit !!! Thank goodness Mr Trump is a safe pair of hands like most who deal in New York real estate, fake universities and Atlantic city Casinos. (Sorry I wasn’t meant to mention Casinos because those dodgy Australians turned down Mr Trump’s after their intelligence folk claimed Mr Trump had too many Mafia contacts to allow him to build a Casino in Sydney’s Darling Harbour).

    Liked by 3 people

    • Dear Peddiebill,

      You have a great point. I’m doing the finishing touches on a post where financial experts are estimating that the estimated US deficit over 10 years, used to pay for 2017 GOP tax cuts will cost US taxpayers about $600 billion dollars than originally estimated.

      With the trade wars, the totally unnecessary government shutdown, his lack of any sense as to how the US economy really works, I wouldn’t be surprised if the US economic growth for the 1st quarter in 2019 =0%.

      I’d be tempted to wonder if the president didn’t want the US economy to go south, if it weren’t for the reality that he’d be hurting his own financial portfolio.

      Thanks for your input.

      Hugs, Gronda

      Liked by 1 person

  3. Gronda, good post. While Presidents get too much credit and blame for the economy, they do provide headwinds and tailwinds, sometimes at the same time. This President has provided some tailwinds with the tax cut, but that also provides headwinds as PeddieBill notes above, and some deregulation.

    The tailwinds are showing up short term, while the headwinds will blow harder in the future. The headwinds include the interest cost on the debt, cutting environmental regulations too deeply, the tariffs, backing out of trade agreements like the TPP, reducing travel from certain countries, hindering legal immigration which is accretive, not investing more in infrastructure and new technologies, and the shutdown.

    He is fortunate they did not repeal the ACA, as that would have caused more contraction. But, his major faux pas is beating up on allies and not valuing relationships and guardrail organizations. The TPP was a way to combat China, but he pulled us out and it went ahead without us. The WTO and NATO are important governors on Russia and China, yet he attacks their credibility. And, pulling out of the Paris accord says we are irresponsible.

    These are my concerns. The hangover from this President will last a long time. Keith

    Liked by 2 people

    • Dear Keith,

      The president is directing the blowing of the tailwinds onto the current US economy. Wait until the US economic growth numbers for the 1st quarter in 2019 are published and then you will hear the regrets. Experts are saying that the cost for the 2017 GOP tax cuts to the US deficit on a 10 year basis was underestimated by $600 billion dollars.

      With the shutdown, and his other nonsensical decisions, I’m thinking that the economy has only one direction to go.

      Hugs, Gronda

      Liked by 1 person

    • Dear Roger,

      Here’s the list. I know it by heart. The list includes his democratic presidential election opponent, Hillary Clinton; the former democratic President Barack Obama; the former FBI Director James Comey; his own former Attorney General Jeff Sessions, the former CIA Director John Brennan; the current Deputy Attorney General Rod Rosenstein; the 2 FBI lovers/ agents Lisa Page and ’Peter Strzok; former FBI agent Andrew McCabe.

      That’s just a start.

      Hugs, Gronda

      Liked by 1 person

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