The fix is finally in; the patch is on the tires of the US Government’s functionality and credit, at least for a few months. But irreparable damage has been done, and no one could say, they didn’t see it coming, especially readers of DAVEMARASHSEZ.
In this case, I hate to say, “I told you so.”
Check out the first hours' damage report from the New York Times,
“Even as the shutdown of the United States government and the threat of a default appear to be coming to an end, the cost of Congress’s gridlock has already run well into the billions, economists estimate. And the total will continue to grow after the shutdown ends and uncertainty persists about whether lawmakers might reach another deadlock next year.”
Sharp losses of what should have been economic performance are almost certain to be recorded for the 4th Quarter of 2014, the Times reports, in employment, business earnings, borrowing costs and overall national and global growth, all of this due to “the intransigence of House Republicans.”
Like your humble blogger, the Times looked back to the pre-run of this gratuitous stupidity in 2011. “We saw huge effects during the summer of 2011, with consumer confidence hitting a 31-year low in August and third-quarter G.D.P. growing just 1.4 percent,” said Beth Ann Bovino, the chief United States economist at Standard & Poor’s.
Now, Bovino says, we can only expect worse.
Already, Times reporters Annie Lowrey, Nathaniel Popper and Nelson D. Schwartz write, “The two-week shutdown has trimmed about 0.3 percentage points from fourth-quarter growth, the forecasting firm Macroeconomic Advisers, based in St. Louis, has estimated.”
And they add, “Most analysts are predicting that growth will remain subpar, probably running at an annual pace of around 2 percent. While companies have generally reporting healthy earnings for the third quarter, an unusual number have been warning that the fourth quarter is not going to look as good, in part because of the political turmoil. Of the 105 companies in the Standard & Poor’s 500-stock index that have reported earnings so far, 68 have provided negative guidance, according to S&P Capital IQ.”
These long-term losses will extend the short-term effect I predicted, more free lunch for the 1%, paid for by the 99%, a predator-creditor’s ball.
“The impasse over the debt ceiling has already raised the United States’ short-term borrowing costs, with investors demanding triple the interest payments they demanded just a few weeks ago, in some cases. Concerns about the United States as a borrower might have a much longer and deeper effect than the shutdown, analysts think.
“A new Macroeconomic Advisers report, prepared for the Peter G. Peterson Foundation, estimates the costs of the fiscal uncertainty of the last few years.”
Since 2009, PGPF says, corporate borrowing costs have gone up 0.38%; economic growth has gone down by 0.3% per year, at a cost of 900,000 jobs.
Now, to the future, the proposed agreement keeps the government open only until January 15, and the staves off default only till February 7.
The Republicans like to call themselves, “the party of small business.” Ask any small businessman about the costs of preparing for shutting down the shop, much less actually doing so, and then re-opening. If the next round of “negotiations” gets close to either deadline, all those costs, which for the US Government are huge, will be repeated.
And, as the curtain on Act 1 of this unending tragedy falls, here’s what John Boehner had to say to conservative radio host Bill Cunningham: "We fought the good fight; we just didn't win."
You didn’t win, Mr. Speaker, that’s for sure. The pathetic display Tuesday, after the Senate stepped back just so you could “be a leader” and vote for the inevitable, should put a final stamp of failure on your tenure. The Tea Party didn’t win; its ratings in national polls have never been lower. So bad game, badly played.
But the real losers here are the United States and its taxpayers, who will not reap the unearned benefits of your foulness, who will, this month, next month, next year and for years after have to pay more to and earn less from your benefactors and beneficiaries, the very, very rich.