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Oct. 1, 2013 - Freedomain Radio - Stefan Molyneux
22:23
2497 The Truth About the Government Shutdown
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Hi everybody, it's Defend Molyneux from Freedom Main Radio.
Hope you're doing well.
This is the truth about the government shutdown in the United States.
So let's start off with a little background, shall we?
There's a story, the story being portrayed by the generally pro-Democrat media, is that the Republicans are forcing a shutdown of the federal government because they want to defund Obamacare.
This is not quite accurate, of course.
The Republicans have actually...
Offered to fund every single government department agency and program except Obamacare, and they demand a one-year delay in the implementation of Obamacare and a repeal of a couple of points of taxation on medical devices which are supposed to help fund Obamacare in return for funding Obamacare.
And of course the Democrats are saying, no way, and one of the fine Democratic orators has suggested that the Republicans get a life because we are run by a clique of 12-year-old girls.
This is not the same as the debt ceiling crisis which is going to hit in a couple of weeks.
So in a government shutdown, the federal government is not allowed to make any new spending commitments, and of course about half of the Republicans Workforce or so is sent home without pay.
In other words, they will probably, well, at least most likely they will get their pay when they return, so they're punished by vacations, as you know, those of us in the private sector are as well.
Now, the debt ceiling is you can't borrow any more money to pay for your existing spending.
So when that hits, the Treasury Department won't be able to pay for spending that Congress has already approved.
And so they're either going to have to lift the debt ceiling or the federal government will have to default on some of its bills, possibly including payments to bondholders.
That could trigger fairly big disruptions in the financial markets or a long-term rise in borrowing costs.
You know, like in the same way that if you quit heroin, you get the sweats.
So that's bad, right?
If you quit smoking, you actually feel quite uncomfortable.
If you quit drinking, if you're an alcoholic, you actually feel uncomfortable.
And Lord knows, we in the West now must be spared all forms of discomfort, even for the sake of preying upon the physical health of future generations.
So, what's actually going on?
Well, each fiscal year, the President submits a budget request to Congress.
This is how much he wants to spend on each department and agency, how much revenue he wants to raise, and which taxes are going to be used to raise that revenue.
The President is legally required to do this no later than the first Monday of February, but Obama has frequently missed that deadline.
Of course, with no negative repercussions, like in the same way, if you don't file your taxes, you have no negative repercussions, right?
Next to House and Senate, budget committees each draft and pass budget resolutions laying out spending authority for the next fiscal year and spending and revenue levels for the next five years because they're such amazing human beings.
They know how the economy is going to be performing in five years.
They also set totals for revenue and spending for the entire budget.
So the House and Senate as a whole pass the resolutions which go into conference.
Once a joint resolution is hashed out, both houses pass it.
The resolution doesn't have the force of law because the president, of course, never assigns it.
But it constrains congressional debate on the budget.
So if a House or Senate member tries to pass a bill that goes against the budget resolution, another member is able to raise a point of order and block him or her from doing so.
Let's have a look at what's currently going on.
There are wide swaths of the federal government that need to be funded each year in order to operate.
If Congress can't agree on how to fund these areas, they have to close down.
And right now, Congress can't agree on how to fund them.
So basically, each year the House and Senate have to agree on 12 appropriations bills to fund the federal agencies and set spending priorities.
Congress has become really bad at passing these budgets and bills.
So in recent years, they've resorted to stopgap budgets to keep the government funded.
These are known as continuing resolutions or continuing irresolutions on passing a budget.
The last stopgap passed on March 28th, 2013 and ended on September 30th.
One of the reasons they don't want to pass any budgets is that it just becomes completely absurd and ridiculous.
The gap between revenue and spending, the amount of increase in revenue.
They just don't want hard figures being handed out to their constituents or for the constituents to actually see how insane American government spending has become.
So they're just doing all these stopgap measures.
So if you can't pay your employees, they have to go home.
Well, the laws and regulations governing shutdowns separate federal workers into essential and non-essential workers.
And if you're essential, you've got to stay.
If you're non-essential, you have to go home.
In 2011, government estimated 1.2 million federal employees out of 2 million or so would likely get furloughed and sent home without pay in the event of a shutdown and shutdown.
I think there have been 17 or 18 government shutdowns since 1970, so this is not exactly the fifth horseman of the apocalypse.
In 1995 and 1996, the federal government actually shut down for a few weeks, and there was not, in fact, a smoking crater where civilization, virtue in the arts, used to be.
There were no 404 not found signs when you tried to get on roads or anything like that.
So, since 1976, there have been 17 different government shutdowns.
In 1995 and 1996, 21 days, Bill Clinton wrangled with congressional Republicans over budget matters.
Six shutdowns in the 1970s, all lasting longer than eight days.
A one-day shutdown in 1982, when Congress couldn't agree on funding for Nicaraguan Contras.
Ah, they said the government was shutting down, but the IRS, DHS, NSA, TSA, DOD, EPA, DOE, ED, FCC, FDA, USDA, ATF, DEA, FBI, CBI, and nearly every other department are going to remain open.
Ah, it's an alphabet super fascist horror, isn't it?
So the federal government doesn't actually have a budget for fiscal 2014, which of course started today, October 1st.
Why?
Well, because you see, this is what's being wrangled about.
The Republican-led House passed a budget calling for $3.5 trillion in spending.
The democratically controlled Senate passed a budget calling for $3.7 trillion in spending.
President Obama issued a proposal calling for $3.77 trillion in spending.
This, of course, happened back in the spring.
The House and the Senate passed their budget plans in late March.
The president's proposal, the last to be issued, came out on April the 10th.
The Senate hasn't seen fit to pass a budget in four years.
And President Obama was two months late with his document.
So now for all of you children out there looking to make a quick handful of change, the government is shutting down.
So you can actually open your lemonade stand without their bullshit regulations.
Yay for the kids!
How do Americans feel about all of this?
Well, there's a reason Rupe Paul has found 70% of Americans oppose raising the debt ceiling.
Interestingly enough, when he was running for office, President Obama was one of those Americans, but now he seems to have changed his tune a little bit because now he's benefiting from debt rather than siding with Americans and complaining about it.
In fact, 55% of Americans say they do not support raising the debt ceiling even if it causes the U.S. to default on its debt.
Well, in reality, the US has already defaulted on its debt, I would argue.
When you start taking money out of your MasterCard in order to pay your visa because you have no other money, Then you have kind of defaulted on your debt.
I mean, and you're actually making it worse by not admitting you've defaulted on your debt and can't pay.
You're just continuing to borrow more and more.
If, for instance, you decide to start becoming a counterfeiter in your basement by photocopying dollar bills and pretending that your monopoly money has something to do with real currency, you have also defaulted, right?
If you start sending in your Visa bill to pay your MasterCard bill, In other words, if you are pretending that debt is an asset, which is basically what having the Federal Reserve buy U.S. Treasuries to the tune of $85 billion a month is basically doing, then you have also defaulted.
So this has all already occurred.
Sometimes, if you die, you'll twitch a little bit afterwards, and this is really what's happened to U.S. government spending.
It has no possibility of repayment.
And the buying of its own debt, the issuing of more debt, and considering it assets, and the complete inability to pay back, and the massive obsession, which is natural on keeping interest rates low, is already defaulted.
So, interest rates would probably be two or three times what they would be right now if the government wasn't crushing them down in order to avoid having to pay a lot of interest on its own debt, right?
So, if Visa says, well, your interest is 15% and you say, well, I'm only going to pay it as if it's 3%, guess what?
You've already defaulted on your debt because you've said you can't pay the real rate of interest on your debt.
So, you're going to pay some made-up interest of your own, which is kind of what the government has done.
And this, of course, you lower interest rates, you...
Provoke a lot of spending in the moment because of overprinting of money.
Inflation is going to increase and the amount of money you can get from interest payments by putting your money in a bank is so low that people spend now.
They don't save.
What happens when you don't save?
Well, you kill your future productivity because the money is simply not available for entrepreneurs and other resource owners to Upgrade their capital equipment to invest in new machinery and upgraded equipment in the robot army that is supposed to replace existing low-rent workers.
So you simply don't have the money to increase your investments in upgrading equipment and therefore you're killing future productivity.
Nearly two-thirds of 63% of Americans feel members of Congress are out of touch with their constituents when it comes to federal spending.
76% of Americans believe the federal government spends too much money.
11% say it spends the right amount, and 7% say it spends too little.
But I would imagine most of those 7% are in the military-industrial complex, so they only count in the column called EVIL. In response to open-ended questions, Americans said that the government wastes 60 cents out of every dollar they pay in federal taxes and that they would cut federal spending by 30% across the board.
And people think that cutting government spending produces some kind of catastrophe.
Well, it may for certain particular individuals, but that's okay.
I mean, you know, when you closed concentration camps in Nazi Germany, some people who supplied those concentration camps with food and weaponry suffered.
But, you know, the end of exploitation and of immorality It causes some people who feast on the carcass of the future some discomfort, but I don't think that we should really take that into too nobler set of considerations.
But even if you cut government spending by over 80%, and I don't just mean cut the rate of growth, but actually cut government spending by 80%, you basically push the government back to about 1970, 1971, when we still had roads, post office and military, government schools, blah-de-blah-de-blah.
So the catastrophe is only from people who don't want to change and who are profiting off the coercion of the government at the moment.
64% of Americans say if a member of Congress does not agree with them on federal spending, they describe that member as extreme.
In other words, Congress's fiscal goals are, for the majority of America's population, an extremist position.
And that's pretty, pretty important to understand, that this is not a representative democracy in any way, shape, or form.
The approval rating of Congress is in the single digits.
What does that change?
Well, why are the Republicans taking a stand on Obamacare?
Well, as we'll see from the numbers, it's because Americans really, really, really do not like Obamacare.
The key parts of Obamacare unfortunately rely on mandatory spending that isn't affected by shutdown.
So the new online marketplace is known as exchanges where uninsured people should theoretically be able to shop for coverage but instead get endless amounts of Browser errors and can't get through to the chat line and can't get through on the phone.
That relies on mandatory spending.
You can't shut that down.
The Medicaid expansion is funded with mandatory funding, as are the billions in federal tax credits to help with purchasing coverage.
The government would continue to set these up.
This is the line.
Sorry for those just listening on audio.
It's quite a big gap.
This is from 2009.
To the present, the black line on the bottom is approval of Obamacare, and the red line on the top is disapproval of Obamacare.
And as you can see, it's regularly 10, 12, 15 points higher on the, dear God, keep that horrible porcupine of government healthcare away from my body as far as possible.
People really don't like it.
And this is what the Republicans are responding to.
It's the general fear and hatred of Obamacare, and this is before it even gets implemented.
After it gets implemented, this will continue to widen.
Obamacare, and I've talked about this before, you can look on my channel for more videos about this, but it is fundamentally a massive tax, a transfer of wealth from the young and the healthy to the old and or the sick.
And this is natural.
When you're sick, you're just desperate to get better.
But when you're healthy, you're not that desperate to keep your taxes low, at least not relative to wanting to get better or get free or subsidized health care.
It's just a mismatch of urgency, of priorities, of emotional investment that occurs, which is why democracies tend to be like a snake eating their own tail.
So what are the facts about this spending situation?
Well, U.S. military budget constitutes almost 50% of the total worldwide military spending.
Let's look at that one again, because they're saying, well, we can't cut.
You see, if we have to cut any government spending, my goodness, we're going to have to stop inspecting food.
We're going to have to close down roads.
We're going to have to close down parks.
It's going to be just terrible because there's just no room to cut.
U.S. military budget constitutes almost 50% of the total worldwide military spending.
This, from a country with largely peaceful neighbors to the north and south, and with massive oceans to the east and west.
If any country should be free of fear of invasion, it should be the United States.
So why does it need such an enormous military?
Because all large governments turn to empire after the successes of the free market give them enough wealth to do so with borrowing rather than tax increases.
Both the House and the Senate continuing resolutions not only fail to reduce military spending, they actually authorize $20 billion more in military spending than authorized by the sequestration created by the 2011 Budget Control Act.
And of course, every government says, oh, we're already at the bone, there's no more fat to cut, there are draconian cuts and so on.
And this is nonsense.
I mean, it's all lies.
I mean, this kabuki hand puppet of fascistic distraction is all just a bunch of nonsense.
They say that they're cutting, and they're not.
What they are, reductions in the planned increased rate of spending.
So if your doctor says, listen, you weigh 300 pounds, you better go on a diet.
And you say, well, I will reduce...
Theoretically, I will reduce the amount of weight I gain over the next 10 years.
I'll still be gaining weight, but instead of gaining 100 pounds over the next 10 years, I'm only going to gain 90 pounds.
Would your doctor say, well, that's great.
What a wonderful plan to reduce your weight.
No, he would say, you're still gaining weight.
You're kind of missing the point.
And this is sort of important.
Under sequestration, military spending increases by 18% instead of by 20% over the next 10 years.
Ooh, and that's what they call a cut, ladies and gentlemen.
So a little graphic of the Capitol.
Sorry we're closed, but do not worry.
We will continue the wars, paying ourselves, molesting you at airports, taxing you, and expanding the police state in general.
The congressional aides will not get paid in the budget shutdown situation, but congressmen and congresswomen must continue to get paid by law.
And that's an exemption from the law.
It's really the whole point of power.
You have to be above the law.
Otherwise, who would want power?
That's the whole point.
So let's have a quick look at the debt ceiling.
Now, of course, if the debt ceiling is not increased, all it means is the government can't borrow more money.
It doesn't mean it has to repay the whole debt all at once or anything like that.
All it means is that the government simply can't borrow more money.
So the Treasury Department can prioritize, if it wants, interest in debt payment to avoid a default.
Let's have a quick look at Total Spending and Revenues Under the CBO's extended baseline, as you can see here, there's just a continual gap.
And this, of course, assumes that revenue...
You know, you see, revenue is declining, but you see, in the future, you see, revenue just magically stops declining and increases, even though a majority of people are going to start to...
A huge, significant number of people are going to start going into retirement and so on.
So you've just made up numbers.
But even with the made-up numbers...
It is a massive gap that simply cannot go on forever.
This is part of the madness of the modern state.
So the debt ceiling doesn't mean that the government shuts down immediately.
It just means that they actually have to stop spending so much money.
I just want to put it much more simply.
But the reality, of course, is everybody's getting angry at the Republicans or the Democrats or whatever it is.
The only thing to get really angry at is math, and getting angry at math is not a very productive thing to do.
It's like jumping off a 10-story building and then screaming at gravity.
I mean, it's the result of decisions made in the past.
For Congress and the Senate to get really angry at any limitations on spending at the shutdown or at the debt ceiling problems, it's basically like getting really angry at Visa for refusing to raise your credit limit when you're already ridiculously in debt and show no signs of even slowing down the increase in your debt, and you get Really angry, no visa bastards, not giving me more financial noose with which to hang the next generation.
Well, math is math.
And no amount of policy wonking, no amount of slow-drawing rhetoric is going to change the basic math.
Now, once the U.S. hits the debt ceiling, it will be forced to only spend as much as its incoming revenues.
Oh my God!
It's only going to be able to spend as much as it brings in, which is a 40% reduction in outgoing payments.
In other words, the U.S. government is currently spending more than 40% more than it's bringing in in revenue.
Try that in your household and see how long you will last.
And here's an example of what it could cost the U.S. government in 1979.
They accidentally defaulted on only $122 million in Treasury payments just due to a software glitch.
Economists argued in a paper in 1989 that this incident permanently increased interest rates by 0.6%, which was a total cost of $12 billion on only defaulting on $122 million.
This is why governments simply don't want any kind of cap on what they can spend, because a lot of what they spend on is interest payments.
If they don't make those interest payments, that's a default, which means interest payments will go up sharply.
And sharply interest payments reflect two things.
They reflect, or interest prices reflect two things.
The first they reflect is the time value of money.
We'd rather have money now than in the future.
And the second thing is the level of risk associated with the person you're lending to.
And if the government defaults, then the cost of borrowing is going to go through the roof, which means they're going to default even more, which means the cost is going to go up even higher.
And then, oh then, we will see some budget cuts.
And they will be random, unprepared for, and they will never affect the people in Congress who are generally millionaires and don't have to worry about these kinds of things.
There's a little funny...
News section that might be worth having a look at from a funny bone standpoint.
Government collapses, runs out of victims.
U.S. government declares insolvency after.
Unprecedented 234 years of parasitic predation.
Other nations follow.
Former voters apologize to each other.
So, it's all a bunch of nonsense.
It's really just designed to distract you from the reality that the current system is completely unsustainable.
It goes the ways of all democracies.
The poor outnumber the rich.
The poor vote to take away the money of the rich.
Everybody ends up poor.
The rich respond by taking control of the political process in an attempt to shield themselves from the general zombie-like predations of the poor.
And the military-industrial complex grows Because it's quite a lot of fun to pay with toy soldiers if you are a general political sociopath.
And so this is generally the way things go.
I hope you won't be distracted by the distinctions, and I hope that you won't buy into the fear-mongering of the largely liberal media about how catastrophic it is for these things to be cut in funding.
Of course the government is going to cut the most Taxpayer-facing stuff so that they hope to provoke general and popular resentment and restore funding.
This kind of hostage-taking is unworthy.
So yes, the government is going to shut down.
Let's hope that it reboots in safe mode, which is a much smaller government.
And as I've said before, the only real problem with government shutdown is that it will be temporary.
But soon, it will become much more permanent.
This can either be a managed process or a nosedive.
Let us hope for the former, but rationally expect the latter.
This is Stefan Molyneux, Freedom Aid Radio.
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