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US Government Shutdown: Democrats Blink…Again


Today the Republican and Democrats in Congress agreed to end the so-called ‘shutdown’ of the US government over the weekend. Not much really ‘shut down’. Government workers were not at work over the weekend. There were no plans to stop funding the military. Or halt social security checks. Or anything else that was economically meaningful. Using the word, ‘partial’, in relation to shutdown was probably also an overstatement. So what was involved? And what was agreed to today?

Republicans wanted to eliminate leftover taxes on the rich and business that they were not able to achieve with their failure to repeal the Affordable Care Act (Obamacare) last year. The ACA required $692 billion in taxes on businesses and investors. Republicans and Trump have been chipping away at the ACA ever since their failure to get a full repeal. The shutdown deal marks yet another milestone in the destruction of the health care act. In the agreement, Republicans reportedly got to eliminate more of the tax funding base for the ACA, another cut of the $692 billion. (The ACA destruction will result in even more accelerating insurance premiums and even more enrolled dropping from the program).

To make sure they got their business tax cuts, Ryan and McConnell held the SCHIP program hostage. SCHIP is the insurance program for 9 million children whose parents otherwise can’t afford to buy them health coverage. The Democrats got the continuation of SCHIP for another six years. In other words, they ‘got’ what they ‘already had’, while the Republicans got something new–i.e. more tax cuts.

So what about DACA–the 800,000 ‘dreamer’ kids? Wasn’t the Democrats’ refusal to pass the spending bill to fund the government based upon getting the DACA issued resolved? Yes. But the Democratic party leadership dropped that demand in today’s agreement, and instead agreed to refund SCHIP in exchange for three more weeks of government funding, and the further ACA tax cuts. In other words, they got what they had and gave up on DACA. They say DACA is not dead, that they’ll return to it three weeks from now.

But in three weeks from now the Republicans will find another program they will hold hostage, and demand the Democrats fund the government further in exchange for keeping another program going–while the DACA demand will be left hanging once again.

What this all points to is the Democratic Party is continually being outmaneuvered by the Republicans. It’s a sad story that has been the case ever since 2008. Democrat party leaders are proving themselves not only strategically myopic since the 2016 election, but tactically inept as well.

What the recent ‘negotiations’ around the DACA-for-funding the border Wall trade off also reveal is the Republicans keep adding demands to the negotiations, keeping Democrats off balance and unable to hold firm to their initial principled demands.

Also revealing is that Trump was a non-entity in the entire negotiations process. He holds PR press conferences for the TV audience, making it look as if he’s in charge, and will play a positive role in getting the two parties to agree on DACA in exchange for his Wall funding. But he’s not in charge. Whoever gets to him last, he agrees with. Shumer goes down to the White House and thinks he has a deal. But the right wing and corporations walk in the swinging door and Trump changes his position before Shumer can even get back to his office on the hill.

Democrat party second in command in the Senate, Dick Durbin, went on TV to try to pick up the pieces. He asked the DACA kids ‘don’t give up hope’. We’ll deliver next time. But now that the Democrats caved in on their DACA demand, who will believe they’ll prove tougher the next time around three weeks from now? The Republicans will hold out even more confidently, knowing the Democrats will cave again. By giving up on DACA the Democratic party leadership ensures it will be even more difficult next time.

To use a metaphor, it’s like a union declaring its intent to go on strike for a non-negotiable demand, and when the deadline comes telling its union members they’ve changed their mind,they’ve given up the demand, and no one should go on strike…for now. The union leaders then declare publicly they’ll strike ‘next time’ three weeks later. Who among their rank and file are going to believe them? Nor will the Republicans (i.e. the management negotiators per our metaphor). And certainly not the workers (DACA kids). Drawing a line in the sand and then backing up and drawing another accomplishes nothing but demoralization.

Jack Rasmus is author of the recently published book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017. His website is https://kyklosproductions, he blogs at jackrasmus.com. His twitter is @drjackrasmus.

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