US shutdown is a blackmailing of democracy
Police officers tape off the Lincoln Memorial, closing it to visitors. Photograph: Doug Mills/The New York Times
Is the US a functioning democracy? This week legislators decided to shut down a swath of the federal government rather then allow an enacted health law go into operation at the agreed moment. They may go further; if they do not vote to raise the so-called “debt ceiling”, they risk triggering default on US government debt – a fate far worse than the shutdown or fiscal sequestration. If the opposition is prepared to inflict such damage on their own country, the restraint that makes democracy work has gone. Why has this happened? What might be the result? What should the president do?
The first question is the most perplexing. The Republicans are doing all of this to impede a modest improvement in the worst healthcare system of any high-income country. The Patient Protection and Affordable Care Act (known as “Obamacare”) is modelled on one introduced in 2006 in Massachusetts by then governor Mitt Romney. Its apparently criminal aims are to cover 32 million uninsured people and ensure coverage of those with pre-existing conditions. True, the programme is complex. But it builds on a defective system. That most working people get insurance through their employers is an obstacle to labour market flexibility since it complicates decisions about leaving a job, particularly for people with chronic medical conditions. It is a form of serfdom.
States in bad health
Compare the US health system to those of the other large high-income countries. The US spends 18 per cent of its gross domestic product on health against 12 per cent in the next highest spender, France. The US public sector spends a higher share of GDP than those of Italy, the UK, Japan and Canada, though many people are left uncovered. US spending per head is almost 100 per cent more than in Canada and 150 per cent more than the UK. What does the US get in return? Life expectancy at birth is the lowest of these countries, while infant mortality is the highest. Potential years of life lost by people under 70 are also far higher. For males, this must be partly due to violent deaths. But it is also true for women.
The idea one should close the government – or risk a default – to stop universal insurance, which other high-income countries take for granted, seems mad. Maybe this shows how much some Republicans loathe Barack Obama. Half of the legislators who called on John Boehner, the Republican speaker of the House of Representatives, to defund the health law come from the old south. Its dislike of the federal government may be part of the explanation. Republicans might fear not the programme will fail, but it will work, cementing the credibility of government.
So what happens now? Shutdowns are relatively predictable. They have also happened before. Goldman Sachs notes that “the longest shutdown equivalent to the current situation occurred in 1995 and lasted five days”. Goldman estimates that about 800,000 federal employees will be put on furlough. Only activities funded by the specific route of congressional appropriations – about one-third of federal spending – will be affected; a little over half the activities within that category are likely to be exempt. In areas not exempt, employee salaries would be cancelled during the shutdown, but most procurement of goods and services would subsequently be made good. Yet this will still be a nuisance. Thus most analysts assume the shutdown will not last very long. Goldman estimates that a two-day shutdown would reduce growth in the fourth quarter by 0.1 percentage points at an annualised rate, while a week-long shutdown would cost 0.3 percentage points.