by Dom Ruscio, Partner
Last week, Congress and the president struck a deal on a continuing resolution that keeps the government operating and suspends the federal debt ceiling, both until December 8.
While us denizens of DC breathed a collective sigh of relief, for some reason I was reminded of an early review of Melville’s Moby Dick, that read-
Our author must be henceforth numbered in the company of the incorrigibles who occasionally tantalize us with indications of genius, while they constantly summon us to endure monstrosities, carelessnesses, and other such harassing manifestations of bad taste as daring or disordered ingenuity can devise…
Those who follow these things closely knows that the federal government’s fiscal year ends on September 30. Since Congress has yet to pass any of the 12 appropriations bills required to keep government departments and agencies operating, once again, we were looking down the barrel of yet another government shutdown.
Not that that’s unusual. Over the last four decades, we’ve experienced 18 lapses in funding. Most occurred over a weekend, but three resulted in a true shutdown of government operations—twice for a total of 26 days and the last one, in 2013, for 16 days.
How much money was saved, you ask? Actually, it cost the taxpayer $2.5 billion in pay and benefits for furloughed federal workers and about $10 billion in penalty interest payments and lost fee collections, according to the Office of Management and Budget.
And the costs would have been much greater had Congress and the president not suspended the debt limit. Unless that was done, the government would have temporarily defaulted on many of its obligations, from Social Security payments to veterans’ benefits and salaries for federal civilian employees. Even a threat of default would have raised borrowing costs and destabilized U.S. and global markets.
Last week, pundits were analyzing who got the better of the deal. But if Congress and the president fail to do their jobs before December 8, we all lose.