When the Senate authorized the Treasury to borrow another 60 days’ worth of operating cash, it was not some heroic bipartisan move saving the country from economic catastrophe. It merely postponed the debate until right before Christmas, when the threat of furloughing thousands of government workers will offer legislators maximum political leverage.
Threatening to default on our nation’s contractual obligations is a sick and cruel political game, where the outcome is already known. The debt ceiling will be raised. And shutting down the government doesn’t really shut down the government – it merely uses federal employees as pawns in an emotionally immature game of political chicken.
There are two issues at play when politicians threaten a government shutdown: the debt ceiling and funding gaps. They are separate, and for more than 200 years of our country’s existence, they were never used to manufacture a “crisis” that politicians could then take credit for solving.
In 1939, Congress passed a law creating a general restriction on the maximum debt the country could incur, initialing setting the ceiling at $45 billion. When federal borrowings approach the ceiling, Congress must authorize additional debt – something it has done 94 times since 1939.
A funding gap is when the Treasury runs short of cash and needs to borrow additional funds. We’ve had plenty of funding gaps, even before creation of the debt ceiling. But for more than 200 years, funding gaps did not require a shutdown of the government – until a weak incumbent president, facing a hostage crisis in Iran and primary challenger at home, used his Justice Department as a political tool.
It proved to be such an effective tool that no one has since seriously challenged its legal basis.
In 1980, despite Democrats’ control of both the House and Senate, President Jimmy Carter could not persuade Congress to pass an appropriations bill for the Federal Trade Commission. Carter’s Attorney General, Benjamin Civiletti, then cited a provision in the 1884 Antideficiency Act as justification to overrule a longstanding opinion that federal agencies could continue operating during gaps in appropriation funding. Carter ordered the FTC shut down, furloughing about 1,600 federal employees, then threatened a complete government shutdown. Congress blinked and funded the FTC.
Politicians had discovered a powerful political tool.
Beginning with that 1980 shutdown, we’ve had ten funding gaps that resulted in federal employee furloughs. This could be avoided if any president would instruct the Attorney General revisit the 1980 opinion and find a way to restore the status quo that existed from 1776 until 1980. It would face certain opposition from Congress – only because it would eliminate a political hammer with which legislators could threaten each other.
David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.