Government Re-Start: Understanding the Aftermath of the Shutdown

Do you remember the increasing and paralyzing fear two weeks ago when we thought the government would remain shut down and we would run out of money? Well, the crisis has been averted, for now.

To recap, many strange things had occurred in Washington that eventually led to the House of Representatives’ missing the fiscal budget deadline (Oct. 1) and resulted in a shutdown of the government. What were these “strange things”? President Barack Obama wanted to start a healthcare reform, the Affordable Care Act, but the House Republicans did not want this, and the Democrats refused to negotiate, hence the $24 billion lost due to workers being furloughed. “The Colbert Report” also sums up the shutdown nicely with an analogy to a children’s game.

All that is old news, though, because the shutdown is over. Workers are starting to go back to work, children can visit zoos, veterans can go to memorials and tourists can finally see the Statue of Liberty. This is a good thing, right?

There’s no simple answer to that. The House was able to resolve its differences just hours before we reached our absolute money limit — the debt ceiling. If an agreement still had not been reached by Oct. 17, all of the money borrowed by the U.S. government, which comes from citizens’ retirement funds, bonds, etc., would not have been paid back to these loaners, and we would have been completely out of money. The agreement the House used is called a Continuing Resolution (CR), which, funny enough, could have been used shortly before the fiscal budget deadline in order to stop the shutdown from happening. A CR basically buys the government more time in the event that they cannot reach an agreement before the budget is due. It allows them to come up with a short-term agreement to appropriate funds to keep the government running while they continue negotiations in order to reach a finalized appropriations bill.

The emphasis here is on “short-term,” meaning that all of our problems have not been solved, just that Congress is “agreeing to disagree” until the new deadline for the appropriations bill comes up. When is that time? This particular CR has appropriated funds for the government until Jan. 15, meaning that a new budget must be finalized before then or else another shutdown will occur. In the event that a shutdown does occur again, the new debt ceiling will be raised through Feb. 7.

What will the government do? Don’t worry about Congress — they have plenty to do. Seeing as the shutdown is not a minor blemish but a zit on the economic and political history of America, Congress — both Republicans and Democrats — is already hard at work to ensure that the new appropriations bill is ready before Jan. 15.
In regards to the money lost from the shutdown, economists are very concerned. According to Annie Lowrey and Nelson D. Schwartz of The New York Times, “Microeconomic Advisers estimated the impact of about 0.7 percentage points of [Gross Domestic Product] G.D.P. a year, equivalent to over $300 billion in lost output over the last three years.” The United States’ economy, after the recession, was already in disarray, but the shutdown added even more damage to years of “severe budgetary conflict.”

To summarize, we have a temporary fix to a long-term problem, the economy is slowly trying to build up steam but keeps getting derailed and the dissatisfaction of voters is in full swing as election season approaches. Was the healthcare reform really worth the fight for all of this strife?

Many analysts say that it is too soon to tell. Amherst alum of ’79, Ekekiel “Zeke” Emanuel, M.D, Ph.D, is one of the planners behind the Affordable Care Act and believes that the subsidies are fantastic “for an individual making between $15,000 and $20,000.” While he adds that it’s basically like getting health insurance for “eighty percent off”, one has to ask, “What about the people who are making just below $15,000 a year or above $20,000 a year?”

With the exception of those without healthcare insurance, most American citizens are covered through employers or through their own means. According to a New York Times correspondent Reed Abelson, President Obama assures us that people who purchase their own healthcare shouldn’t expect many changes in their policies and that the Affordable Care Act will actually provide a choice for them, if they qualify for “federal subsidies or Medicaid.” However, millions of people who already have insurance have been finding changes in their policies, such as increasing premiums, old plans being discontinued, etc. While the new law is much more generous than many other previous plans in that it takes people with pre-existing conditions into account instead of denying them coverage, it is raising the price of healthcare for many of those who were able to afford it before the reform. Who is the reform supposed to be helping?

The idea behind the Affordable Care Act is that enough healthy people will sign up for the program. By healthy, they mean “young” people like college students or recent graduates who have no insurance and are too old to be covered by their parents’. Having healthy people under the act means that the insurance has to pay smaller fees while still gaining money to afford the sicker and older participants’ conditions.

The problem behind this is that analysts aren’t sure how long it will take for healthy people to sign up. They aren’t sure if the reform will actually work since the fee for not having health insurance is low during the first year of the act, and the people who tend have illnesses are the ones most likely to have signed up for insurance immediately. Only time will tell.

While the government seems a bit bleak right now, we should remember that it is supposed to get better, eventually.