The Washington Post reports that experts agree “A government shutdown would hinder the economy, waste billions of dollars in federal funds and put a scare in the markets.” But most of the talking heads on Fox News’ “business show” Bulls & Bears over the weekend (9/28/13) thought he or she knew better.
Panelist Gary B. Smith made it sound like a government shutdown would be a net plus. Addressing host Brenda Buttner, he said, “I think the lights will go on in a lot of people’s heads because it’s not going to be as catastrophic as the administration, everyone makes it out to be. Guess what Brenda? The military will keep fighting, air traffic controllers will keep directing planes, the post office will keep delivering mail, Social Security checks will go out. When you think about it, Brenda, all the things that we want the government really to do and is mandated to do, those things will continue. Yes, the Dept. of Education will be closed, you might not get to visit … Yellowstone, you might have to wait a couple of weeks for a visa. …Brenda, the last time we had any length closure in the mid-90s about 21 days, guess what GDP did? It rose, and the stock market - flat for those 21 days.”
Buttner joined the happy talk. She said, “There was a little blip down, and then it went up to 7.2% GDP!”
Liberal Bernard Whitman was one of two (out of six) who wasn’t upbeat about a closure. “Gary must be living in some macroeconomic fantasy land,” Whitman said. “The government shuts down for three or four weeks, GDP gets cut in half, growth falls to about 1 ½ %. If the government is closed for a month, we enter a recession for the quarter. It would be a complete disaster. Why? Hundreds of thousands, if not millions of federal government employees, no paycheck. That means no tax revenue, no money to spend, it means active military personnel who are fighting and risking their lives for us will not be paid.”
Tracy Byrnes made faces. “You know, this Freddy Kruger scare tactics is nonsense. This is craziness! …Gary’s right, the last time this happened, the market was flat, and then it went up, as a matter of fact. So it means nothing at the end of the day.”
Jonas Max Ferris was the other voice of dissent. He said, “When they go into shutdown mode, it’s so patently stupid. They lose more money than they’re going to save. …They don’t do simple things like cut 10% out of everyone’s Social Security check which would help balance the budget. They shut down things that are profitable to the economy. …When you give out visas, people come here and spend money. You’re going to turn that off? …What they should do is what makes money to our economy and what doesn’t, let’s keep those going.”
Jon Layfield laughed. “Bernard got his numbers out of the sports page somewhere. …Mark Zandi came out with these numbers. Guys, surprise, surprise! Mark Zandi is pretty much in the administration’s pocket.”
Despite the rosy predictions, the market tumbled today.