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Brief #32—Economic Policy

Policy Summary
As the first week of 2019 comes to a close, the government shutdown shows no immediate signs of doing the same. Officially in its third week, the shutdown has progressed to the point that President Trump has stated that he may “declare a national emergency” if it continues. While government officials have confirmed that he technically has this power, it has also been acknowledged that such a measure would be extreme and would likely lead to further complications, not guaranteeing it would yield the results that Trump has proven he is so desperate for. According to Democratic Rep. Adam Schiff, such a tactic is ultimately faulty, as Trump would be unable to build the wall through national emergency declaration.

Since the shutdown was enacted, Trump has clung to his strategy of blaming the Democratic leaders for all problems that transpired since. Despite the $1.5 billion that was previously allocated for the wall, Trump seems insistent on sticking to his guns on his demand for  $5 million plus. The general consensus among Democratic congressmen and women seems to be that the Wall is unnecessary and a waste of funds. As it stands now, the current state of our government can only be described as a standoff.

Analysis
Meanwhile, things are growing progressively worse for federal workers. According to NPR, the shutdown has affected over 800,000 workers, many of whom are either being forced to work without pay or out of work completely. These workers are spread out among major federal agencies and departments, such as Homeland Security, Urban Development, Housing, Agriculture, and the Department of Treasury, among others. They account for roughly 1/4th of the federal government’s employees.

In the early days of the shutdown, economists indicated that it would likely not be too big of a deal for federal workers, provided it ended quickly. So far, though, the opposite has come to pass and as workers in different federal agencies, such as TSA and the National Park Service, are beginning to express anger at not being paid over a 3 week period. The  affected workers are either working without pay or seeing their work time furloughed, amounting to many hours not being counted toward the country’s GDP. The suspended paychecks of federal workers across the nation are likely to stem further problems for the general economy. Things such as eating out, retail purchases, mortgage payments, doctors’ visits, and traveling are consumer purchases that help make the economy tick.

It doesn’t help that the government shutdown has come at a time when markets have been increasingly turbulent. Major stock indexes, such as NASDAQ, have seen dramatic declines. When combined with   decreased consumer spending (see above), we are presented with a recipe for dramatic declines in investor confidence. This, in turn, can lead to a downward trend in 2019 first quarter economic growth. It was estimated that economic growth would be slow before the shutdown but now things may be worse.

Resistance Resources:

This Brief was submitted by USRESIST NEWS Economic Po0licy Analyst Samuel.O. Brient:  contact Sam@usresistnews.org

Photo by Andy Feliciotti

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