Keep the shutdown and balance the budget
Bottom Line: The partial government shutdown presents us with a teachable moment about our federal government but that’s not all. It’s also an opportunity to balance the budget. Last year the federal government spent just over $4 trillion while running a deficit of $779 billion. That comes out to about 19% more spending than revenue. Right now, the federal debt is $21.5 trillion and rising. We’re spending more than $360 billion annually (or about half of the deficit) on just interest payments alone. With interest rates rising and higher deficits that number is only heading higher – at least if nothing changes.
During the partial government shutdown about a quarter of the federal government isn’t operational. That amounts to just over $1 trillion in potential savings during the year if it stayed in place, or to put it another way, we’d have an estimated budget surplus of greater than $200 billion annually if the shutdown didn’t end. Yes, some would argue that the US economy would be impacted by the partial shutdown, and there’s some truth to that but even if the US economy stalled – going from 3%+ growth to flat growth the numbers would still work. In other words, it’s pretty much a given that it’d work to solve the deficit.
It’s far from an ideal way to be fiscally responsible but given the lack of political will to act responsibly and the ticking time bomb growing that’ll eventually lead to dramatic changes cuts to Social Security, Medicare and other programs – if nothing changes – the ends could more than arguably justify the means.