A Libertarian Dream Come True
Libertarians dream of smaller government, less regulation of economic activity, less intrusion by the federal government into our personal lives, lower taxes, less government spending, a balanced budget, and a narrowing of the federal government's role and functions to those activities contemplated by the framers and for which national government is logically suited (i.e., foreign relations and national defense; the White House, the Congress and the Supreme Court; collecting taxes; regulating the financial markets and enforcing the federal securities laws; and preserving and administering federal land). The federal shutdown has achieved most of these Libertarian objectives without a ballot being cast or a shot being fired.
The Obama Administration has helpfully distinguished "essential" Federal government personnel from "nonessential" Federal government personnel. If the nonessential government personnel are nonessential, then they are by definition not needed -- so why are they federal government personnel at all? Most of them should be fired. The cost savings would be enormous and would help balance the discretionary spending component of the federal budget in years to come (albeit with a transitory increase in unemployment insurance payments). Senators and representatives wishing to reduce government spending should use their Appropriations Committees to reduce the budgets of agencies to obligate those agencies to fire all of the personnel the Obama Administration itself declared to be "nonessential." The resulting savings have been estimated to be about 13% of the federal budget -- a nice start!
To the benefit side of the federal government shutdown ledger we also must add the incalculable spur to economic growth, business activity, and entrepreneurship sparked by the relaxation of, or the nonenforcement of, thousands of regulations of unproven efficacy by dozens of Federal agencies and departments. Businesses can focus on making products and services, rather than complying with new red tape.
The ever-taxing, ever-spending, ever-growing leviathan federal government has taken a federal holiday it did not want. America can only be the better for it. May the "nonessential" components of the Federal government never reopen!
If the debt ceiling is not raised, then the federal government, like every individual, family, and business in America, suddenly, but wonderfully, will be limited to paying out only what it receives in tax revenues. The Democrat Party's business model of inexorably increasing federal spending to addict ever more Americans to social welfare and entitlement programs in return for votes for Democrat politicians would seize up.
The Obama Administration would have to decide rapidly which bills really need to be paid and which do not. Default could be avoided by prioritizing payments to interest on Treasury securities. The budget of the federal government would suddenly and forcibly be balanced more swiftly, and government spending slashed more deeply, than could ever be achieved legislatively. Another bloodless Libertarian victory!
Republicans, sadly, often are happy to tax and spend almost as giddily as are Democrats. The federal government shutdown and successful resistance to increasing the debt limit, together, would force both Democrats and Republicans to focus seriously on entitlement program reform and on out-of-control federal government spending, which someday, if not arrested, will cause an unavoidable Treasury securities default and trigger a financial crisis more severe than the crash of 2008.
Ron Resnick is a co-founder of CounselWorks, which provides strategic business advice and regulatory and compliance consulting services to hedge funds. He can be contacted at: Ron Resnick at email@example.com