First, not sure this guarantees a lack of a shutdown at all. The R’s have shutdown the government before, and they always had a Speaker at those times. Only by working with the D’s and therefore making the crazies irrelevant will this work. Color me skeptical, but let’s hope.
I was hoping to get some actual economic discussion, so let me put out some thoughts.
The new Speaker is a member of the far right wing of the GOP. That wing doesn’t seem to want to do anything, they only want to oppose things.
So my thought is that dealing with the budget isn’t going to go very well. It requires bipartisan negotiation and a willingness to accept less than perfection in order to make progress toward a goal. But with no goals, there is nothing to progress toward. So there is no negotiation, just opposition to whatever is proposed.
My prediction is that there will be a shutdown - likely an extended one. The tricky part is how that will affect markets. That’s where my knowledge falls short. Logically, a shutdown should be bad for the economy and therefore, the stock market. But this isn’t strictly logic - there’s an emotional component as well.
The Speaker controls what comes to the floor for a vote.
All sorts of things would be amended to necessary legislation: national abortion ban, national ban on gay marriage, national ban on any sort of gay rights, extreme national requirements to vote, complete repeal of the Civil Rights Act, complete repeal of the Voting Rights Act.
As offered before, when a coalition rules by a thin majority, the most extreme faction in that coalition dictates policy, and necessary legislation can be held hostage in pursuit of the the most extreme policy.
Doing so with the opposition party’s help cost the last guy his job. Because of the bomb-throwing caucus on the far right, it is impossible to do it any other way. The BTC wants no spending, abortion control, and a repudiation of the 2020 election. That, I think, augurs for more dysfunction.
I have already moved us into mostly cash, including a CD ladder from 1-5 years, stacked mostly shorter, and MM funds as are paying over 5% anyway, modestly beating inflation (or at least inflation as experience by our household.)
That is easy to do with costless transactions in IRAs, and in non-tax advantaged accounts I have kept a few things as we still have with massive gains (BRK and COST from the 90’s, for example) and have the rest in cash or equivalents.
When the shutdown comes it may affect the market not-at-all, or a little, or a lot. I don’t care, I’m content to rest easy for a while while the idiots (IDIOTS!) do their best to wreck the economy.
What a sad state of affairs, but there you have it.
Yes. But there’s one more area - budget issues. This extreme faction has some ideas about the budget - mainly less spending.
But anything that passes the House has to go to the Senate. To get past the Senate, there must be negotiation. I don’t see negotiation and compromise as a tool this extreme faction is willing to use. The last Speaker used negotiation and compromise to keep from shutting down the government, and that cost him his job as Speaker.
So I still see a shutdown in three weeks. A shutdown is the only way this faction can get the Senate to agree to some of their extreme ideas. Shutting down the House is how they got the Speakership. They will use the same tool to get the Senate to agree to their demands. A shutdown actually accomplishes their fiscal goal - for the government to spend less.
It then becomes a waiting game. Who will cave first? The Senate, in order to have a functioning government? The extreme faction, when their financial backers start feeling financial pain from the lack of a functioning government?
Or, which minority will be thrown under the bus, to keep the government clanking along, until the next “must pass” piece of legislation comes up?
The new speaker has talked, publicly, repeatedly, about a national abortion ban, and abridged gay rights. He can pack the ways and means committee with like minded people, and guarantee a budget bill does not come to the floor without an abortion ban, or a gay rights ban.
Of course he can. But he can’t make the Senate agree to that bill. The most he can do is allow the shutdown to happen and to let pressures start building on the various constituencies, waiting to see which one caves first. And knowing that the “lower budget” constituency is perfectly happy with a shutdown as it accomplishes their desired goal.
Hence - yet again - my prediction of a prolonged shutdown.
The party getting the public blame for the shutdown will cave first. If it hurts enough people long enough public sentiment–and the upcoming elections–will make sure of that point (over and over and over again). Biden will be able to cite the strong economy before the shutdown and then compare it to after the shutdown. It will not be pretty for the losing party.
As you noted, the sitting President will blame the opposition party. But the opposition party will blame the President’s party for failing to accept their plan in the Senate.
Then the greens will blame the reds, and the yellows will blame the blues, the purples will blame the magentas, and so on in an endless and pointless blame game.
So you can’t really say one party will get the public blame. Every party and every faction will be subject to some form of public blame. And only the “burn it to the ground” group will be getting what they want - it all burning to the ground.
I don’t think this is going to end quickly or very well.
You may well be right, on both counts. I remember when some nutty stuff was coming out of the House in the 90s. The POTUS stood his ground, and we actually had “fiscal responsibility”, that was also rational, for a few years. But folks are orders of magnitude nuttier now.
A number of years ago, I caught a conference by the Concord Coalition on C-Span. One of the panelists talked about a conversation he had with one of the “starve the beast” advocates. He summarized what the “STB” had just told him, as best I can remember “so your plan is to do nothing, until there is a financial crisis, then tell all these retirees, many of whom have no other financial assets ‘sorry, we can’t do it anymore’, and you don’t think there will be serious economic, social, and moral, consequences?”
The new speaker has also spoken at length, without details of a solution, about the “problem” of SS and Medicare.
I proposed my template for an extremist “solution” to SS and Medicare: impose a work requirement on able bodied people over 65, so they can’t be on Medicare unless they are working some minimum number of hour per week. And make SS effectively disability only, no old age pension, for the able bodied, so, unless they are so wealthy they can live well without SS, they have to work for sustenance, regardless of age, until they are so broken up and feeble, the “JCs” can’t make money off them anymore.
The “JCs” dont need you or me to fix the things they mess up, like the several once prominent USian corporations that have been run into the ground by their own management. They have the government to tax us, to provide for them.
Let me add a key power being overlooked: Congresscritters usually want to be reelected if possible, and recent elections and polls show that post SCOTUS Roe decision highly motivated voters are extremely likely to go to the polls to vote against any politician who opposes abortion in the first trimester at a level that appears to overcome anti-abortion voters even in red states. This shatters the voting patterns of the last 40 years.
Related to that key fact is the historic fact that we usually have two parties:
the Democratic Party that seems relatively immortal but consists primarily of an extremely flexible durable coalition of locally based powers and
a reorganized every 30-50 years counterpoise Party
(Federalist, Whig, Lincoln Republican, Hayes Republican, TeddyRoosevelt Republican, Harding Republican, Reagan Republican)
that shatters and shifts on tough issues (national monetary policy, slavery, reconstruction, corporate power, 1960s-70s dispensation) usually setting new national debates and agendas.
Looks like we are ready for one of those big 30-50 year turnovers that historically almost no one can imagine until it happens.
I hope we make it through to November 5 2024 and January 20 2024 without insurrection or too much blood, and at that point I expect we will have a shattered GOP.