Why the Shutdown is Only an Eyewash?

The American government has been embroiled in a bitter battle with the Democrats which has led to a government shutdown for the past 28 days. During this period, the media has been working in overdrive to showcase the supposedly drastic effects that the government shutdown is having on the federal employees and the people of America in general.

However, when facts are considered, the truth that the media is spreading false information becomes obvious. In this article, we will have a look at the facts which explain that the government shutdown is not at all as catastrophic as it is being made out to be.

Why the Federal Government Shutdown is not a Big Deal?

The federal government has been shut down for close to five weeks now. In the business world, when something is shut down, the expenses go down to zero. For instance, if a store is shut down, the expenses involved for the store immediately become close to zero. Hence, people assume that when the government shuts down, the expenses of the government also go down to zero. The media propaganda also supports this notion. Obviously, if the government stopped spending money, the security and well-being of any nation would be in jeopardy.

The facts reveal that the government has not stopped spending all the money. In fact, when the accounts for the shutdown period were released, it became evident, that more money had been spent from government coffers. However, a lot of this money was for debt repayment.

After adjusting for debt repayments and conducting an apples to apples analysis, it turns out that the shutdown has only led to a reduction of about 7% in the Federal budget! Now, to be fair, 7% of the federal budget is still a large number. However, it is not as if the government has just left the nation to the wolves.

Why the Spending hasn’t Reduced Much?

There hasn’t been too much of an impact on spending because a lot of important departments are already protected from the impact of a shutdown. Hence, the Federal Government is bound to spend more than two-thirds of its budget regardless of a shutdown. This is because some departments have been classified as essential. Hence, their funding cannot be stopped under any circumstances. Some of these departments have been mentioned below.

  • Welfare programmes like Social Security and Medicare are guaranteed. Hence, government shutdowns do not have any effect on this spending
  • Military expenditures are also considered to be exempt from government shutdown. This is the reason why the US Military continues to operate unabated regardless of the shutdown
  • Agencies such as the Federal Reserve are self-funded. This means that they do not rely on the government for funds. Hence, as far as they are concerned, it is business as usual. All their employees and bills are getting paid.

Hence, the government shutdown only includes a temporary and small setback. The media may be showing federal employees going broke and hungry. However, the reality is very different. The shutdown only affects a very small proportion of the Federal employees. Hence, only the 7% cut. Also, it needs to be understood that all of this money is eventually going to be paid back to these same employees as “back pay.” Therefore, the reality is that the government is only delaying some payments which shouldn’t lead to the sort of poverty, misery and doomsday scenarios that are being shown in the media.

Why Furloughed Government Employees aren’t Losing Much?

The media has covered stories of federal employees who have had to resort to Gofundme.com funding campaigns in order to make ends meet. However, this is an inaccurate way of sharing information which is meant to wrongly influence public opinions.

The reality, which the media doesn’t portray is the fact that government employees are already highly paid. On average, a government employee is paid 12% more than a private sector employee with the same skill set.

Also, it needs to be understood that the wage difference is the highest at the lower levels. Government employees who only have a high school diploma are paid about 24% more than their private counterparts who have the same skill. This is not considering medical and other benefits which are provided by the government. When the benefits are considered, federal employees earn 75% more as compared to their private counterparts.

Earning more is not a crime, or a reason to not get paid. However, these employees should be better placed than their private counterparts to handle a cash crunch. If they have to create Gofundme pages a few weeks of missing a paycheck, then it has got more to do with personal financial discipline.

Conclusion

Obviously, the shutdown is bad as well as unnecessary. However, it does not threaten to bankrupt employees or crash the economy. The reality is that these effects have been exaggerated by the media. It is a foregone conclusion that the government should end this standoff and start working in the best interests of people. However, it is not causing widespread misery during the shutdown either.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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