Speaker 1: And we are back with another edition of the Federalist
Radio Hour. I'm Matt Kittles, senior Elections correspondent at the Federalist,
and your experienced Shirpa on today's quest for knowledge. As always,
you can email the show at radio at the Federalist
dot com, follow us on ext FDR LST, make sure
to subscribe wherever you download your podcast, and of course
to the premium version of our website as well. Our
guest today is Vironique de Rougie, George Gibbs, Chair in
Political Economy and senior research fellow with the Mercada Center.
Our topic today, yes, the shutdown staredown is on shut
down politics and the ultimate loser in this latest dysfunctional
government saga, the taxpayer. Of course, always the taxpayer. Vernique,
thank you so much for joining us on this edition
of the Federalist Radio Hour.
Speaker 2: Thank you for having me.
Speaker 1: Absolutely as we talk this afternoon, the government is still
shut down in what day number two of the usual
round of madness that's subject to change at any time,
and so therefore I really want to talk about the
mechanics behind all of this, what these two sides seem
to be fighting for. What is on the line ultimately
for Americans and for the American taxpayer specifically. But let
us begin with how did we get here.
Speaker 2: It's a good question. I think we got here many
years ago. I think when Congress lost the muscle fairly
quickly actually to pass the budget and appropriate appropriation bills
on time do their job. Basically, they just fairly in
the last fifty years that the budget roles were passed,
they've only passed the budget four times following the regular order.
Speaker 1: In fifty years. That is ridiculously amazing.
Speaker 2: Yes, there, but I will say that the last twenty
have been like the worst because not only and what
used to be just kind of slide kind of going
over time to pass all the appropriations bill or whatever
like turn into it to just basically something ridiculous. Like
during the last bread the last term President Biden term,
they had to pass thirteen continuing resolution because they were
just absolutely not on time. Continuing resolution is one of
the things that are in dispute right now. So they're
basically they're a bill that passes the House and the
Senate and goes onto the President's desk to extend the
spending numbers from a given year to the next in
order to give more time to Congress to pass the
new year's budget numbers. Basically, So to give you a
concrete example, right now they're working on the budget twenty
twenty six. They're only passed on a bipartisan basis. Three
of the twelve appropriation bill. The fiscal year ended on
October first or September thirtieth, And what the House of
Representative passed with only one Democrat is a clear continuing reserlation,
continuing resolution bill that would extend the twenty twenty five
funding into all the way to November twenty twenty six.
And so it's the same level that we've been on.
There's no addition, there's no cut. It's just the same
level as the one basically they agreed to in March
and in December twenty twenty four. Basically, and right now
the Democrats in the Senate said they weren't going to
agree to that, and so the government shut down.
Speaker 1: And what they are seeking, that is to say, in
this case, the Republicans, what they are seeking is the
continuation of the status quo at least through election year,
the mid terms twenty twenty six. Correct, Well, I.
Speaker 2: Think what the Republicans say they are seeking is time
to finish the appropriations process, times to pass the other
eight bills that they need to pass in order to
basically follow the rule to passing the twenty twenty six budget.
And so they weren't. They're not saying we're going to
continue the spending level of twenty twenty five all the
way through twenty twenty six. They're just saying, give us
an extra what is it, six weeks in order to
basically have time to work on what we need to
work on. And the Democrats said no. The Democrat in
the House with the exception of one, and the Democrat
and the Senate with the exception of three said no.
And the reason why they said no is that they
want to use this moment as leverage to get things
that Republicans don't want to give them and those like
the I mean, just to kind of summarize a little
bit what they want. They want their tax credits Obamacare
tax credit that were extended during the pandemic. Well, actually
we really wasn't during the pandemic, because it was it
was in twenty twenty one. They expire at the end
of this year, and they want them to be made permanent.
So they want emergency spending, tax credit, tax credit, emergency
tax credit extensions to be made permanent even during time
of non emergency. And the second big category of things
that they want is that the reforms and spending cuts
that were made to pay for the tax reduction or
the tax reform and the one big beautiful bill be
a raise that we went back to spending like we
were before, especially on medicaid spend.
Speaker 1: Yes, spending is the operative term here. What is it
north of a trillion dollars of new spending to a
budget that is burdened by a deficit that is quickly
approaching thirty seven trillion dollars. I mean, this is untenable.
But then when you think about it, what they are
fighting for, the Democrats in this case, all of this spending,
as you note, that was meant for an emergency situation.
And we can argue about how much of an emergency
it was to put more debt on the backs of
our children grandchildren during that time period, but that's what
it was sold as, and that emergency is long over,
and yet they want to continue to spend this money.
And no matter what they say is we have reported
at the Federals don't want to get your take on this.
Some of this money would indeed go to illegal immigrants.
Democrats like to say, no, that's not the case. They
say that because the Biden administration changed the definition of
what probation really is in all of these cases, and
so we have millions of people on probation that wouldn't
have been allowed here before and they are, by any
Americans estimates, still in a legal immigrant and still benefiting
from American taxpayer dollars.
Speaker 2: Yeah, that's one thing. And the other thing is that
they remove the cap, for instance, for the emergency expansion
of the text credits, so a lot of this money
goes to a household that have very high income and
that's just not right. So it's just like, there's no
reason for taxpayers to be subsidizing people who make let's say,
as a family, you know, over two hundred thousand dollars
a year, and yet this is what's going on right
now that was going to expire at the end of
the year, and the Democrats are shutting down the government
because they would like this subsidy for high income taxpayers
but also illegal immigrants to continue.
Speaker 1: So how's it working out for them this time around.
Speaker 2: Well, the politics. The politics is hard for me to know.
But the thing is, what we know from the past
is like, it doesn't matter. It doesn't matter. When the
Republicans showed the government and was it ninety six under Gingridge,
it was extremely unpopular by all accounts, but they ended
up being re elected and doing great, you know, and
so it was like, it's not it's it's unclear that
even if one party comes out ahead in the short term,
and often it is the Democrat, this time around, I'm
not sure, but it won't matter in the end. It
just won't matter.
Speaker 1: Yeah, the polling so far, so far, and this is
early into it shows that the vast majority of Americans
are blaming Democrats because this is really their shutdown. Republicans
have certainly been on that front before, but this this
was their their line in the sand. But I guess
the issue is no doubt.
Speaker 2: There's no doubt that this is a Democrat. The Democrats
are responsible for this shutdown. A lot of what they
asked for has nothing to do with the twenty twenty
the twenty twenty six budget, the tax credits we're only
going to expire at the end of the year, so
there's no reason to do it right now. We don't
have the money anyway. It's really kind of shocking when
you think about the fact that they want to stop
paying for the tax cuts. I mean, so basically we
should be saying, you know that the Democrats are for
tax cuts, you know, tax cuts without paying for them.
I guess it's this is their shutdown. And I saw
pulling on the day of so before it happened. That
showed very clearly that the American people were against the shutdown.
They didn't want to see the shutdown happen. And and
this is with all you know, the media messaging as
if it was the fault of the Republicans. So yeah,
I wouldn't be surprised if Democrats like came out of
this even more hurt than they were coming in. But
no matter what happens, it's it's always short lived, you know,
so at the very least in the past, no big
political victory has ever happened thanks to you know, like
someone who was against the shut the party was against
the shutdown, and nothing really bad has ever happened to
those who were for the shutdown.
Speaker 1: I guess, yeah, I think You're absolutely right. Time and
time again, election after election we learned the same thing.
But the shutdown politics doesn't make a net winner out
of either party because the American voter has divided. As
the American voter is continues to put in Congress people
who have abdicated their jobs over and over and over again.
But here is the issue. Each American, of course, has
a different idea of what the job of Congress is
to do. It seems to me the left in this
country believes and supports the idea that the job of
Congress is to continually fill this insatiable appetite for spending.
And that's that's really ultimately what will happen here. Because
I want to ask you about what the status quo means,
because it's still the Biden administration status quo. It's still
an ungodly amount of spending going forward just for this
continuing resolution.
Speaker 2: I don't you know, can I can I tell you
the thing that frustrates me the most, absolutely mess. I
think we're reading too much into this. We're all reading
way too much into this. The Democrats are in a
bad position because they are stock between a situation where
they know their base really want them to do really,
you know, retaliate against Republicans, but they really have no
means to do it. And this is why we're in
this mess. It means nothing more than this. In the end,
I think nothing.
Speaker 1: I agree with you, Yeah, yeah.
Speaker 2: I think. And nothing good is going to come out
of this. And what frustrates me the most right is
that actually both sides are pretty fiscally irresponsible. I mean
not just right now, but it's been over time and
this isn't going to solve nothing.
Speaker 1: Yeah it is. It is a useless exercise.
Speaker 2: It's a total useless exercise. And you know, I've learned,
I've learned their hard way because I remember in twenty
thirteen during the Obama Care debate, you know, I saw
some value and actually the Ted Cus shut down. I thought,
you know what, you want to fight for your principles?
What are you going to do? This is a really
bad this is a very bad precedent that this country
is setting with this Obamacare reform blah blah blah. And
I thought, you know, you have to show your principle
if you're a member of Congress. Nothing good came out
of it, Nothing good came out of it, and so
I'm kind of like, now I've learned over the years,
like do you remember, do you even remember? I didn't
even remember that there was a shutdown doing the first
Trump administration of DACA.
Speaker 1: I did two.
Speaker 2: Yeah, I just didn't remember. And even after people told
me the debate some details, I was like, literally, I
have zero recollection of this. I think it's kind of
become just much for common But also it gets you nothing.
Speaker 1: Ever, and yeah, politically speaking, it gets you nothing. Ever,
so why do we continue to do this?
Speaker 2: Economically it gives you nothing. This is not going to
shrink the government, shrink the size of the government. This
is not this is not going to this is not
going to address any of the of the of the
really the dead problems that we have. Uh, it could
make the inflation worse because you know, adding if the
Republican's cave basically what it's doing, it's adding to future
deficits without you know, promising to pay for them ever. Ever,
and you know, if I'm an investor and I'm already
nervous about the trajectory of the fiscal situation in the US,
this only adds to it, right And when so, I mean,
it's not it's there's no there's no upside for anyone.
And and obviously the Democrats would love for the for
the government to to to grow and and and to
be for more spending to happen, but it's not gonna.
It's not gonna, it's not gonna. It's not gonna help
them ultimately with the fact that they have no ideas,
they have no new ideas, They're totally disoriented right now,
and they're, you know, they're their base is demanding that
they took actions like this to to to to show,
you know, the Republicans that they're like basically they're doing
this to show their base that they're doing something, but
they know it's getting them nowhere, and so it's very,
very frustrating.
Speaker 3: A labor force participation disaster. The watched Out on Wall
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Speaker 1: Yeah, it's frustrating, indeed, and it's particularly frustrating for the
average American who shows up for work every day and
it seems like the people they elect refusing to do
their jobs. Now, you talk about the disorientation. Everybody's disoriented
when it comes to these sorts of things. Even though
we've been over and over these we've seen shut down
after shutdown over the last forty years in this country.
So all of that said, what signals does this send,
the shutdown, this later shutdown send to the markets, to
our debt holders, to other countries. To me, it seems
to suggest that this is a country that can't simply
can't get its fiscal house in order, can't get its
act together.
Speaker 2: Well, so I think it is sending a message that
no one is really responsible. I mean, I think in
this on the shutdown story that the Republicans clearly are
more responsible than the Democrats. They they did their home,
they did their work, they passed, They passed a continuing
resolution in order to be able to go through the
process of finishing, possibly in a bipartisan way, the budget
for twenty twenty six. And there, I guess to the
extent if you're if you and the Republicans are, and
the Democrats are sending the message to investors that they're
not that there's no amount of spending that they that
there's no limit to the amount of spending that they
want without ever having to pay for it. But I
will say that the problem is that the CR maybe
the existence of a CR again, right, even if it
weren't even if it weren't ending in a shutdown.
Speaker 4: Would still mean basically that no one is really actually
willing to do the hard work of reforming entitlement reform
to raise you know, primary deficit primary surpluses.
Speaker 2: I mean, like like, if you look this year alone,
this fiscal year under the Republicans, uh, we and and
and the Democrats, I guess we increase the debt by
two trillion dollars. We are in time of peace. The
economy is booming, the stock market is booming. Uh, inflation
is you know not, I mean, there's still problems with
inflation and and and now it's going back up a
little bit. But for the most part doing this year
where the debt was going up, inflation was more or
less in control. Uh and and and yet we're piling
on debt, piling on debt, and piling on debt, and
and all their willing to do, it seems, is to
actually pass a cr that keeps suspending at the same level.
No one is serious about talking about reforming the drivers
of our debt. No one is serious. I mean, I
know the Republicans try very hard to message on the
fact that they're bringing in a ton of revenue with
with with tariffs and even ignoring the distorative nature of
tariffs and the fact that Americans are paying tariffs. I mean,
it's it's a drop of water in the size of
the debt we have, you know. So I think the
I think if I were an investor, I would I
would kind of start wondering, like, when when is it
going to become risky to land to land to to
the US government? Obviously, the US government is a safe
for bed than most other governments, right because other countries
are in a much worse situation, or they're actually just
like really just dangerous place to invest. But still it's
just not good. The fact that you're not the ugliest
at the beauty pageant doesn't mean you're pretty. And I
think this is becoming probably obvious to a lot of investors.
Speaker 1: And there's a lot of ugliness in this government for sure.
Our guest today is very Nique de Rougie, George Gibbs,
Chair in Political Economy and Senior research fellow with the
Mercadis Center. Topic of course is the shut down stare
down shut down politics, and as we've been talking about,
shut down politics basically are useless and do nothing for
you the tax payer. But maybe I think there's hope,
at least from the political parties that something big happened
this time around. What we are seeing are some threats about,
you know, cutting more government jobs in all of this,
and the Trump administration has been trying to do that right,
sizing this big, bloated government. Will that have any impact
on Democrats that you know, their constituency in part certainly
as the government employees.
Speaker 2: So I thought that the threat by Omb to say,
if you shut down the government, we're going to use
this as as you know, as an opportunity to fire
a lot of work. And let's be honest, most of
these programs that are shut down, right are programs that
the Democrats like, usually not Republicans so much. So it's
it's really it's really hurting the Democrats most. The other
thing is, like most federal employees our Democratic base, so
they're the one who are either working without pay or
not working at all and not being paid. So but
I thought that this threat would actually carry more water.
But in my opinion, it tells you how scared. Basically
a lot of the Democrats are out there extreme base.
But I fear that if the Trump administration goes ahead
was doing this, they're going to get a lot of
the blame. But again, even if they get a lot
of the blame in the short term, is it going
to make a long term political impact. I don't know,
but it is very true that this is this is
an instance where the Trump administration could go ahead and
use this moment to do basically what they wanted to
do all along, and that it seemed that they have
the legal authority to do. Whether it's wise or not
to do it the way they want to do it,
I don't know, but.
Speaker 1: I think it's long past time, of course, and they've
been trying to deal with this, this massive, bloated government
bureaucracy for the entirety of Trump two point zero. So
far they've gotten challenged in all kinds of courts because
of this. The fight continues, but as you say, this
is an opportunity to really cut into the leviathan that
is our federal bureaucracy. Ultimately, who blinks? Do you think
based on the early days of this shutdown.
Speaker 2: I don't know so usually, like I think the last
time there was a shutdown for thirty over thirty days,
right so to pay period. I think that's the maximum
it would go on because people who won't be paid,
they may be able to kind of swing in for
you know, one pay period, but two is becoming harder,
and then three obviously, so the political pressure that exists
already will just be really, really, really intense as we
go on. My fear is that there are a lot
of Republicans who want to extend the Obamacare COVID tax credits,
and that they will put a lot of pressure on
their colleagues to cave on this is this is my fear.
But so I don't think it's going to go much
longer than to pay period. But what do I know,
I don't know, but it's seems it seems that it
would be hard to do much much longer. And it
could be that the Democrats are because are going to
get a lot of pressure because a lot of these workers,
you know, are are going to put pressure on their
Democratic members. But it's also a possibility that Republicans that
are really not good on these Obamacare tax credits are
going to uh are going to are going to get
a cave and put pressure on their colleagues to cave
on this. So it's hard to tell.
Speaker 1: How do you negotiate with a party with people who
hate the President of the United States so much that
they will do anything to try to, you know, at
least give the perception that the as the United States
has lost a battle, and quite frankly, a party that
has lost so many battles over the last few years
in this country because of you know, where they stand,
And how do you negotiate with members of that party,
extreme members of that party that celebrate political assassination. This
is a very very hostile time in America for so
many reasons.
Speaker 2: Yeah, so I don't know, but I think that the
tensions that you are talking about at the scale of
the country maybe strangely less vivid at the scale of Congress.
Not that the Democrats like President Trump any better, or
like their Republican colleagues or counterpart any better, but I
do think that Democrats are not less immune to their
voters pressures when they're the ones suffering from the shutdown.
So I think kind of ultimately it's going to come
down to how much pressure these guys are getting to
either hold firm or cave, and you know, it's going
to be interesting to see how it unfolds. I think
that President Trump seems to have very signal that he's
not going to cave. It looks like the Republicans, at
least a big chunk of them, are really outraged at
the idea of having to cave and give Democrats something
that they find is unacceptable. But again, you know, who
knows how much of their voters are going to put
pressure on them for them to do things that they
don't believe in. I don't know.
Speaker 1: Yeah, well, we've seen so many shutdowns over the years,
and you mentioned it before. I think you're like a
lot of Americans yours truly. I do remember the twenty
nineteen shutdown, but there have been a lot of shutdowns
over the last twenty plus years in this country, and
I don't certainly remember every one of them, but I
remember thinking throughout those, and I remember reporting throughout those
how much does this really impact the delivery of government services?
Because when we say shut down, there's a misnomer. There
a lot of a lot of government services continue to
go on. What is the actual impact of a government shutdown?
Speaker 2: So? Well, the impact is for really the federal workers, right,
I mean they're all the ones who have to go
to work, and they're a significant amount of number, like
people that m be some people at the I r S,
the air traffic controllers have to go to work, t
S A agent, the military, all of these have to
go to work. But they're going to work without being paid, right.
They are essentral workers, right, So they're they're going to work.
And then all the ones who are are being furloughed
and so basically are not are.
Speaker 5: Not getting getting paid, uh and and they're not working
and in this case they may actually face the risk
of losing their jobs.
Speaker 2: Right. There are lots of like the like the like.
For for the American people who are not public employees, uh,
they will, they will, you get there will be fewer
people to answer their calls at the I R s.
There be their museums are closed, public public, public parks
and things like this are closed. But after a while,
even with essential workers like air traffic controllers and border
enforcement and things like this, we may start seeing impact,
you know, relatively rapidly, in part because people don't like
working without pay sure, and so I think in the past, Uh,
it took, it took a little while, but it happened
that you know, even though these guys are supposed to
go to work, they end up saying, you know what,
I'm sick or I can't go to work for whatever reason.
And then and then you see it.
Speaker 1: Have we learned over time and has it been somewhat
frightening to the entranched bureaucrats that during government shutdowns, now
there are things that that hurt, slowed down, whatever, But
we learn at least at some level that we don't
need this big of a federal bureaucracy. Does that Does
that message ever seep through to anybody?
Speaker 2: I don't think so. I really don't think so, Okay,
I don't think so and and and one of the
reasons is because it's not clear, right, there's no incentives
within government to be more productive. There's no incentives to
do more with less, right, there's only incentives to add
more workers because like the text payers, you know, they're
not at the negotiation table, so so this and so,
they're not a lot of these agencies are not. They're
not working, they're not. They're not sending the checks where
they need to be sent, they're not. But I don't
don't I don't think that there's any like we would
have we would have seen it, considering how many government
shutdowns we've had, you know, in the last fifty years.
I think the only time where we didn't have a
government shutdown was during the first Bush administration. I think
the father like the one right after a President Reagan
and then under President Biden. So I think these were
the only two. And yet it's not as if we've
seen anyone say, you know, the lesson learned is that actually,
you know, we can do so much more with fewer people.
That's not that's these are not the incentives that exist
in the private sector in the public sector. They're only
incentives that exist in the public in a private sector, Yeah.
Speaker 1: No, I know, I think it is still true. We
could still get by without without this massive, you know,
workforce that we see in the federal government. But we've
seen as you mentioned, you know, the Biden administration, the
first Bush George H. W. Bush during his administration, no shutdowns,
but still in those and I can speak clearly for
the previous four years, constant battles, constant brinksmanship, you know,
the showdown political theater that constantly goes on even if
there isn't a showdown. Does that does that ultimately cost
America in different areas for all of this showdown politics?
Speaker 2: Yeah, so what I've read, Well, so I think this
could trit this. This is one of the problems with
the moments, Like the moment is more you get more
points for being a creator of chaos than for being
someone who actually delivers good government service services, and and
so I think that's that's the problem. So and this again,
remember I think that this government, this particular government shut
down is a product of the fact that Democratic voters
really want their members to stick it up to the
Republicans do something anything, that's something, so let's do it right.
It's not, it's not it's it's not meant to even be,
you know, super productive. It's meant most more to be
to cause chaos, because these guys really want chaos, even
though I know most of these members probably know that
this is totally pointless.
Speaker 1: So what do they do aultimately? Because that continues to
be a growing problem for the Democratic Party.
Speaker 2: I agree, but I don't know. I don't know how
you get out of this, right, it's I think you
get out of this by So it's kind of interesting
about three Democrats in the Senate voted alongside Republicans. I
wonder how much time it will take to get I
guess we need their fifty three in the Senate, so
it was fifty six, you need sixty, right, so they
need to pill another four Democrats. I think my Calcolici
is correct, but it's around there. So I don't know
how how you get those people to break ranks with
their colleagues. I don't know. But what I've read is
that actually, unfortunately for taxpayers and for future generations, shutdowns
cost more than not shutting down, So because you have
to catch up, I don't know if they pay interest.
Speaker 1: They do.
Speaker 2: Yeah, So it's basically this is adding to the debt.
This is adding to the debt. The act of shutdown
itself is adding to the debt. And that's just, you know,
that's really unfair.
Speaker 1: It is unfair. As I said at the outset of
our conversation, the people who ultimately get screwed to the taxpayers,
the people who are actually paying taxes. And let's face it,
what the Democrats are arguing for where a lot of
people who don't pay taxes, including some people who are
here illegally, who are not US citizens. And that is
a battle that is being fought right now. Final closing
question for you, how do Republicans get through the message
that this shutdown is really on the Democrats when you
have a corporate media that is sending the exact opposite
message over and over again.
Speaker 2: I think I think they're doing the right thing. I
see a lot of members doing videos on Instagram and
talking to their constituents and explaining they need to explain
what the COVID expending expended tax credits do and and
tell them this is just really unfair. We're not in
an emergency. We're not We're not anymore in the pandemic,
these are subsidizing, These are subsidizing high income tax payers.
There there and explaining, and I see them actually do
a very good job at this. I think. I think
it's it's a hard it's a hard thing to do,
and I worry that the hardest part of their job
is to convince their their their colleagues, their Republicans colleagues,
not to cave, not to cave on on the COVID subsidies,
the Obamacare subsidies, and on Medicare, Medicaid for for on
the on the Medicaid reforms. Uh So, it's like they
have they have a lot of work to do, but
I think they're doing a pretty good job.
Speaker 1: Well, if it's any consolation, Americans can have faith in
the knowledge that all of this is really ultimately for nothing.
It's just useless, useless politics, over and over again. Eventually,
something's going to have to give. Thanks to my guest today,
ver Anique de Rougie, George Gibbs, Chair in Political Economy
and Senior research fellow with the Mercada Center, you've been
listening to another edition of the Federalist Radio Hour. I'm
Matt Kittle's Senior Elections correspondent at the Federalist. We'll be
back soon with more. Until then, stay lovers of freedom
and anxious for the fray.
Speaker 2: I heard the fame, voice, the reason, and then it
faded away.