The ‘non-essential’ parts of government that shut down are actually quite essential

October 6, 2013

There’s a saying that “the federal government is basically an insurance company with an army.” And during the ongoing federal government shutdown, these basic functions are mostly still operating.


There's a lot more at stake than just parks (The Washington Post)

The people with guns and a claim to the state’s monopoly on violence show up to defend property arrangements at home and the national interests abroad. And, due to the way they are funded, the marquee social insurance programs, Social Security and Medicare, are still running.

So what is actually shut down? And how would we describe what functions are currently not being carried out?

It's hard to understand what the “non-essential state” actually is from current press coverage. The stories dominating the headlines are about national park closings and zoo cameras going offline, giving the sense that the "non-essential" parts of government are simply about facilitating leisure and vacations. And, like looking into the wrong end of a telescope, the stories of individual people and programs put on furlough doesn’t communicate to the public what kind of overall functions are being abandoned by the state during the shutdown.

So what kind of state has been shut down?

The state that regulates the economy

It’s impossible to imagine the economy without the state. The state’s role in the economy is massive, ranging from knowledge to rules to coordination to efficiency to determining the nature of property rights to checking market failures. But there are two modern trends that especially require a federal government to play an important role in the economy.

The first is the discovery and understanding of the business cycle during the Great Depression. As Timothy Shenk noted in the recent issue of Dissent, before the Great Depression, the word economy “was typically used as a synonym for efficiency—think of economy-class travel today. People rarely talked about the economy, and those who did generally used it as a synonym for the much more prominent concept ‘society.’ Within just a few decades, however, the economy had emerged as the central object of domestic politics.”

One reason is because policymakers started tracking national economic trends through measurements. Understanding that the economy is a connected thing, and that it can be functioning at high and low levels, was a great achievement of 20th-century economics. However it can only work if we are actively measuring it and responding with appropriate policy to ensure full employment and price stability.

As Bill McBride notes, in “the early stages of the [Great] Depression, policymakers were flying blind. But at least they recognized the need for better data, and took action….the House is depriving us of data, and right now we are flying blind.” There was no jobs report on Friday, and if the shutdown continues we could see no surveys conducted to generate the job numbers for next month’s report. As the Wall Street Journal reports, “[k]ey figures on international trade, inflation and retail sales will be postponed next week if the shutdown persists.”

The other related, important change that requires a federal presence is the move from markets based in local, “embedded” spaces, like small towns, to a national and global marketplace, where the ability to verify and coordinate requires a state presence.

These functions are not happening. To give an example, the government acts as a broker and verifier of income for mortgages. This coordination of information is not functioning, and an ongoing shutdown will delay new home mortgages in a very fragile market.

The government also provides public price data on a wide variety of commodities, facilitating trade across many people. As the Financial Times reported, with the U.S. Department of Agriculture down information on pig prices has disappeared, throwing the market into chaos.

As they note, “[t]he situation underscores the commodity trade’s reliance on the U.S. government for supply, demand and other fundamental data.” It also has implications for fairness, as the shutdown’s price opacity “may also empower meatpackers as they deal with farmers.” (Or in other words, the shutdown means you are getting ripped off on your bacon.)

The state that provides for basic needs

Though the big social insurance programs are still running, many federal programs that directly target those in the most need are either empty or running on fumes. Because of its ability to ensure a basic minimum, borrow and thus lean against the business cycle, and pool risk at the national level, the federal government plays an important role in providing for those most in need. This is at risk under the shutdown.

As Bryce Covert of Think Progress, explained in an e-mail, “Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, is perhaps the most important safety net program that's getting zero dollars from the shutdown. But Congress didn't extend TANF, which expired Sept. 30 too, so that's also getting zero dollars. And childcare subsidies, which rely on both federal grants and TANF dollars, are now also seeing no new money. There are other social service programs getting hit, like Head Start, Supplies for food pantries, Meals on Wheels.” That’s millions of people at risk for no good reason.

The state that provides for the public health

The growth of the modern state is tied to the awareness of public issues in health and the need to address them. The state has a responsibility to provide responses to a wide range of public issues including pollution, clean air and water, sanitation and epidemics, because there’s no way individuals alone can do this.

Yet this state is not showing up for work these days.The CDC is having trouble tracking food-borne illnesses under furloughs, it is no longer monitoring the spread of influenza and other infectious diseases. Meanwhile the National Institute for Health is turning away “200 patients each week from its clinical research center, including children with cancer.” The Environmental Protection Agency just stopped clean-ups at 505 Superfund hazardous waste sites sites in 47 states.

The state that invests

As Michael Lind of the New America Foundation documents in his recent economic history Land of Promise investments by the federal government have historically fueled the big technological waves in the United States. And this state is at risk during the shutdown.

It’s halting important scientific research across the country. It’s disrupting biomedical research; indeed the start-stop natures of our periodic crises makes basic research very difficult. An extended shutdown would affect the reliability of the nation's electric grid.

This isn’t just physical investments, but investments in people as well. As mentioned above, Head Start is getting cut. We know that cash benefits through the EITC for mothers significantly benefit the fate of young children. Beyond the basic inhumanity of it, cutting WIC is the equivalent of bombing factories and roads when it comes to destroying our nation’s capital.

There are a few takeaways. The first is that it is easy to miss this state. It sits in the background, showing important results in what doesn’t happen (outbreaks), in what happens on far better terms (trade), or what doesn’t pay off for some time to come (investments and research). The constant uncertainty of moving from one crisis to the next that are now a feature of modern governance makes it harder to carry out these functions well. However if you are part of the current conservative movement, which finds these functions illegitimate for a state to carry out, this disruption is bonus.

The other is that these are the functions of the state that are hit under sequestration. Indeed, the cuts of the past years have fallen entirely on these functions of the state. In a globalized, 21st-century world, all of these functions will become more, not less, essential to a prosperous and just society. So why aren’t we funding them as if that was a priority?

Mike Konczal is a fellow at the Roosevelt Institute, where he focuses on financial regulation, inequality and unemployment. He writes a weekly column for Wonkblog. Follow him on Twitter here.

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