With the US federal government about to shut down over who-cares-what, I suppose any blog purporting to discuss economics should comment on it. I’ll first note that I am not at all interested in the “debate” surrounding the shutdown and Obamacare, but here are some thoughts, in order of importance:
1. As I tweeted: The worst thing about the government shutdown by far is huge jump in people who write “shutdown” as a verb when it should be “shut down.”
2. Essential services will continue. Since my political views are such that I want the government only to do essential things, I’m viscerally just fine with a shutdown. I realize that’s not analysis, but I have feelings, too.
3. The issues surrounding the shutdown are just politics and nothing else. There are no real policy issues at stake here. Yes, the Republicans are against Obamacare, but this game of chicken is about elections, not improving policy. (Politics is not about policy, especially nationally.) The Republicans are cementing their anti-PPACA position, counting on the law’s unpopularity to benefit them in the long run. A bold move, especially how easy it is for the media to tell the story that Obamacare would have worked much better had Republicans not undermined it.
4. For actual analysis, Tyler Cowen nails it:
The GOP also wishes to combat the notion that it is the intransigent party, and a battle over the relatively unpopular ACA (“why will Obama negotiate with Putin and Assad but not with us?”) is a better arena for them than most of the other venues where this clash of reputations might pop up.
The GOP, from its budget strategies, might manage to repeal the medical devices tax. Repealing a tax, and chipping away at ACA, is in this setting a major victory for them, especially given that right now they are not winning so many victories. It doesn’t matter so much that the medical device tax repeal would be relatively small in its impact. “We forced the repeal of one part of Obamacare” is a big symbolic victory.
Recent events are simply public choice theory in action.