Home About Archives RSS Feed

The Independent Investor: Will the Lights Go Out?

By Bill SchmickiBerkshires columnist
The deadline looms. There is no deal in sight. Various political factions are jockeying to get their demands met. It is all part of an annual compromise to fund the government for another year.
 
So what else is new?
 
If the government does shut down on Saturday morning, it will be the 18th such occurrence in U.S. history. In every case, the nation has survived, although at times the cost has been great. There was, for example, a 16-day shutdown back in 2013 that resulted in a $24 billion hit to economic output and caused 850,000 workers to be laid off.
 
We all know it costs the American people more to shut down the government than it does to keep it open. In this age of partisan politics, where compromise is a rare commodity, the drama of a government shutdown goes on year after year. At the 11th hour, a series of horse trades normally occurs, allowing both sides to kick the can down the road for a little while longer until the next deadline looms.
 
You might have thought that with a Republican-controlled House, Senate and presidency, that passing a spending bill would have been smooth sailing. Far from it, readers may recall that in years past, the Republicans have controlled the House, but the threat of closing the government occurred anyway. That's because there are so many splinter groups within the GOP that there is always someone or some faction that insists on more or less spending; usually more on defense and less on everything
else.
 
In the Senate, although the Republicans hold the majority of seats (52), you still need 60 votes to pass a spending bill. That requires the cooperation of eight Democratic Senators. To get their votes, the Democratic leadership wants legislation passed that would protect "The Dreamers" from deportation. Those 700,000-plus illegal immigrants who were brought to the U.S. as young children and are now caught up in the web of President Trump's animosity towards all immigrants, legal or otherwise.
 
The Democrats also want to reverse Trump's decision to halt monthly subsidy payments to insurance companies offering health care to low-income people. Those demands fly in the face of ultraright Republicans, many of whom want spending cut (except for defense) in all social programs, especially those involving Obamacare and immigrants.
 
Thursday, President Trump and Republican congressional leaders were meeting with Chuck Schumer, the Senate's Democratic Leader, and Nancy Pelosi, his counterpart within the House.
 
The betting is that they will all agree to disagree, but extend the existing spending bill by two weeks.
 
That would enable the GOP to finish up their tax package before re-focusing on a spending plan.
 
If so, that would simply kick the can down the road to just before Christmas. Given that only 18 percent of voters would go along with even a temporary shutdown of the government, the hope is that our legislators would be loath to cause a shutdown during the holiday season.
 
I am not sure I agree with that. The Republicans seem oblivious to voter sentiment. Their tax bill has less than a 30 percent approval rating among Americans, who rightly believe the "tax cuts" benefit the rich and corporations, while savaging most other Americans. Both the president and his party have their own end game, which does not include the majority of voters. 
 
However, even if we do see another shutdown, the impact will be short-lived both for the economy and the markets. Maybe that is what the Republicans are counting on.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
0 Comments
     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Cheshire Officials Talk School Heating Issues, Facilities Management
Pittsfield School Committee OKs Comfort Dog Pilot Program
Letter: Religious Liberty and Christian Nationalism
Berkshires Set to Dodge Full Impact of Nor'easter
New Smoke Alarm PSAs Geared Toward Older Adults
Former Pine Cobble Teacher Charged With Assaulting Student
North Adams OPM Search Committee Picks Three Candidates
Medical Matters Weekly Welcomes Certified Hand Therapist
Police Investigating Threat Made at BArT Charter School
Stockbridge Cultural Council Announce 2022 Grants
 
 


Categories:
@theMarket (397)
Independent Investor (451)
Retired Investor (77)
Archives:
January 2022 (7)
January 2021 (2)
December 2021 (9)
November 2021 (7)
October 2021 (8)
September 2021 (9)
August 2021 (6)
July 2021 (8)
June 2021 (6)
May 2021 (6)
April 2021 (9)
March 2021 (8)
February 2021 (8)
Tags:
Debt Wall Street Retirement Economy Markets Housing Metals Europe Selloff Europe Rally Stock Market Pullback Japan Crisis Fiscal Cliff Greece Interest Rates Election Debt Ceiling Energy Euro Stimulus Jobs Stocks Oil Deficit Currency Congress Banks Taxes Recession Commodities Federal Reserve Bailout
Popular Entries:
The Retired Investor: The Hawks Return
The Retired Investor: Has Labor Found Its Mojo?
Independent Investor: Europe's Banking Crisis
The Independent Investor: Don't Fight the Fed
The Retired Investor: Time to Hire an Investment Adviser?
@theMarket: Let the Good Times Roll
The Retired Investor: Climate Change Is Costing Billions
@theMarket: One Down, One to Go
The Retired Investor: My Dog's Medical Bills Are Higher Than Mine
@theMarket: Quarter Ends With a Bang
Recent Entries:
The Retired Investor: Crypto Crashes (Again)
@theMarket: Corporate Guidance Sends Stocks Lower
The Retired Investor: A New Female Fed
@theMarket: Beware the Hikes of March
The Retired Investor: No-Shows Threaten Economy
@theMarket: Fed Meeting Notes Throw Markets a Curve
The Retired Investor: My Dog's Medical Bills Are Higher Than Mine
@theMarket: Markets Up on Thin Holiday Trading
The Retired Investor: Climate Change Is Costing Billions
@theMarket: Markets Are Heading for Trouble