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The US budget row that's not about the budget

The last government shutdown came in 2018 and lasted for 35 days
The last government shutdown came in 2018 and lasted for 35 days

The US government is mostly in a shutdown because the fiscal appropriation authority, the law needed to authorise spending of taxpayer's money, has not been passed in the US Senate.

It is technical and tedious, as the process usually is.

Describing it as a money fight is slightly better, as we know what money is and we know what a fight is.

But it is not really about money, it is about politics, and that makes it harder to resolve.

There have been shutdowns before – ten in the past 30 years, when they started to become a thing.

Mostly they were about the budget – about trying to rein-in the chronic overspending that has seen the US debt pile grow and grow.

The tax cuts that began with former president Ronald Reagan not matched by a commensurate reduction in spending, the US government has gotten by on a willingness of the rest of the world to buy its debt to an extent that no other country can get away with.

It will last forever, and something needs to be done.

Fiscal conservatives have tried, and failed, for decades to get the deficit down and balance the books.

Former president Bill Clinton was forced into it by former speaker of the United States House of Representatives Newt Gingrich.

But since 9/11 it has been deficit financing all the way.

But this shutdown is not about the national debt or the Budget deficit (6.5% of GDP – well outside the Maastricht limit of 3% in the EU).

The US debt is 125% of GDP, according to the US Treasury – compared to the 109% debt ratio of Ireland in 2011 – year one of the IMF/EU bailout. But no, that is not what the row is about either (although Republican Senator Rand Paul is voting like it was).

Healthcare

Ostensibly this row is about medical insurance costs – which is at least a tangible issue that most Americans can relate to.

They are outrageously high, and at a time when affordability is the number one issue for Americans, keeping any kind of a lid on medical costs is a popular issue.

According to the Kaiser Family foundation, the average American family is paying roughly $2,000 per month for health insurance.

Two grand a month and they don't get much for it.

Although America spends the highest on healthcare as a percentage of GDP, its health outcomes are well below average for the club of rich countries, the OECD.

Nobody likes paying top dollar for sub-standard product, especially when the product is your own health.

The Affordable Care Act – also known as Obamacare – was supposed to make health insurance cover more widespread, and it largely succeeded in that aim.

But costs kept going up, and the Biden administration introduced a subsidy scheme as part of post-covid measures to help ease the economy back to health.

Those subsidies are due to finish at the end of this year.

The rising cost of health insurance those subsidies masked is set to be revealed, making insurance significantly – perhaps prohibitively – more expensive for an estimated 20-24 million Americans.

Most of the public would like to pay less, or certainly no more, for their insurance.

Jobs that come with an insurance package paid or subsidized by employers are highly prized.

In an economy that feels like its running out of steam, that makes the health insurance issue even more prominent for a lot of workers.

If you are going to pick a political fight around budget measures, this looks like the one to pick.

Legend of Donald Trump

After ten months of being accused of doing practically nothing to challenge the untrammeled power of Donald Trump, the Democratic Party has indeed picked this as the hill to fight on.

Except the fight is not really about health insurance costs either.

If it was, this matter could be resolved, as Republicans do not like the price of health insurance any more than their Democratic neighbours do.

Their political representatives are amenable to cutting a deal – those in the Senate have been trying all this week, behind the scenes, in the more thoughtful way of the upper house.

The problem is this is a fight over the untrammeled power of Donald Trump.

He knows it. The Democrats know it, and the Republican politicians know it.

That all makes it much harder to fix because ordinary politicians are amenable to compromise – a nip here, a tuck there, some financial lubricant to help the thing slide through, and presto: it is sorted.

Except Donald Trump is not a politician.

He sold himself explicitly to the public on that premise, and they voted for him in the belief that he is indeed not a politician.

Trump supporters do not want things done in the old way of Washington (or any other political system): they want disruptive change.

Mr Trump promises to give it to them and that means no compromises.

At least that is the legend of Donald Trump.

Still his entire image in business and politics has been crafted around the idea of not giving in to pressure.

In the public glare of the White House, he cannot - will not - give in to the challenge from Democrats in the Senate.

Give in once, and the whole image of power collapses, and with it, the Trump agenda.

The Senate Democrats, led by Chuck Schumer, have been presented with a window of opportunity by virtue of the Senate voting system that requires what we in Europe call a qualified majority to get most important things through.

They call it the filibuster, the requirement that 60 of the 100 members vote for something to get it through the upper house.

It means that in a house with 53 Republicans, they need at least some of the Democrats on board to pass laws.

Chuck Schumer is the leader of the Democrats in the US Senate

So with a pressing requirement to vote through a short term financing bill (the money process) in order to legislate a proper budget (more process), the Democrats have a one-off chance to make a stand on the issue of Obamacare subsidies to try and wring a concession out of the Trump administration.

The question was; firstly, would they actually do so? (The Democrats have usually insisted that it is irresponsible to shut down the government, and Mr Trump has previously tried to abolish Obamacare entirely, so they would be jumping into a really nasty fight).

The second question is once they start, how do they stop?

They say the first thing pilots have to learn is not how to fly, or even how to take off – it is how to land. Obvious when you think about it.

For politicians, embarking on a dispute that so directly challenges the very identity – the deliberately crafted public persona honed over decades – of the President of the United States, then having a pretty good idea of how you end that dispute is at least as important as deciding to pull the trigger and start it in the first place.

Such is the uncomfortable place Mr Schumer and his colleague the leader of the minority in the House of Representatives Hakeem Jeffries find themselves in.

The two New York politicians have gambled big on this one, facing down another quintessential New Yorker, Mr Trump.

So they have made it all about Health insurance, and so have Republicans on Capitol Hill – but with a twist of immigration as well.

Take these rival pitches on rival cable news channels on Friday:

"Welcome to day three of the Democrat shutdown. You've got the Chuck Schumer and the Senate Democrats have now voted three times to reject the clean, simple continuing resolution that we passed out of the house two weeks ago to keep the government operating for the people.

"And they're claiming, breathlessly, that they're not trying to restore free, taxpayer funded benefits and health care to illegal aliens. And it's simply not true. I would, I would direct everybody right now go to speaker.gov Okay - that's my official website.

"We put right there on the first page, the evidence. I have the receipts. Okay? Chuck Schumer filed a counter proposal, a counter continuing resolution, when they voted ours down. And what is in that if you go there on the on the page, you'll see, go to page 57 it's buried in their document. But it says in that section 2141 right there, Chuck Schumer filed it.

"It says they want to repeal the health provisions of the one big, beautiful bill, the working families tax cut that we Republicans passed earlier this year and that President Trump signed it a lot on July 4.

"Now, why is that so important? Because, that's where you'll find they want to add back in almost $200 billion of taxpayer funds to give free stuff to illegal aliens, 100% in writing, not a Republican talking point. It's Chuck Schumer's own document."

Republican speaker of the House Mike Johnson on Fox News:

"Good morning. We're in day three of the Trump Republican shutdown because Republicans don't want to provide health care to working class Americans. We know that real people are being hurt, and that unfortunately has been the case since the beginning of the Trump administration.

"On July 20, it was Speaker Johnson, Republicans in the House and the Senate, along with Donald Trump and the administration, who passed this one big, ugly bill that set in motion the health care crisis that the American people are dealing with right now, largest cut to Medicaid in American history.

"They ripped food from the mouths of hungry children, seniors and veterans, and all of that was done so that they could provide massive tax breaks to their billionaire donors. Now they don't want to extend the Affordable Care Act, tax credits for everyday Americans, and that's shameful."

House Minority leader Hakeem Jeffries, CNN:

"There is so much in Trumps second administration that Democrats could have chosen to concentrate their fire on. Some have argued they should attack everything, oppose everything. Others say that would just dissipate their efforts, and further alienate voters from a Washington that doesn't deliver for them.

"Better to focus on one issue and try and make the best of it."

Republicans have tried to undermine Mr Schumers standing, saying this former opponent of government shutdowns has caved in to pressure from the party’s left wing, in particular the New York Representative Alexandria Occasio Cortez (AOC), who is rumored to be planning to run in a primary election against Mr Schumer, when his six year term as Senator ends next year.

She says she has not decided to run for the Senate, but there is certainly a faction of the Democratic Party that is spoiling for a fight with Mr Trump, and is sore at the party’s generally supine position since last 6 November.

The problem with mounting a direct challenge to Mr Trump is that it is a direct challenge to Mr Trump.

Mr Trump’s approach to challenge was shaped by Roy Cohn, his lawyer in the 70s and 80s, their relationship fictionalised in the Oscar nominated (and Irish Film board funded) movie "The Apprentice".

The notorious Mr Cohn taught Mr Trump to always adopt a ruthless, win at all costs approach - go on the offensive - "attack attack, attack".

Admit nothing, deny everything, and always claim victory. Always demand absolute loyalty from subordinates, manipulate the media ruthlessly, use fear as both sword and shield, and never settle.

"Fight, Fight, Fight", to quote the man himself after surviving an assassination attempt last year.

Donald Trump (L) and Roy Cohn
Donald Trump and Roy Cohn seen together in 1981

With that kind of operating system hard wired into the core of his being, the President is unlikely to spend Sunday night closeted with Mr Schumer, a bottle of whiskey and a complicated plan to subsidise health insurance premiums camouflaged as something else to enable everyone to save face, and get the federal government back to work.

This one looks like it is in for the long haul.

Just like the last time there was a shutdown, during the first Trump administration, when it lasted for 35 days.

Essential workers

It was not so much ended by compromise as by the long haul – and short haul – flights that were not getting in and out of the country’s airports.

Air traffic controllers (and airport security staff) are considered essential workers and have to turn up even if they are not being paid.

But they are human too, and run out of money like the rest of us.

They are not immune to the real world consequences of that.

Ten of them called in sick in New York, bringing the already stretched system to breaking point.

Watch out for the air traffic staff if this shutdown starts to drag.

Indeed, this overstretched sector is in worse shape than it was back in 2018, Covid and stress having taken its toll.

They may not make it to 35 days.

Already there are signs of the President reverting to the Mr Cohn playbook, notably his threat to use the shutdown as a pretext to fire, permanently, large numbers of federal workers.

It is probably not legal, and some Republican politicians are aghast at the idea.

But as Mr Cohn said, use fear as sword and shield.

Scared politicians are easier to control, so are scared civil servants, and the people they vote for.

So how do the Democrats switch this dispute off without once again losing face before Mr Trump and the electorate?

Making a stand on health insurance affordability ought to be a vote winner, particularly in next year's mid-term elections when a finely balanced lower house should be pretty easy to flip Democrat, enabling the kind of house inquiries into Republicans and their policies the Republicans are doing now to Democrats.

Republicans, keen to avoid both outcomes, ought to be amenable to the logic of using taxpayers money to buy their way out of trouble and cut a deal with the Democrats – giving them a small win to get to the end of the year, and hope the public have forgotten in 14 months’ time.

But that is the old cynical way of Washington.

The new cynical way of Washington is to use the biggest sledge-hammer you can find to crack all nuts, no matter how small.

Right now, Mr Trump has the biggest hammer, and every motivation to use it, and Mr Cohn’s book on hammers and how to use them.