Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: A lot of people are saying Trump wanted this, that
Speaker 2: I wanted this closing, and I didn't want it, But
Speaker 2: a lot of people are saying it because I'm allowed
Speaker 2: to cut things that should have never been approved in
Speaker 2: the first place.
Speaker 3: I'm Steady Flanders, head of Government and Economics at Bloomberg
Speaker 3: and this is Trumponomics, the podcast that looks at the
Speaker 3: economic world of Donald Trump, how he's already shaped the
Speaker 3: global economy and what on earth is going to happen next.
Speaker 3: This week, we're asking why is this US government shut
Speaker 3: down so different from others we've seen, and what could
Speaker 3: it mean for the US economy. Now, government shutdowns in
Speaker 3: Washington aren't new, but they have become more common in
Speaker 3: a politically polarized country in which the two main parties
Speaker 3: don't want to agree on anything. And his latest one
Speaker 3: is the third shutdown under President Trump. He had two
Speaker 3: in his first term, including one in twenty eighteen that
Speaker 3: lasted thirty five days, the longest on record. Now, as
Speaker 3: we record this on Wednesday, the eighth of October, the
Speaker 3: shutdown is entering its second week, having started at midnight
Speaker 3: on October first, when Congress failed to pass a stopgap
Speaker 3: funding measure. But already it feels a bit different politically
Speaker 3: and economically different politically because this time around, both sides
Speaker 3: seemed to want to shut down, and the standoff between
Speaker 3: them feels less like a dispute about funding than a
Speaker 3: constitutional struggle over the relative strength of the executive in
Speaker 3: America's political system. And that's a feeling that's intensified by
Speaker 3: the body language of both sides and the Director of
Speaker 3: the Officer Management and Budget, Russell Voyd, seeming to relish
Speaker 3: the opportunity of talking about mass layoffs and holding up
Speaker 3: billions of investment funds earmarked for projects in democratic controlled state.
Speaker 3: There's one reason why the economic stakes also seem unusually
Speaker 3: high this time. I mean, typically any economic impact of
Speaker 3: the federal workers not getting paid during a shutdown gets
Speaker 3: completely offset when the government reopens and they get the
Speaker 3: money their own. If that doesn't happen, or if there's
Speaker 3: deeper cuts, it could have a more lasting impact, and
Speaker 3: at a particularly sensitive time for the economy, when the
Speaker 3: labor market's already weakening and many think we could be
Speaker 3: on the brink of a recession. Deepening government cuts and
Speaker 3: heightened uncertainty could just push the economy over the edge.
Speaker 3: But the longer the shutdown continues, the less likely we're
Speaker 3: going to know what's really happening, because those crucial economic
Speaker 3: statistics aren't being gathered by all those furloughed federal workers,
Speaker 3: and neither with the Federal Reserve know what's going on
Speaker 3: potentially as it goes into its next meeting at the
Speaker 3: end of the month. So there really is a lot
Speaker 3: at stake here and more than enough to talk about
Speaker 3: with my guests. Matthew Glassman, a senior fellow at the
Speaker 3: Government Affairs Institute at Georgetown University and former appropriation staffer
Speaker 3: on Capitol Hill. Matt, thanks very much for joining us,
Speaker 3: Thanks for having me, and as ever from Washington, our
Speaker 3: own Anna Wong, chief US economist at Bloomberg Economics, and
Speaker 3: reminding you she was also an economist at the Federal
Speaker 3: Reserve before she joined us and on to comment to
Speaker 3: the White House Council of Economic Advisors during President Trump's
Speaker 3: first term. Anna, welcome back.
Speaker 1: Happy to be here again.
Speaker 3: Matt. One of the reasons that we invited you on
Speaker 3: is you've written an excellent piece for Politico on this
Speaker 3: topic and we allow people who listen to Trump nomics
Speaker 3: to read non Bloomberg publications. Your big assertion there was
Speaker 3: that this was a different kind of shutdown and we
Speaker 3: should perhaps take it a bit more seriously than the
Speaker 3: shutdowns we've seen in the past. So broadly, why do
Speaker 3: you think there's so much at stake?
Speaker 4: I think in past shutdowns, we've typically had one party
Speaker 4: trying to leverage the shutdown to achieve a policy goal.
Speaker 4: So you can think about the Republicans in twenty three
Speaker 4: they want to repeal Obamacare, right, so they're going to
Speaker 4: proudly say we are not going to fund the government
Speaker 4: until you do this. It did work, of course, and
Speaker 4: in twenty eighteen, same thing with Trump and the Wall.
Speaker 4: I am not going to vote for spending buil or
Speaker 4: sign a spending bill until you give them my wall.
Speaker 4: Or the Democrats with DACA, we are not going to
Speaker 4: go with the spending bills till you give us DACA.
Speaker 4: And those are all sort of like policy fights. Here
Speaker 4: we have something a little deeper, and that is democratic
Speaker 4: concern with Trump's unilateral spending moves. Right there are bargains
Speaker 4: for proporations bills because they can be filled us from
Speaker 4: the Senate, so the parties have to work together, and
Speaker 4: those have been sort of undone by the Trump administration
Speaker 4: this year through processes called recisions and also things called impoundments,
Speaker 4: where the president is unilaterally trying to cancel some of
Speaker 4: that spending and that makes bargaining for the next bills impossible.
Speaker 4: How can you bargain if the president is just going
Speaker 4: to pull the rug out from under you? And so
Speaker 4: that's underlying what the Democrats are doing here, or real
Speaker 4: fight over the very appropriations process, and that's something different
Speaker 4: than sort of a policy hostage situation. It's a little
Speaker 4: weird of cour because they have translated that into a
Speaker 4: fight over healthcare where they're claiming they want to extend
Speaker 4: ACA subsidies, which is sort of like a classic policy
Speaker 4: hostage shutdown. But we do have this bigger issue in
Speaker 4: the background, which is how can they bargain with someone
Speaker 4: who is just going to turn around and cancel the bargain.
Speaker 3: I said at the beginning, both sides seem to want
Speaker 3: the government to shut down. Why is that not being
Speaker 3: the case in the past in pass shutdowns?
Speaker 4: The side that wasn't trying to sort of leverage the
Speaker 4: shutdown to Win policies had had a clear message, reopened
Speaker 4: the government and then maybe we'll negotiate with you. We
Speaker 4: don't want a government shutdown. Here, it's more complicated because
Speaker 4: the Trump administration sees this democratic and do shutdown as
Speaker 4: a way for them to further their ideological project of
Speaker 4: shrinking the federal workforce and increasing sort of presential control
Speaker 4: over the agencies. So the administration, and this is President
Speaker 4: Trump and omb Director of Vote Have you know, said
Speaker 4: if you shut down the government, we are going to
Speaker 4: do things like start cutting federal workers or potentially even
Speaker 4: closing whole agencies or defunding things completely permanent. And so
Speaker 4: there's a sense that this shutdown is not simply open
Speaker 4: or closed, but can the Trump administration leverage this to
Speaker 4: sort of further their own separate ideological ends, and that
Speaker 4: gives both sides incentives. There is this big group of
Speaker 4: Republicans caught the middle who really just want the government open,
Speaker 4: like sort of a traditional anti shutdown view, but the
Speaker 4: administration certainly sees this as an opportunity to take advantage of.
Speaker 3: We'll come back to you on the sort of constitutional
Speaker 3: aspects of this. But Anna simply why the economic state's
Speaker 3: particularly high.
Speaker 1: As you mentioned, the economy is in a particularly fragile
Speaker 1: state right now, and it's even perhaps at a turning
Speaker 1: point stage. Is it turning toward a deeper recession into
Speaker 1: a new recession or is it actually in the phase
Speaker 1: of recovery. And even before the shutdown, the economic picture
Speaker 1: was particularly blurry. Economic data was sending various message and
Speaker 1: now we are at a very sensitive point of the
Speaker 1: mind Tarry policy cycle where the FED is on the
Speaker 1: cusp of cutting again. But it's unclear whether this cutting
Speaker 1: cycle would continue or would it be cut short because
Speaker 1: of concerns of rising inflation or actual actually rising inflation.
Speaker 1: So without the data, it's just very difficult.
Speaker 3: Just remind us how would you normally think about the
Speaker 3: economic impact of all these furloughed workers.
Speaker 1: So for each week of shutdown, there's a rule thumb
Speaker 1: that says it will knock off about zero point two
Speaker 1: percentage point off the annualized quarterly GDP growth. However, once
Speaker 1: the shutdown is over, then you'll see a commensurate rebound
Speaker 1: in GDP. So as long as this shutdown is over
Speaker 1: by mid November, the fourth quarter GDP should be relatively unaffected. However,
Speaker 1: in terms of labor as statistics, furloughed workers would be
Speaker 1: counted as temporarily unemployed if they're recorded correctly, And so
Speaker 1: that means that seven hundred and fifty thousand furlold workers
Speaker 1: will roughly translate it to an increase of the unemployment
Speaker 1: rate from currently four point three percent to four point
Speaker 1: six to four point seven percent in a non farm
Speaker 1: payrolls for LOLd workers would still be counted as employed,
Speaker 1: as they will be continued to be paid.
Speaker 3: And Matt, how do you view the sort of aggressive
Speaker 3: posture of certainly Russell Voyd from the Office for Management Budget,
Speaker 3: who's had this very kind of matcho stance writing memos
Speaker 3: about accelerating the shrinking of the federal workforce. But it's
Speaker 3: not supposed to be even possible to not pay furloughed workers,
Speaker 3: and it's not even clear that he can fire workers
Speaker 3: in response to a shutdown. So how do you think
Speaker 3: that's going to play out? I mean, are we going
Speaker 3: to see more cases going to the court.
Speaker 4: Perhaps, But the thing pushing back on this is sort
Speaker 4: of the political position of the Republicans. The way to
Speaker 4: sort of win a shutdown if someone else is trying
Speaker 4: to use it against you is to just say, Nope,
Speaker 4: we are not giving into your demands. We don't know.
Speaker 4: We don't give into demands of hostage takers. Reopen the government.
Speaker 4: We're negotiate votes. Actions are sort of undermining that by
Speaker 4: doing things to leverage the shutdown from their own side.
Speaker 4: And you saw the reaction of Republican senators when he
Speaker 4: said they might not pay furloughed workers. That's totally off
Speaker 4: message politically, and all of a sudden, it looks like
Speaker 4: both sides are trying to leverage the shutdown. So I
Speaker 4: think there was a pretty strong reaction on Capitol Hill
Speaker 4: towards O and B director and the President just being like, stop,
Speaker 4: stop trying to leverage this, and just let us tell
Speaker 4: them to reopen the government. And you can see reflected
Speaker 4: in public opinion. In past shutdowns, the side that just
Speaker 4: wanted to reopen the government and then continue to negotiate
Speaker 4: has always politically had the upper hand, and we're not
Speaker 4: seeing that this time. The Democrats currently are doing better
Speaker 4: in the polling than the Republicans, and I think that's
Speaker 4: in part because the administration is muddy in the waters
Speaker 4: by themselves trying to leverage the shutdown.
Speaker 3: To their own ends, and you've had this kind of
Speaker 3: funny thing on social media. Well, on the one hand,
Speaker 3: you've got Karlyn Levitt in the White House briefing room
Speaker 3: saying no, no one is enjoying the shutdown, and at
Speaker 3: the same time, the President tweeting out memes that suggest
Speaker 3: that maybe he is having a bit of fun. But
Speaker 3: you mentioned the public. You could say that the Democrats
Speaker 3: are also not negotiating. There's been no negotiations happening on
Speaker 3: the Hill. So is it What are the risks here
Speaker 3: for the Democrats in terms of public opinion?
Speaker 4: The risks are that they will be perceived as the
Speaker 4: party not wanting to just cleanly reopen the government. That's
Speaker 4: always been the risk in pass shutdowns, and we've seen
Speaker 4: this with the Republicans in thirteen and Trump in eighteen,
Speaker 4: that you just lose the public if you try to
Speaker 4: demand policy concessions in order to reopen the government. That said,
Speaker 4: the Democrats have done an excellent job so far of
Speaker 4: turning this into a fight over healthcare subsidies rather than
Speaker 4: a fight over whether the government should be open or closed.
Speaker 4: In pass shutdowns, it's been almost impossible for the party
Speaker 4: shutting the government down to get their message through, and
Speaker 4: the issue has always come down to should the government
Speaker 4: be open or closed because of sort of the mixed
Speaker 4: messages from the Republican side. I think the healthcare message
Speaker 4: and the unity of the Democrats have brought that through
Speaker 4: in a way that has really turned this into sort
Speaker 4: of a healthcare subsidy debate rather than should the government
Speaker 4: be open or close debate, And so for now I
Speaker 4: think that's the Democrat's best issue. It's not a secret
Speaker 4: why they're turning this into healthcare. It's by far their
Speaker 4: best issue with voters. And to the degree that this
Speaker 4: becomes a healthcare debate, they will benefit from it politically.
Speaker 4: The degree it becomes a debate whether the government should
Speaker 4: be open or closed, they will be hurt. But for
Speaker 4: now they're doing fine. That's said. Shutdowns aren't static, like
Speaker 4: they get worse and worse and worse in terms of
Speaker 4: their impact on actual citizens, on agencies and federal workers.
Speaker 4: Military paychecks are going to get missed next Wednesday, civilian
Speaker 4: paychecks this Friday, and those sorts of things. Programs start
Speaker 4: to run out of money, airport lines get longer, and
Speaker 4: those sort of things build up the pressure and so
Speaker 4: you could very easily see public opinion reverse in the
Speaker 4: Democrats here and really start to hurt them.
Speaker 3: Yeah, we've been monitoring that on just on the airlines,
Speaker 3: for example, because there's a core staff who are still working,
Speaker 3: but then they're calling in sick, and we've seen some
Speaker 3: delays at airports yesterday. It looks like the fear is
Speaker 3: that could intensify. Matt you're describing something where for the
Speaker 3: first time in a while, the Democrats are potentially losing
Speaker 3: at least one small part of a political battle. It's
Speaker 3: not been a good year for them. And I just
Speaker 3: wondered the President's quite good at noticing those things and
Speaker 3: you know, turning things around. I wonder how you read
Speaker 3: what the comments he had at the beginning of the
Speaker 3: week where he seemed to also recognize that it just
Speaker 3: being about healthcare was not going to be good for him,
Speaker 3: and that maybe if there was a deal to be done,
Speaker 3: he could be the one to get the credit for it.
Speaker 4: Yeah, for sure. And I think this is one spot
Speaker 4: where you see differences between Trump and the congressional Republicans
Speaker 4: quite starkly. They each have sort of their own ideological projects,
Speaker 4: and Trump's has been going after his enemies, which he
Speaker 4: I think largely perceives as this professional liberal class of
Speaker 4: government workers are very often in his target zone. Whereas
Speaker 4: Republicans on the hill, their ideological project has for a
Speaker 4: long time been sort of cribbing or reducing or eliminating Obamacare.
Speaker 4: The President is perfectly happy to compromise on healthcare, just
Speaker 4: as he seemed perfectly happy to compmise on things like abortion.
Speaker 4: He doesn't have sort of that traditional Republicans streak about
Speaker 4: those things that throws them off message because they are
Speaker 4: caught between sort of their ideological view of health care
Speaker 4: and then their desire to be in line with Trump,
Speaker 4: particularly in the House. I do think a healthcare compromise
Speaker 4: is coming. One of the weirdest things about this shutdown is,
Speaker 4: in the past shutdowns, the policy demand of the people
Speaker 4: shutting the government down has been a non starter. Like
Speaker 4: President Obama was never going to sign a law repealing Obamacare, right,
Speaker 4: and the Democrats were never going to go for a
Speaker 4: border wall. But a healthcare compmise to extend these subsidies
Speaker 4: is something a lot of the moderate Republicans want and
Speaker 4: I think is going to happen, whether there's a shutdown
Speaker 4: or not. So this shutdown is about, like now turned
Speaker 4: into an issue that is actually solvable through compromise, and
Speaker 4: that makes it a little bit different than pass shutdowns too.
Speaker 3: I mean, just sort of switching back to the economy.
Speaker 3: I mean, it obviously is going to make a difference
Speaker 3: in people's cost of living if some of these big
Speaker 3: increases in health insurance come through, but we won't know
Speaker 3: what's going to happen with that for a few months.
Speaker 3: If you're the Federal Reserve, and we've talked about the
Speaker 3: FED a lot in different contexts than the threats to
Speaker 3: its independence and other things over the last few months,
Speaker 3: but even if they weren't facing a quite aggressive White
Speaker 3: House in the last few months, they'd be facing a
Speaker 3: tough choice when it comes to the economy. So talk
Speaker 3: us through how problematic it is for them if some
Speaker 3: of these sort of core economic data are not available
Speaker 3: when they go into that next meeting at the end
Speaker 3: of the month.
Speaker 1: So the next meeting is October twenty eighth to twenty ninth,
Speaker 1: and before that, we were supposed to have received the
Speaker 1: September CPI report on October fifteenth, and also weekly jobless
Speaker 1: Claims OUR reports and also of course the non farm
Speaker 1: payroll for September. And if the shutdown last beyond October eighteenth,
Speaker 1: for example, then the collection of the unemployment rate for
Speaker 1: October would be disrupted and price quotes for CPI for
Speaker 1: October would also be disrupted. So basically the FED would
Speaker 1: be going into not just the October meeting, but also
Speaker 1: going into the December meeting sort of flying blind on
Speaker 1: both inflation and jobs. And this is quite different than
Speaker 1: the twenty eighteen shutdown, for example, because back in twenty eighteen,
Speaker 1: the BLS was actually funded, so CPI and non farm
Speaker 1: pay was not actually disrupted. And so to see how
Speaker 1: shutdown affected collection of economic statistics, you have to go
Speaker 1: back to twenty thirteen. But even then the shutdown lasted
Speaker 1: only two weeks, and that already reduced the CPI price
Speaker 1: quotes by twenty five percent for collection in October, and
Speaker 1: also disrupted or reduced the number of responses in the
Speaker 1: unemployment survey, causing more error in the unemployment survey.
Speaker 3: And just to be clear, what happens if you've just
Speaker 3: not collected the data the labor for survey, for example,
Speaker 3: that goes uncollected for that month, right, I mean, what
Speaker 3: would they normally do.
Speaker 1: Yeah, So for the Unemployment rate survey in twenty thirteen,
Speaker 1: a BLS resumed collection a week after they normally do it,
Speaker 1: and they have to kind of ask the responders what
Speaker 1: was your status two weeks ago? So they're basically asking
Speaker 1: people to recollect something that happened in the past, as
Speaker 1: opposed to asking them what happened just you know, just now, right,
Speaker 1: So this is a sampling error.
Speaker 3: And again in practice, how could that affect what the
Speaker 3: Federal Reserve does at the end of October or do
Speaker 3: you think that their decision is kind of baked in
Speaker 3: at this point.
Speaker 1: So in the last FMC meeting, they flagged in the
Speaker 1: dot plot the median wanted to cut fifty basis points more.
Speaker 1: It was a very close call, and without a shutdown,
Speaker 1: I would have thought that given indications of many inflation
Speaker 1: measures edging up again, they would not be cutting in October.
Speaker 1: But because of the shutdown and the uncertainty to economic
Speaker 1: activity and also increased upside risk to employment, I think
Speaker 1: they will follow through with a twenty five paces point
Speaker 1: cut this October.
Speaker 3: Interesting, well, Matt, I mean that would be an upside
Speaker 3: for the president from all this. The tradition of the
Speaker 3: podcast these days, At the moment you decide to talk
Speaker 3: about the shutdown, the government's going to reopen again. So
Speaker 3: even even as people are listening, something miraculous might have
Speaker 3: happened on late Wednesday night or something. But given your
Speaker 3: experience and given the analysis of what's going on and
Speaker 3: how much each side has at stake, but also, as
Speaker 3: you said yourself, the fact that it's actually over something
Speaker 3: quite doable on both sides, the sticking point, even though
Speaker 3: there's these very high stakes, Actually the single thing that
Speaker 3: the Democrats are focused on is something that could be fixed.
Speaker 3: How do you think this is going to end?
Speaker 4: I mean, I think how it ends is relatively clear.
Speaker 4: You will get a Democrats voting to reopen the government
Speaker 4: unconditionally and Republican promising a good faith negotiation over the
Speaker 4: healthcare subsidies which will be extended. And so that sort
Speaker 4: of allows everybody to win in some sense politically. Leader
Speaker 4: Schumer of the Democrats will get sort of the credit
Speaker 4: for having fought that his liberals want, and the Republican
Speaker 4: moderates will get their healthcare subsidies. The Republican leaders will
Speaker 4: have not just given away the healthcare subsidies angering their base,
Speaker 4: and Trump will end up with no further restrictions on
Speaker 4: sort of executive spending encroachments that have gone on. That's
Speaker 4: sort of the terms that I think are mostly imaginable
Speaker 4: as to how long it goes. I think there's a
Speaker 4: bunch of pressure points, and the first one is really
Speaker 4: next Wednesday with the military pay and the eighteen shutdown.
Speaker 4: In the long shutdown, DoD was funded so we didn't
Speaker 4: have this issue of soldiers missing checks. But that pressure point,
Speaker 4: to me is sort of the front end window of
Speaker 4: when this would end sometime middle of next week. If
Speaker 4: they go through that and they're still on a stalemate,
Speaker 4: then you start to talk about longer term. But I
Speaker 4: do think there's a good pressure point to end this
Speaker 4: sometime next week.
Speaker 3: But what you've described is something that they could do tomorrow.
Speaker 3: If you think the Democrats are actually willing to give
Speaker 3: in without having a solid assurance on the health insurance subsidies,
Speaker 3: then it just seems odd that they would hold out
Speaker 3: this far and make that their point and then only
Speaker 3: accept a sort of good faith promise from an administration
Speaker 3: and from a Republican leadership that is not they would
Speaker 3: say not shown them a lot of good faith, you know,
Speaker 3: with the rescinding of past funding and other things.
Speaker 4: Yeah, I mean, And that sort of highlights how sort
Speaker 4: of this shutdown is both very high stakes over these
Speaker 4: constitutional issues of executive power and also very low stakes.
Speaker 4: It's over a healthcare policy that was probably going to
Speaker 4: be compromised anyway in the next couple of months, whether
Speaker 4: there was a shutdown or not. And so part of
Speaker 4: what you're seeing here is that the sort of going
Speaker 4: through the motions of the shutdown is a exercise in
Speaker 4: coalition management. Remember, Schumor did not go to shut down
Speaker 4: the government last March, and that really had much of
Speaker 4: the liver wing of his party sort of nipping at
Speaker 4: him pretty bad over the last six months, and for
Speaker 4: him to not engage in a shutdown now probably would
Speaker 4: have lost them forever and maybe cost him his job,
Speaker 4: if not his seat in the Senate going forward. And
Speaker 4: so part of what both sets of leaders are doing
Speaker 4: right now is fighting for their basis admiration. And yes,
Speaker 4: you could end the shutdown today, but is the left
Speaker 4: flank of your party for Schumer or the right flank
Speaker 4: of your party for Johnson and Thune. And in some
Speaker 4: ways Trump going to accept that as a worthy effort
Speaker 4: and a worthy fight. And I think the answer today
Speaker 4: is no, And I think the answer next week might
Speaker 4: be maybe, And I think in a month the answer
Speaker 4: would definitely be yes.
Speaker 3: And what will the public think about it? Who will
Speaker 3: benefit in the end? Do you think?
Speaker 4: Unknown? I mean, the one thing we do know about
Speaker 4: shutdowns is traditionally the party trying to leverage it has
Speaker 4: lost politically. But in every case, both parties have seen
Speaker 4: blame taken upon them. It's kind of like you know, war, right,
Speaker 4: you can't increase, sort of like the overall happiness with
Speaker 4: both parties. Both parties are going to see a negative.
Speaker 4: It just who sees a more negative. And I think
Speaker 4: we're seeing that in the polling right now, like the
Speaker 4: typical citizen is not thrilled with either party in these situations.
Speaker 4: I suspect, you know, the longer it's dragged on, the
Speaker 4: more it would tend to shift to hurt the Democrats.
Speaker 4: But so far they've defied that, and they've done an
Speaker 4: excellent messaging job. And I think the President has made
Speaker 4: some sort of errors in judgment about how to approach this,
Speaker 4: such that right now, if it ended, it would probably
Speaker 4: call it a draw, but no harm to the Democrats,
Speaker 4: which would be exceeding expectations in these things where going
Speaker 4: into this, I don't think anyone thought sort of the
Speaker 4: Democrats were going to come out better on the other
Speaker 4: side of this.
Speaker 3: Interesting. I remember when I was in the US treasurer
Speaker 3: in the late nineties, and there was one time when
Speaker 3: we thought we were heading into a shutdown, and of
Speaker 3: course the big debate internally was about everybody wanted to
Speaker 3: be considered an essential worker, and it was kind of
Speaker 3: insulting not to be an essential worker. But it does
Speaker 3: seem like the definition of an essential worker has been
Speaker 3: much tighter this time around. Even in this conversation, we've said,
Speaker 3: you know, previously the Pentagon was funded, this time it isn't.
Speaker 3: Previously the BLS was that, this time it isn't. I mean, Matt,
Speaker 3: is there a sense of which the administration has heightened
Speaker 3: the cost of this?
Speaker 4: Yeah, I mean, and I think that's that's something all
Speaker 4: administrations do on the margins. If you think about the
Speaker 4: twenty thirteen shutdown. Obama was against the shutdown, of course,
Speaker 4: and so what did he do. He immediately made sure
Speaker 4: the national parks were closed, the Washington Monument was closed
Speaker 4: so that would inconvenience tourist who would publicly see it.
Speaker 4: And then in the twenty eighteen shutdown, when Trump was
Speaker 4: in favor of the shutdown, he left those things open,
Speaker 4: left the parks open, and left the monuments open and
Speaker 4: things like that. So the president has some wiggle room.
Speaker 4: The key question, and the key discretion is about what
Speaker 4: is an accepted or sometimes people say essential worker. And
Speaker 4: in the laws Congress have written about this essentially comes
Speaker 4: down to people doing sort of life safety things, so
Speaker 4: that's soldiers, law enforcement, people feeding the animals at the zoo.
Speaker 4: But there's also an exception for people essential to the
Speaker 4: constitutional process, so aiding the present or aiding Congress in
Speaker 4: sort of ending the shutdown, right, and so that definition
Speaker 4: can be stretched so widely. Is some person at Treasury
Speaker 4: important to that that's really in the eye of the beholder.
Speaker 4: And so presidents absolutely do use this discretion to help
Speaker 4: them politically and substantially in these shutdowns. And the Toy
Speaker 4: administration certainly is, like with many things, using that latitude
Speaker 4: to stretch it beyond perhaps what sort of a neutral
Speaker 4: reserver would say is reasonable.
Speaker 3: Although these days it seems like soldiers are much more
Speaker 3: essential to curb crime and disarray in our cities settle
Speaker 3: on anything else. But that's a whole other issue. Anna,
Speaker 3: I guess the last word for you. I mean, if
Speaker 3: just listening to Matt, it does sound like there will
Speaker 3: be a sort of decision point coming in the middle
Speaker 3: of next week around the military pay. Do you think
Speaker 3: that could also be significant in terms of the economic
Speaker 3: impact and the lack of economic data. You know you're
Speaker 3: going to get bigger aera statistics all of those things.
Speaker 1: Yes, absolutely, If the shutdown does end next week, sometime
Speaker 1: next week, then we'll basically get barely a blip in
Speaker 1: terms of the sampling error that I mentioned just now,
Speaker 1: and also the jobless claims. If so far from the
Speaker 1: state level jobless claims, the shutdown has not led to
Speaker 1: a spike, but with next week's jobless claims, we were
Speaker 1: expecting that we would start seeing a drift shop. So
Speaker 1: if the shutdown resolved by then, I think things will
Speaker 1: go on as usual.
Speaker 3: And not get the extra cut or the cut that
Speaker 3: you might you wouldn't have expected to have otherwise.
Speaker 1: Well, I still think that there will be a cut,
Speaker 1: because it's already mid October, and I think the job
Speaker 1: report is still going to be pretty modest enough to
Speaker 1: warrant some concerns to buy insurance for the labor market.
Speaker 3: Anna Wong, Matthew Glassman, thank you so much. Thanks for
Speaker 3: listening to Trumponomics from Bloomberg. It was hosted by me
Speaker 3: Stephanie Flanders. I was joined by Anna Wong, chief US
Speaker 3: economists for Bloomberg Economics, and Matthew Glassman, a Senior Fellow
Speaker 3: at the Government Affairs Institute at Georgetown University. Trumponomics was
Speaker 3: produced by Samasadi and Moses and Them, with help from
Speaker 3: Andrew Derker and Chris marklou Amy Keen is our executive producer,
Speaker 3: and sound designers by Blake Maples and Kelly Gary Sage.
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