Tuesday 29 January 2013

Before we 'kick the bucket', maybe we should read this… How Doctors Die...



Before we 'kick the bucket', maybe we should read this… 
How Doctors Die... 

Many doctors make dying very costly, e.g. more than $100,000, $500,000, a few million of dollars, (or if the family is unlucky) $24,000,000.  After spending most or all of the family money the patient dies like all poor people without doctors and hospital. Staying at home in the last days may be more meaningful and caring. 

An expensive doctor may ensure that huge sums of money is spent and the patient NEVER COMES HOME ALIVE. 

How Doctors Die It’s Not Like the Rest of Us, But It Should Be by Dr Ken Murray. 

Years ago, Charlie, a highly respected orthopaedist and a mentor of mine, found a lump in his stomach.  He had a surgeon explore the area, and the diagnosis was pancreatic cancer.  This surgeon was one of the best in the country.  He had even invented a new procedure for this exact cancer that could triple a patient’s five-year-survival odds—from 5% to 15%—albeit with a poor quality of life. Charlie was uninterested. 

He went home the next day, closed his practice, and never set foot in a hospital again.  He focused on spending time with family and feeling as good as possible.  Several months later, he died at home.  He got no chemotherapy, radiation, or surgical treatment.  Medicare didn’t spend much on him.  It’s not a frequent topic of discussion, but doctors die, too.  And they don’t die like the rest of us. 

What’s unusual about them is not how much treatment they get compared to most Americans, but how little.  For all the time they spend fending off the deaths of others, they tend to be fairly serene when faced with death themselves.  They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care they could want.  But they go gently. 

Of course, doctors don’t want to die; they want to live.  But they know enough about modern medicine to know its limits.  And they know enough about death to know what all people fear most: dying in pain, and dying alone.

They’ve talked about this with their families.  They want to be sure, when the time comes, that no heroic measures will happen—that they will never experience, during their last moments on earth, someone breaking their ribs in an attempt to resuscitate them with CPR (that’s what happens if CPR is not done right). 

Almost all medical professionals have seen what we call “futile care” being performed on people.  That’s when doctors bring the cutting edge of technology to bear on a grievously ill person near the end of life.  The patient will get cut open, perforated with tubes, hooked up to machines, and assaulted with drugs.  All of this occurs in the Intensive Care Unit at a cost of tens of thousands of dollars a day. 

What it buys is misery we would not inflict on a terrorist.  I cannot count the number of times fellow physicians have told me, in words that vary only slightly, “Promise me if you find me like this that you’ll kill me.”  They mean it.  Some medical personnel wear medallions stamped “NO CODE” to tell physicians not to perform CPR on them. I have even seen it as a tattoo. 

To administer medical care that makes people suffer is anguishing. Physicians are trained to gather information without revealing any of their own feelings, but in private, among fellow doctors, they’ll vent. “How can anyone do that to their family members?” they’ll ask. 

I suspect it’s one reason physicians have higher rates of alcohol abuse and depression than professionals in most other fields.  I know it’s one reason I stopped participating in hospital care for the last 10 years of my practice.  How has it come to this—that doctors administer so much care that they wouldn’t want for themselves? 

The simple, or not-so-simple, answer is this: patients, doctors, and the system.  To see how patients play a role, imagine a scenario in which someone has lost consciousness and been admitted to an emergency room.  As is so often the case, no one has made a plan for this situation, and shocked and scared family members find themselves caught up in a maze of choices. They’re overwhelmed. 

When doctors ask if they want “everything” done, they answer yes. Then the nightmare begins.  Sometimes, a family really means “do everything,” but often they just mean “do everything that’s reasonable”. 

The problem is that they may not know what’s reasonable, nor, in their confusion and sorrow, will they ask about it or hear what a physician may be telling them. 

For their part, doctors told to do “everything” will do it, whether it is reasonable or not.  The above scenario is a common one.  Feeding into the problem are unrealistic expectations of what doctors can accomplish.  Many people think of CPR as a reliable lifesaver when, in fact, the results are usually poor.  I’ve had hundreds of people brought to me in the emergency room after getting CPR. 

Exactly one, a healthy man who’d had no heart troubles (for those who want specifics, he had a “tension pneumothorax”), walked out of the hospital.  If a patient suffers from severe illness, old age, or a terminal disease, the odds of a good outcome from CPR are infinitesimal, while the odds of suffering are overwhelming. 

Poor knowledge and misguided expectations lead to a lot of bad decisions.  But of course it’s not just patients making these things happen.  Doctors play an enabling role, too. 

The trouble is that even doctors who hate to administer futile care must find a way to address the wishes of patients and families. Imagine, once again, the emergency room with those grieving, possibly hysterical, family members.  They do not know the doctor. 

Establishing trust and confidence under such circumstances is a very delicate thing.  People are prepared to think the doctor is acting out of base motives, trying to save time, or money, or effort, especially if the doctor is advising against further treatment. 

Some doctors are stronger communicators than others, and some doctors are more adamant, but the pressures they all face are similar.  When I faced circumstances involving end-of-life choices, I adopted the approach of laying out only the options that I thought were reasonable (as I would in any situation) as early in the process as possible. 

When patients or families brought up unreasonable choices, I would discuss the issue in layman’s terms that portrayed the downsides clearly.  If patients or families still insisted on treatments I considered pointless or harmful, I would offer to transfer their care to another doctor or hospital. Should I have been more forceful at times? I know that some of those transfers still haunt me. 

One of the patients of whom I was most fond was an attorney from a famous political family.  She had severe diabetes and terrible circulation, and, at one point, she developed a painful sore on her foot.  Knowing the hazards of hospitals, I did everything I could to keep her from resorting to surgery. 

Still, she sought out outside experts with whom I had no relationship. Not knowing as much about her as I did, they decided to perform bypass surgery on her chronically clogged blood vessels in both legs.  This didn’t restore her circulation, and the surgical wounds wouldn’t heal.  Her feet became gangrenous, and she endured bilateral leg amputations.  Two weeks later, in the famous medical center in which all this had occurred, she died. 

It’s easy to find fault with both doctors and patients in such stories, but in many ways all the parties are simply victims of a larger system that encourages excessive treatment.  In some unfortunate cases, doctors use the fee-for-service model to do everything they can, no matter how pointless, to make money. 

More commonly, though, doctors are fearful of litigation and do whatever they’re asked, with little feedback, to avoid getting in trouble.  Even when the right preparations have been made, the system can still swallow people up. 

One of my patients was a man named Jack, a 78-year-old who had been ill for years and undergone about 15 major surgical procedures. He explained to me that he never, under any circumstances, wanted to be placed on life support machines again. 

One Saturday, however, Jack suffered a massive stroke and got admitted to the emergency room unconscious, without his wife. Doctors did everything possible to resuscitate him and put him on life support in the ICU.  This was Jack’s worst nightmare.  When I arrived at the hospital and took over Jack’s care, I spoke to his wife and to hospital staff, bringing in my office notes with his care preferences.  Then I turned off the life support machines and sat with him.  He died two hours later. 

Even with all his wishes documented, Jack hadn’t died as he’d hoped.  The system had intervened.  One of the nurses, I later found out, even reported my unplugging of Jack to the authorities as a possible homicide.  Nothing came of it, of course; Jack’s wishes had been spelled out explicitly, and he’d left the paperwork to prove it. But the prospect of a police investigation is terrifying for any physician.  I could far more easily have left Jack on life support against his stated wishes, prolonging his life, and his suffering, a few more weeks.  I would even have made a little more money, and Medicare would have ended up with an additional $500,000 bill. 

It’s no wonder many doctors err on the side of overtreatment.  But doctors still don’t over-treat themselves.  They see the consequences of this constantly.  Almost anyone can find a way to die in peace at home, and pain can be managed better than ever. 

Hospice care, which focuses on providing terminally ill patients with comfort and dignity rather than on futile cures, provides most people with much better final days.  Amazingly, studies have found that people placed in hospice care often live longer than people with the same disease who are seeking active cures. 

I was struck to hear on the radio recently that the famous reporter Tom Wicker had “died peacefully at home, surrounded by his family”.  Such stories are, thankfully, increasingly common. 

Several years ago, my older cousin Torch (born at home by the light of a flashlight—or torch) had a seizure that turned out to be the result of lung cancer that had gone to his brain.  I arranged for him to see various specialists, and we learned that with aggressive treatment of his condition, including three to five hospital visits a week for chemotherapy, he would live perhaps four months. 

Ultimately, Torch decided against any treatment and simply took pills for brain swelling.  He moved in with me.  We spent the next eight months doing a bunch of things that he enjoyed, having fun together like we hadn't had in decades. 

We went to Disneyland, his first time.  We’d hang out at home.  Torch was a sports nut, and he was very happy to watch sports and eat my cooking.  He even gained a bit of weight, eating his favorite foods rather than hospital foods.  He had no serious pain, and he remained high-spirited.  One day, he didn’t wake up.  He spent the next three days in a coma-like sleep and then died. 

The cost of his medical care for those eight months, for the one drug he was taking, was about $20.  Torch was no doctor, but he knew he wanted a life of quality, not just quantity.  Don’t most of us? If there is a state of the art of end-of-life care, it is this: death with dignity. 

As for me, my physician has my choices. They were easy to make, as they are for most physicians.  There will be no heroics, and I will go gentle into that good night.  Like my mentor Charlie.  Like my cousin Torch.  Like my fellow doctors. 

Ken Murray, MD, is Clinical Assistant Professor of Family Medicine at USC.

Micromax story



Micromax story

Rahul Sharma, co-founder and executive director of Micromax, has to be prised away from his Gurgaon office. It’s understandable. Micromax has, in a span of 13 years, gone from being the company that made parts for Nokia, to one selling cheap phones no one really trusted, to being the third most successful handset brand in India, according to a recent study.
The October report by technology analysts CyberMedia Research also showed it to be the No. 1 in tablets, ahead of Samsung and Apple; data released in January shows that Samsung is leading again, by a small margin. Recently the company launched Android set-top boxes and televisions as well, recording a turnover of Rs.1,978 crore in 2011-12.
We meet at The Oberoi hotel in Gurgaon, and 38-year-old Sharma comes across as down-to-earth and relatable. Sharma is—in his own words—a middle-class boy who made it big, but despite the money, life hasn’t changed much. “My family is my parents and my sisters. My sisters are married now so it’s really just my parents and me,” he says.
His passion lies in creating new technologies. “Other people want to go to the golf course, I want to come to office, this is where I have fun. All four of us (the founders) are techies that way.” Sharma’s a geek who loves his Bose SoundDock and whose pet hobby is observing how other companies implement technology, and figuring out how that can be improved.
In school, Sharma knew he wanted to be an engineer, though he didn’t know exactly what he wanted to do. By the time he finished studying mechanical engineering in Nagpur, Maharashtra, he had decided that he didn’t want to enter the corporate world as so many classmates would.
He says, “We were all friends; me and Rajesh (Agarwal) were neighbours, and I knew Sumeet (Arora) and Vikas (Jain) from college, and when we had finished studying, it was 2000, and we thought, everything is booming, we should also start a business.”
At the time, Agarwal was already in the hardware business, but since the IT boom was at its peak, the friends decided to get into the software industry.
“One thing we couldn’t decide on was a name—we had all sorts of crazy ideas which I can’t even remember, but then we thought Micromax sounded good. We thought, this is cool. So we named the company Micromax Informatics.”
Our drinks come, masala chai for me and cappuccino for him, and after taking a sip, Sharma grins and says: “That’s still our name, it doesn’t make sense any more, but we went to the registrar and found that it was the only name with Micromax available so we couldn’t change it any more. Otherwise we should be Micromax Telematics.” This eye for detail is precisely what helped drive Micromax’s growth.
In the early days, the team worked on low-end technology. The company got a boost when Nokia became a partner in 2001, but the real growth came from Bharti Airtel Ltd. Sharma explains: “In those days, payphones were only BSNL (Bharat Sanchar Nigam Ltd), MTNL (Mahanagar Telephone Nigam Ltd) lines because the technology for the billing was operating at a particular frequency which only those lines could work at. That was such a stupid thing. We created a simple tool to convert the frequency, which allowed Airtel to build a huge network of payphones, and it became a big business for us.”
"IN PARENTHESIS: Sharma loves cars, and felt he had arrived when he bought a BMW. Combining his love for travel and cars, he’s a Formula One fan who says that attending the Circuit de Spa-Francorchamps in Belgium is one of the most memorable events of his life. He says: “I had the opportunity to visit this circuit and the experience was truly unbelievable. I used to take an off on the race day and tell everyone not to disturb me while watching the race.” This isn’t possible any more, he says, but adds, “Work keeps me busy but I still make sure I catch the highlights of every race”"
That’s when Sharma and his fellow entrepreneurs started feeling they had arrived. He says: “I was the son of a school principal, Sumeet was the son of a brigadier. We were all middle-class boys who were suddenly driving BMWs, and life was good.” Yet Sharma felt more was possible.
While Agarwal and Jain are directly involved in building the business, and Arora is the head of technology, Sharma’s role is to incubate technology. He jokes, “We spent a lot of money educating Sumeet, so now we come up with strange ideas and he finds ways to make them work.”
One of those strange ideas was to start making mobile phones. Sharma says: “We started off with a phone that you would only have to charge once a month. This was very simple to do, by the way, and to this day I don’t know why every company isn’t already doing this.”
They made the phone, but no distributor wanted to touch it.
After this experience, Sharma decided to trust his own judgement, and focus on creating new types of technology instead of on price. “We don’t do focus groups,” he says, “Samsung will do a focus group, Nokia will do a focus group, everyone does a focus group and you end up with no new ideas.” And new ideas, he had decided, were crucial to the continued growth of Micromax.
To get ideas, Sharma says he goes to mobile phone stores to work as a salesman from time to time, and gets feedback from customers. That’s what led him to approach Arora with the idea of dual SIM phones which used a single baseband, so as to make the technology affordable. Today, dual SIM phones are extremely popular, and are made by companies like Nokia and Samsung as well—Micromax was the first to introduce both the 30-day battery recharge and dual SIM phones with a single baseband in India.
“I’m not the customer. You’re not the customer. There’s around 5% of people who will use the full features of a phone, and need to pay Rs.40,000 for a phone. For the 95%, we make technology that makes their life better and we don’t charge them for things they don’t need,” he says.
At the same time, he doesn’t like the suggestion that they’re playing a pricing game with the competition. He says, “When we came out, we were cheaper because we wanted to give a fair deal to buyers, but then other people jumped in with really cheap, low-quality handsets.”
“We were sandwiched between them and between the Nokias and Samsungs, and this muddled our position. But most of those companies aren’t here any more, because the only thing they offered was the price.” He says this with a great deal of satisfaction, though there’s no denying that Micromax does offer products for a lot less than the international competition—its recently launched smartphones and tablets are almost half the price of similar devices from brands like Samsung.
Building TVs shows Micromax’s commitment to doing different things. “It not really about TVs, it’s about screens,” Sharma says. “In time, all TVs are going to be smart, and they’re going to talk to your phone and your tablet. We want to make sure that you have a Micromax TV, a Micromax tablet and a Micromax phone, and to do that, we’re starting with the best TVs we can make, and we’re going to keep improving these.”
Part of Micromax’s growth also comes from looking at the international market. Sharma says he has high hopes of the US and European markets. He mixes his love of travelling with business—he has just returned from a business trip to the US, which he calls a great vacation.
“We started off small because there was some scepticism but we’re seeing a good response from the carriers in the US, which is how you get into that market. We’re able to offer a value which Chinese companies like Huawei and ZTE aren’t doing, because their mindset is to compete on price. We learnt early that you’re not going to succeed on just price—you need to offer something more,” he says.
Today, Micromax has a presence in 12 countries besides India, and claims to be selling 1.75 million handsets and 70,000 tablets every month. It’s targeting Rs.2,800 crore in turnover, which would require the company to continue to gain momentum around the world, but Sharma is confident. For now, though, he’s looking forward to trips to the US, to travel, and to set these plans in motion.


Short History Of The Debt Ceiling/Government Shutdowns



Short History Of The Debt Ceiling/Government Shutdowns

With all the political talk about the debt ceiling, we thought a short history of the debt ceiling and government shutdowns was in order.

The Second Liberty Bond Act of 1917


Prior to World War 1 every bond issued by the U.S. Treasury needed to be approved by Congress.  During World War 1 Congress approved four different Liberty Bond Acts to issue bonds (and a fifth  Victory Loan Act of 1919).  With the second Liberty Bond Act in 1917, Congress also established a $15 billion “aggregate debt limit” because it was easier than countless bills to approve individual bond offerings.  Thus was born the debt ceiling.  It has been raised (and lowered) almost 100 times since.

History of Debt Ceiling Fights

Throughout history the debt ceiling has been called unnecessary and dangerous, much as it is now.  Calls for its elimination are at least 80 years old.  A review of the stories below read like the talking points from President Obama’s press conference earlier this week.

(h/t The Big Picture):

    The Milwaukee Journal – (March 20, 1939) Boost for Debt Limit Ditched -Roosevelt Calls on Congress, However , to Remove Curb on Issue of Bonds
    President Roosevelt informed congress Monday that there is no present necessity for legislation to increase the legal limitation of $45,000,000,000 on the toal public debt, but recommended increase of the present $30,000,000,000 limitation on outstanding government bonds. The special message transmitted a letter from Treasury Secretary Morgenthau informing thim that the current balances of the treasury indicate no immediate necessity for advancing the debt ceiling.
    The New York Times – (March 31, 1939) PRESIDENT URGES ENDING OF LIMIT ON BONDED DEBT
    President Roosevelt told Congress today that there was no immediate need for raising the $45,000,000,000 limitation on the public debt. He asked, however, that the $30,000,000,000 “ceiling” on Treasury bond issues be removed.
    The Portsmouth Times – (November 9, 1940) The Debt Taboo Is Lifted
    Treasury Secretary Morgenthau officially opens post-campaign business with an announcement that he is going to ask congress for a public debt limit of either 60 or 65 billion dollars. That is a matter which could not have been discussed conveniently in advance of Election Day, but must be discussed now. Like the skeleton in the closet it can’t be kept hidden forever.
    The New York Times (February 15, 1941) $65,000,000,000 Debt Limit Voted; Senate Critics Deny It Is Enough
    The Senate approved today, with slight changes, the House bill to raise the national debt limit to $65,000,000,000, a ceiling which, according to Administration spokesmen, will suffice until June 30, 1942, at least.
    The Pittsburgh Post-Gazette – (May 10, 1944) Boosting the Debt Ceiling
    With the national debt already standing at approximately 187 billion and slated to reach the 240 billion mark next March, this business of raising the limit by successive jumps instead of taking it off altogether is little more than a psychological gesture. By holding that flexible limit over the Administration’s head, perhaps some congressmen feel that they will exert pressure on some officials to hold down expenditures. But since those officials know as well as the congressmen that the debt limit is going up and up until the war is won, maybe this economy gesture is intended only for public consumption.


In rare instances the debt ceiling was even cut:

    The St. Petersburg Times – (April 24, 1946) Senators Favor Debt Limit Cut
    The first step to cut back the limit of what the federal government might owe, from its historic high of $ 300,000,000,000 was taken yesterday by the senate finance committee. The committee voted to reduce the public debt limit to $275,000,000,000. Its unanimous action forecast congressional approval for the first reduction in the debt ceiling, pushed upward steadily during the war years.

More often than not, however, the debt ceiling is being raised:

    The Lewiston Daily Sun – (June 28, 1955)
Extension of National Debt Ceiling Voted; House Action Leaves Limit at 281 Billion for Year
    The House voted 226-56 today to continue for another year the “temporary” 281 billion dollar limit on the national debt. The Senate is expected to act by Thursday: without congressional action, the limit would fall back then to 275 billion. Democrats got in some additional cracks at the administration on its handling of government finances before the extension sailed through on the 170 vote margin in the House.
    The New York Times – (July 26, 1958) The Federal Debt Ceiling
    “A specter that has been putting in an appearance more or less regularly every year now since 1953 is again back to haunt the Administration. That is the problem of keeping the public dept within the dept ceiling – a problem that will be additionally complicated in the present fiscal year at least by the prospect of a very substantial budget deficit. The dept ceiling is a comparatively new instrument of fiscal control in this country. In 1938, with the dept then standing at what many regarded as the dangerously high level of $37 billion, Congress acted to discourage future reckless spending by setting a limit on the debt of $45 billion. During the ensuing eight years, most of which were marked by war or preparation for war, Congress had little choice but to revise this limited ceiling upward when such action was requested by the President. The ceiling was lifted five times in that period, until it reached $300 billion in 1945. A year later it was revised downward for the first time to its present level of $275 billion.”
    The Pittsburgh Press – (June 15, 1962) $308 Billion Debt Ceiling is Approved
    The House has approved President Kennedy’s request to raise the national debt ceiling to a record 308 billion dollars after rejecting a Republican effort to trim the hike. The vote on final approval late yesterday was 210 to 192, an 18-vote margin. Asked whether Republicans were justified in charging the Pentagon had tried to “black mail” them into supporting the bill, President Kennedy said he hoped everyone understood the possible effects of failing to raise the limit.
    The Eugene Register–Guard – (June 10, 1966) Another June Rite: Raising Debt Limit
    Raising the national debt limit has become a June rite in Congress. This year the only doubt about it is whether the ceiling will be boosted by $2 billion or $4 billion. Congress already has approved the projects and voted the appropriation that will call for today’s federal debt to rise – as it has been doing year after year. The United States Treasury says it needs a $332 billion limit to give it elbow room to maneuver and be sure of paying its bills. The House says $330 billion is enough. The Senate will discuss the question next week.
    The Pittsburgh Post- Gazette – (January 31, 1967) US Seeks loans to pay its Bills
    Secretary of the Treasury Henry H. Fowler told Congress today that the government would be unable to pay all its bill if the ceiling on the national debt was not lifted within 30 days. Fowler ran into Republican hostility in day-long testimony before the House Ways and Means Committee — not on the need to raise the limit but on the government’s debt and budget accounting methods as well as related matters. Fowler asked that the ceiling be raised by $7 billion to $337 billion to cover the period until June 30. Further legislation covering the period after June 30 will be needed later he said.
    The Palm Beach Post – (May 26, 1970) Congress Asked to Hike Debt Ceiling
    The Nixon administration asked Congress yesterday for an $18 billion increase in the national debt ceiling primarily because the slumping economy is producing lower than expected federal income. The administration asked Congress for an $418 billion increase in both the permanent ceiling no at $365 billion and in the temporary ceiling of $377 billion the government is operation under this fiscal year. Treasury Secretary David M Kennedy and Budget Director Robert P Mayo told the Ilouse Ways and Means committee the increase was needed to cover a $1.8 billion deficit this fiscal year and $1.3 billion deficit in fiscal 1971.
    The Miami News – (December 1, 1973) Senate may meet tomorrow on debt limit, election reform
    The federal government’s debt is $63 billion over the legal limit and the Senate is preparing for its first Sunday session in 112 years – all because of a tangle created by an election reform measure. Despite the government’s technical violation, officials said bonds and other government debts could be paid off over the next few days out of about $4.5 billion in cash on hand.
    The New York Times – (November 14, 1975) CONGRESS ADOPTS NEW DEBT CEILING
    After a partisan dispute and a last-minute appeal by Speaker Carl Albert, the House of Representatives narrowly approved today a bill increasing the Government’s debt limit.
    The Youngstown Vindicator – (October 5, 1977) Rise in Debt Limit Approved in House
    Concerns about the government being unable to borrow more money can be set aside. The ceiling on the national debt will be raised. But a congressional stalemate over raising the debt caused some uneasy moments at the Treasury Department. The government also had to do some juggling of the books to hold its auction of short term treasury bills to investors on Monday. The loan from the Federal Reserve pushed the national debt almost to its limit, teaching $ 699.96 billions dollars.
    The Montreal Gazette – (April 3, 1979) U.S. Raises Ceiling on National Debt
    The U.S. House of Representatives passed legislation yesterday extending the government’s borrowing authority and preventing the U.S. from defaulting on its debts for the first in its history. The vote to accept Senate amendments and to send the legislation to the White House was 209-165. It came after the House rejected, 216-160, a Republican-led attempt to tack on a strong amendment calling for a balanced federal budget. The House vote came after U.S. Treasury Secretary Michael Blumenthal claimed in a letter that the treasury was on the verge of a default and that retired persons would be hit first. About $8 billion in Social Security cheques already had been mailed to 35 million Americans, Blumenthal said, and there would be no funds to cover them if the House failed to act. In addition, he said, the treasury would not be able to pay civil service retirement benefits, veterans benefits and railroad retirement benefits due for collection today.
    The New York Times – (November 1, 1983) SENATE DEFEATS BILL TO INCREASE DEBT CEILING
    The Senate, in an extraordinary and unexpected move, defeated a bill late tonight to raise the nation’s debt limit, leaving the Treasury without the authority to borrow. The defeat, with both Republicans and Democrats voting against the bill, came on a vote of 56 to 39 just after 11:30 P.M. Although there is no immediate threat of shutting down the Government, the Senate defeat left unclear whether the Senate would be able to approve an increase in the ceiling in time to prevent a serious disruption. Twenty-five Republicans joined 31 Democrats in voting against the bill. Twenty-eight Republicans and 11 Democrats voted for it. The defeat was seen by some Republicans and Democrats as a way to put enough pressure on the White House and the Congress to get both to agree on some major measures to reduce the projected Federal budget deficits through spending reductions, tax increases or both.
    The New York Times – (May 04, 1987) Time Bomb in the Debt Ceiling
    There is a time bomb in the national debt ceiling, set to go off at midnight May 15. If a new and higher ceiling has not been set, or the current ceiling extended, Government borrowing must stop and the United States will slide quickly into default. Unthinkable, but that’s how Congress wired the debt limit law last October. Each year Congress goes down to the deadline, then lifts the ceiling. But the game is trickier this year, and could have more serious consequences. Congress threatens yet another crisis to rattle already-worried financial markets. What’s needed instead is a simple bill to raise the ceiling, with dispatch and no strings. The ceiling is a sham. It has no effect on the debt. Deficits create debt; the Reagan deficits have more than doubled the national debt, to $2.25 trillion, ceilings notwithstanding. Each time Government borrowing gets close, the ceiling is raised – but not without costly eleventh-hour shenanigans that force the Treasury into devious financing.
    The New York Times – (May 12, 1987) REAGAN URGES A RISE IN DEBT CEILING
    Warning of dire financial consequences, the White House urged Congress today to raise the national debt ceiling before the Government runs out of authority to borrow money this Friday. ”We cannot overestimate the effect of such a dereliction of duty,” Marlin Fitzwater, the President’s spokesman, said. But a number of conservative Republicans refuse to heed the Administration, and White House legislative strategists say they do not have the votes to assure passage of such a measure. Periodic Ritual: The fight to raise the debt ceiling is a periodic ritual on Capitol Hill, and every battle is surrounded by predictions of fiscal ruin. Accordingly, there is deep skepticism that the Government will ever be allowed to run out of money and stop paying its bills.
    The New York Times – (October 19, 1989) Debt Limit Increase Is Sought
    “The Treasury Department has formally notified Congress that it would like to have an increase in the national debt ceiling in place by Oct. 24 to permit planning for Treasury bond auctions and avoid a default on Government obligations when the current ceiling expires on Oct. 31. Some House Democrats fear that the Administration is trying to create an artificial need for a short-term increase of the debt ceiling, to which Senate supporters of a capital gains tax cut could attach their proposal.”
    The New York Times – (October 8, 1990) U.S. Sales Contingent on New Debt Ceiling
    Treasury financings this holiday-shortened week are confined to tomorrow’s auction of three- and six-month bills and Wednesday’s auction of seven-year notes. On Thursday, the Resolution Funding Corporation, the agency established to raise money to finance the savings and loan bailout, will auction 30-year bonds. These auctions, however, are contingent on a new debt-ceiling increase being enacted. The rate for a three-month bill on Friday was 7.04 percent and for a six-month bill it was 7.08 percent. By late in the day the outstanding seven-year note was trading at a price to yield 8.50 percent.
    The New York Times – (November 11, 1995) Debt Ceiling Impasse Dampens Bond Prices
    Discussing the possibility of a Government default, Mr. Gamba said, “I believe that the repercussions would far exceed anyone’s estimation.” But, he added: “I don’t believe the Government would allow that to take place. It’s really hard to say how the market would react, because it’s never happened.” Carroll J. Delaney, director of research at Stires, O’Donnell & Company, called the impasse between Congress and the Administration macho theatrics that were being played to the hilt. Still, he saw a potential for both a “loss of credibility and a significant decline in prices.” Mr. Delaney said that the “procrastination and posturing is negative for both the markets and national image in the long run.” He added that if “the Treasury pulls out all stops to insure timely payment on principal and interest,” there will be a short-term, temporary effect of uninvested cash looking for a home.
    The New York Times – (January 13, 1996) Gingrich Promises Solution on Debt Ceiling
    Speaker Newt Gingrich promised today to avoid more uncertainty about the nation’s borrowing during the impasse on the Federal budget, saying, “We will find a way to take care of the debt ceiling.” Mr. Gingrich, a Georgia Republican, made the comment at a news conference here and left immediately for the next stop on a 10-day fund-raising tour for Republicans. The nation’s debt reached the statutory limit of $4.9 trillion on Nov. 15, and since then Treasury Secretary Robert E. Rubin has avoided defaulting on bonds by borrowing from Government pension funds, a practice that does not count against the debt ceiling.
    The New York Times – (March 1, 2002) G.O.P. Strategy On Debt Ceiling
    Republican leaders in the House told the Bush administration that they did not have enough votes to increase the legal limit on the national debt and urged the White House to attach the measure to another piece of popular legislation, possibly a supplemental military appropriations bill. The administration has asked Congress to raise the debt limit by $750 billion, to $6.7 trillion, by the end of March, when the government is likely to breach the limit.
    The New York Times – (December 25, 2002) Bush Seeks Increase in National Debt Limit
    The Bush administration asked Congress today to approve another increase in the limit on national debt, saying it will run out of the authority to borrow money by late February. The deputy Treasury secretary, Kenneth W. Dam, in a letter to the House speaker, J. Dennis Hastert, cited the cost of combating terrorism and the economic slowdown for the government’s growing indebtedness. The federal government, which enjoyed a budget surplus as recently as two years ago, had a shortfall of $157 billion this year and is expected to have a larger one in 2003. Congress raised the government’s debt limit in July by $450 billion, to a total of $6.4 trillion, but administration officials predicted even then that they would need to raise the limit again by some time next year.
    The New York Times – (October 15, 2004) As U.S. Debt Ceiling Is Reached, Bush Administration Seeks to Raise It Once Again
    Less than a day after President Bush implied that Senator John Kerry lacked ”fiscal sanity,” the Bush administration said on Thursday that the federal government had hit the debt ceiling set by Congress and would have to borrow from the civil service retirement system until after the elections. Federal operations are unlikely to be affected because Congress is certain to raise the debt limit in a lame-duck session in November. Congressional Republicans had wanted to avoid an embarrassing vote to raise the debt ceiling just a few weeks before Election Day. Since Mr. Bush took office in January 2001, the federal debt has increased about 40 percent, or $2.1 trillion, to $7.4 trillion. Congress has raised the debt ceiling three times in three years, raising it most recently by $984 billion in May 2003.
    The New York Times – (March 16, 2006) Senate Approves Budget, Breaking Spending Limits
    The Senate narrowly approved a $2.8 trillion election-year budget Thursday that broke spending limits only hours after it increased federal borrowing power to avert a government default.  The budget decision at the end of a marathon day of voting followed a separate 52-to-48 Senate vote to increase the federal debt limit by $781 billion, bringing the debt ceiling to nearly $9 trillion. The move left Democrats attacking President Bush and Congressional Republicans for piling up record debt in their years in power.
    The New York Times – (July 30, 2008) Bush signs sweeping housing bill
    President George W. Bush signed into law on Wednesday a huge package of housing legislation that included broad authority for the Treasury Department to safeguard the nation’s two largest mortgage finance companies and a plan to help hundreds of thousands of troubled borrowers avoid losing their homes. The law authorizes the Treasury to rescue the mortgage finance giants, Fannie Mae and Freddie Mac, should they verge on collapse, potentially by spending tens of billions in federal monies. Together, the companies own or guarantee nearly half of the nation’s $12 trillion in mortgages. To accommodate the rescue plan for the mortgage companies, the bill raises the national debt ceiling to $10.6 trillion, an increase of $800 billion. The bill also creates significant liabilities and risks for taxpayers, that are virtually impossible to calculate.



History of Government Shutdowns – 18 Times Since 1976!

The laundry list above highlights how common these political battles have become over the debt ceiling. The same hyperbolic language used today has been used for the last 80 years. The same warnings used for the last 80 years are being used today. The same metaphors used for the last 80 years are being used today.

Given the recurrent nature of debt ceiling battles, it should come as little surprise that government shutdowns are also quite common. While we all remember the 1995 government shutdown, the list below tallies the 18 shutdowns since 1976:

    September 30 to October 11, 1976 (10 days)
    September 30 to October 13, 1977 (12 days)
    October 31 to November 9, 1977 (8 days)
    November 30 to December 9, 1977 (8 days)
    September 30 to October 18, 1978 (18 days
    September 30 to October 12, 1979 (11 days)
    November 20 to November 23, 1981 (2 days)
    September 30 to October 2, 1982 (1 day)
    December 17 to December 21, 1982 (3 days)
    November 10 to November 14, 1983 (3 days)
    September 30 to October 3, 1984 (2 days)
    October 3 to October 5, 1984 (1 day)
    October 16 to October 18, 1986 (1 day)
    December 18 to December 20, 1987 (1 day)
    October 5 to October 9, 1990 (3 days)
    November 13 to November 19, 1995 (5 days)
    December 5, 1995 to January 6, 1996 (21 days)

To be clear, most of these government shutdowns were due to a lack of a budget or Continuing Resolutions to fund and run the government. They did not necessarily occur because of the debt ceiling. We see this as a distinction without a difference.

Some of the more notable government shutdowns are highlighted below:

In December 1981 the government shut down and President Reagan sent home 20% of the non-military federal workforce (400,000 of 2.1 million people). During the episode there was no talk of default and the markets largely ignored it. (When the government was re-opened, all Federal employees were paid for the furloughed period.)

    November 20 to 23, 1981
    The spending feud between the Republican President Reagan and the Democratic Congress led to a shutdown. The November 20 deadline for a stop gap spending bill was on a Friday, however the House-Senate Conference delayed it to the following Monday to finalize a bill. The compromise bill consisted of 4 billion in spending savings/cuts, by reducing 2 percent of government spending. The White House in reviewing the numbers claimed there would only be 2 billion in savings from the proposed cuts. When presented with the bill in the morning, Reagan refused to sign Congress’s continuing resolution. Reporting in the New York Times stated “President Reagan vetoed the measure as “budget-busting.” Faced with the “difficult choice” of either signing the bill or disrupting Government services, the President said, “I have chosen the latter.” Reagan’s veto led to a shutdown in the government for the afternoon, forcing 400,000 of the 2.1 million federal employees home. Congress approved a stop gap spending bill which later the same day Reagan signed, ending the shutdown with work resuming the next morning. Only on December 12, 1981, did the Congress and and President Reagan approve an Omnibus spending bill, “setting the spending ceilings for the entire year, except in foreign aid. Thus, although the continuing resolution will be superseded by enactment of individual appropriation bills.”

In October 1984, 500,000 federal employees were sent home, one-sixth of the non-military federal workforce. During the episode there was no talk of default and the markets largely ignored it.  (When the government was re-opened, all Federal employees were paid for the furloughed period.)

    October 3 to 5, 1984
    Congress failed to pass a stopgap money bill, when a new budget was not passed for the new fiscal year. On October 4th 500,000 civil servants out of the 2.9 million civil servants where sent home from their jobs; leading to a partial shutdown. An emergency spending bill passed, which Reagan signed, and normal government operations continued the next morning. Both times the shutdowns were limited in their implications and impacts.

    November 10 – 14, 1985
    In Reagan’s second term the government again faced a shutdown. Congress could not agree over a budget agreement, and the need to extend the federal borrowing limit, beyond the limit which was 1,823 trillion, which contradicted plans to balance the budget by 1991.

In 1986, 500,000 federal employees were again sent home.  There was no talk of default and the markets largely shrugged it off.  (When the government was re-opened, all Federal employees were paid for the furloughed period.)

    October 16 – 18, 1986
    The Democratic Congress and the Presidency’s inability to agree on a new fiscal budget led to another half day furlough. Congress had also failed to come to an agreement and pass a spending bill. At Midday 500,000 non-essential federal employees were forced home. An emergency spending bill passed, returning employees the next day to work.

A shutdown in 1990 forced President H.W. Bush to go back on his “read my lips” tax pledge by raising taxes.  This was a seminal moment for the Republican party, which has not favored any kind of tax increase until this day (the fiscal cliff fight and subsequent tax deal is not considered a tax hike).

Again during this period there was no talk of default or market crashes because of the government shutdown. (To be fair, markets were under tremendous stress during this period, but it was more about Iraq’s invasion of Kuwait, the specter of the first war since Vietnam and an ongoing recession.)

    October 5 – 9, 1990
    All previous government shutdowns lasted only short periods of time, in 1990 that changed under Reagan’s successor and former Vice President, and then President George H.W. Bush when the government experienced its longest shutdown. In October 1990 the government was shut down a total of three days, because of Democratic Congress and the Republican President could not agree on a budget for 1991. As signs of economic problems were visible on the horizon, the battle was centered on the Gramm-Rudman-Hollings Act to balance the budget. Democrats wanted to increase taxes on the nation’s richest to reduce the ballooning deficit, but in the 1988 campaign Bush had promise he would not increase any taxes across the board. Bush threatened to veto any budget that Congress presented to him that included a tax increase.  Oct. 6, 1990: President Bush made good on his veto threat; with the budget vetoed and without a continuing resolution agreed upon, the government was shut down throughout the three day Columbus Day weekend. Both the President and Congress wanted to limit the negative impact of a shutdown, and they agreed the new budget would not include any surtax or tax increases. Over the weekend President Bush then signed a continuance, and government opened on Tuesday morning. The closure during the holiday weekend, limited the impact a three day closure would had on running the government, had it been closed for three days during the week. Bush was however, was forced to agree to tax increases, going against his main campaign pledge. The President signed the Omnibus Budget Reconciliation Act of 1990 on November 5, 1990 securing a budget for the fiscal year.

In 1995 a Democratic president shut down the federal government and sent nearly half the federal workforce home!  There was no talk of default and the markets largely ignored this episode.  During the few days of this shutdown the S&P500 rallied over 1.5% and the 10-year yield fell 5 basis points.

    November 13 – 19, 1995
    he first shutdown commenced at midnight on November 13, 2005, after a last minute attempt to avert the shut down; Clinton, Gingrich, House Majority Leader Dick Armey, and Senator Bob Dole met, but failed to reach a compromise. Clinton described the negotiations in his memoirs, My Life; “Armey replied gruffly that if I didn’t give in to them, they would shut the government down and my presidency would be over. I shot back, saying I would never allow their budget to become law, “even if I drop to 5 percent in the polls. If you want your budget, you’ll have to get someone else to sit in this chair!” Not surprisingly, we didn’t make a deal.” At the midnight, a partial shutdown led to 800,000 “nonessential employees” being sent home or told not to come into to work, with only emergency government services remained open. This represented 42 percent of the civil servants employed. The shutdown only ceased with an agreement on a temporary spending bill.
    December 5, 1995 to January 6, 1996
    When the temporary funding measures expired, and no continuance was yet again signed, the government shut down this time for 14 days from December 16, 1995 and finally ending on January 5, 1996; the longest shutdown period in US history. Although Congress enacted resolutions to end the shutdown and another temporary spending bill was signed ending the 21 day partial government shut down, the government did not go back to fully functioning until April. Clinton agreed to submit a seven year balanced budget plan approved by the Congressional Budget Office to ensure the government would keep running after the January 26, 1996 spending extension end date. With the agreement, Clinton declared ‘The era of big government is over.’



Conclusion – It Only Matters Because We Want It To Matter

The United States has a nearly 100-year history of debt ceiling and budget fights which include 18 federal government shutdowns between 1976 and 1995.

However, none of these prior episodes produced chaos in the financial markets or any speculation of default.  Why might the current stalemate prove different?

When the government is forced to shut down, the President has wide latitude in how this occurs.  So, the President can dictate how this will happen and presumably will do it in a way that helps him politically.

In the 1980s President Reagan was trying to shrink the government and had no problem demonstrating how unnecessary many government functions are.  So he closed the government several times and often sent home up to one quarter of the federal workforce (400,000 to 500,000) and justified it by calling them “non-essential.”   It was the Democrats who feared people asking, “What do these federal workers do and why do we pay them?” who rushed to agree with Reagan to re-open the government.

In 1995 President Clinton proclaimed the era of big government over, so he could not argue that the world economy hinged on the operation of the federal government.  Instead, he wanted the public to view a government shutdown as an unnecessary inconvenience.  He accomplished this by sending home almost half the federal workforce (800,000) and closing high profile programs/monuments like the National Zoo and the Washington Monument.  It worked.  News reports of saddened Boy Scouts that could not walk the steps of the Washington Monument and the sheer number of disrupted federal workers weakened the Republicans resolve and they quickly compromised with Clinton to reopen the government.

Now President Obama wants the government to be viewed as the single most important driving force in the world economy.  So, a shutdown brings talk of default, depression and crashing markets.  This fear of armageddon is the leverage he hopes to use over the House Republicans.  And to be fair, he needs this kind of leverage.  As we detailed last month, the Republicans and Democrats are more divided now than anytime since the end of the Civil War.  Both sides are dug in and will to take it to the brink.  If one side or the other was not prepared to go to the brink, they would have no leverage over the other side.  Unfortunately, this means what used to be a non-economic event or merely an unnecessary inconvenience is now a critically important event to the world economy.