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Shutdown: Day Two

As the federal government shutdown enters day two, there are no signs of a quick resolution. Instead it now appears that this shutdown could last for a couple of weeks and will only be resolved as part of a larger deal to increase the debt limit in exchange for concessions on government spending and maybe even on health reform implementation.

Yesterday House Republicans brought up three bills to fund specific areas of government through December 15th. These “mini-CRs” would allow temporary funding for the National Park Service and the Department of Veterans Affairs, as well as allow the District of Columbia to use its own revenue to keep operating. The Democrats dismissed the tactic and reiterated their demand for a “clean” CR free of policy riders that would defund or delay the health-care overhaul. All three measures were called up under a suspension of the rules, which meant they required a two-thirds majority to pass. Only a handful of Democrats broke ranks to support the bills and so they all were defeated. All three measures will be brought up again this morning under regular rules so they can be passed by a simple majority, but they have little chance of advancing in the Senate and also drew a White House veto threat on Tuesday.

All of the political antics over the CR is just the opening act of what many are predicting will be a much bigger battle as the federal government is due to hit it borrowing limit on October 17th. The shutdown could continue until then and used as leverage to bring about a “grand bargain” that would resolve the debt limit, FY14 funding, and sequestration, as well as opening up ongoing negotiations on a long list of policy provisions favored by Republicans. They could include delaying implementation of the health care law for a year, instructions for a revenue-neutral tax overhaul, approval of the Keystone XL pipeline, a rewrite of financial regulations, new spending cuts, and other changes.

But absolutely nothing is certain right now except that federal government remains closed and Members of Congress continue to play the blame game.

Shutdown: Day One

The federal government shutdown is now in full effect. Initially many federal workers were allowed to go into work this morning to receive furlough notices and implement shutdown plans – cancelling meetings, setting up out-of-office replies on email, and dropping off their Blackberries with IT personnel. And while there are some federal workers who have been deemed “essential personnel” and are lucky enough to be at work, there is no guarantee that they will be paid.

On Capitol Hill, elected officials are still discussing ways to move forward and get government up and running again. The Senate Democratic leadership, with support from the White House, continue to push for a “clean” continuing resolution (CR) to run through November 15th and allow time to come to agreement on how best to fund federal government for FY14. House Republican leadership continue to argue that health care reform delays must be included in any CR in order to get support from a majority of their members.

In a surprise (not) move, House GOP has announced that this afternoon they will bring up for consideration three separate CR bills to continue funding National Park Service and the Department of Veterans Affairs, as well as allow the District of Columbia to use its own revenue to keep operating. The bills will not include extraneous policy riders regarding health care reform and would allow some key federal operations to resume while larger negotiations continue surrounding the FY14 funding. All of the mini-CRs would run through December 15th and fund agencies at the same level as proposed under the comprehensive CR that both chambers have been battling over for the past week and a half.

Senate Democrats have already indicated that they will not support the GOP’s piecemeal approach.

Senate Sends Amended CR Back to the House

Today, the Senate approved an amended version of the House-passed Continuing Resolution (CR) to keep the federal government running when the fiscal year ends on September 30th. The Senate-amended version strips out the House language defunding the Affordable Care Act (ACA) and changes the end date of the CR from December 15th to November 15th.

The bill now goes back to the House for consideration. House leaders are expected to amend it further and send it back to the Senate. House conservatives are pushing for an amendment to delay implementation of the ACA individual mandate for one year. House leaders may also put forward a short one or two week CR to keep government funded while they continue to negotiate a longer-term agreement with Senate Democrats and the White House. House GOP leadership will meet tomorrow to determine their course of action.

The situation remains very fluid. If both chambers do not pass the same bill and send it to the President for his signature by October 1, the federal government will shut down.

To Shutdown, or Not to Shutdown…

That is the question on everyone’s minds. Today the Senate will offer amendments to the House-passed continuing resolution with the expectation that they will vote on the modified bill no later than Sunday and send it back to the House for consideration. House Republican leadership is already formulating a strategy to further modify the Senate-amended CR and possibly send it back to the Senate again. That measure could contain a one-year delay of the health care law that would draw broad Democratic opposition and a White House veto threat – not to mention that the clock will likely run out and send us into a government shutdown. The House GOP is also reserving the option of passing a “clean” one-week CR to avoid a partial government shutdown while negotiations continue.

The Office of Federal Relations will continue to monitor the situation and provide further updates throughout the week and into the weekend.

Eight Days to End of Fiscal Year

There are just eight days left in the current federal fiscal year yet there is no certainty as to how lawmakers will resolve their partisan differences before October 1st. The continuing resolution (CR) approved by the House last Friday will be the focus in the Senate where they will attempt to modify the bill before sending it back to the House for consideration. The House, meanwhile, will shift their immediate attention to a proposal to raise the debt ceiling until after the 2014 November elections.

Continuing Resolution: Senate Democrats will greatly modify the House passed CR to strip it of language defunding the Affordable Care Act (ACA) and keep government funded at current levels. They will send that back to the House where Republican leadership may or may not find enough votes to approve the modified version of the bill. This could lead to a series of back and forth votes between the House and Senate in an effort to avoid a government shutdown if there is no deal by next Monday.

But even a clean, level-funded CR may face opposition from some House Democrats who continue to argue that austerity spending plans are harming the economy and threatening job growth since a level-funded CR would trigger automatic, across-the-board cuts (sequestration). However, those cuts would not begin until January so Congress could still pass separate legislation late in the year to undo them.

Debt Ceiling: Meanwhile, House Republican leaders are drafting a debt limit bill that will likely be unveiled next week and would remove the ceiling on federal borrowing authority beyond the 2014 elections. And, just like their CR, it would delay implementation of the ACA, as well as cut mandatory spending, provide instructions for a tax overhaul, and promote deregulation and energy development.

Although the White House would not necessarily object to a debt limit suspension mechanism, the House plan would be laden with provisions the White House and congressional Democrats oppose. Obama has said he wants a clean debt limit increase before it expires in mid-October and he has ruled out negotiating over an increase in borrowing authority.