Taxes & Spending

Will the Government Shut Down?

A federal government shutdown at midnight on Friday has become a very real possibility. 

At the White House on Tuesday, Speaker of the House John Boehner (R.-Ohio) told President Obama and Senate Majority Leader Harry Reid (D.-Nev.)  that Republicans want real and significant spending cuts in any deal for a long-term Continuing Resolution (CR) to fund the government.  Obama and Reid refused to accept real and deeper spending cuts, which broke down the negotiations.

The current CR expires at midnight on April 8, and if no deal is reached by then, the federal government will shut down for lack of funding.

At the White House meeting, Obama and Reid offered $33 billion in cuts for the rest of the fiscal year, some from mandatory spending, and which included $10 billion in cuts that have already taken effect.  The meeting ended without a deal because Boehner refused to budge from demands for deeper cuts, specifically in discretionary spending, which would shrink the size of government in the future.

“As I’ve said throughout this process, since the spending binge in Washington is hurting job creation in this country, we’re going to fight for the largest cuts possible—real cuts, not more smoke and mirrors,” said Boehner after the meeting. “We’ve made clear that Democrats’ $33 billion proposal is not enough, and much of it is based on gimmicks.”

Reid and Obama refused to cut more from discretionary spending, saying that even these small cuts to a budget deficit this year projected to be $1.6 trillion, would severely harm Americans.

“We cannot take it all from domestic discretionary spending” Reid said.

The President does not consider the difference in cutting the size of government a priority. “The way they are categorized means that those are called mandatory spending cuts as opposed to discretionary spending cuts.  But they’re still cuts,” said Obama.

Republicans, however, want all spending cuts from discretionary spending, so that the baseline government spending in future years is lower, which would shrink the size of government.  The House-passed CR of $61 billion was the largest single cut in discretionary spending in history.

Obama and Reid seemed unable to understand Boehner’s strong position on government spending.

“It’s not a question of numbers, it’s ideological with them,” said Reid—quite accurately—of the Republican position.

“What they are now saying is, ‘Well, we’re not sure that every single one of the cuts that you’ve made are ones that we agree to.  We’d rather have this cut rather than that cut.  That’s not the basis for shutting down the government,” said Obama after the meeting.

The government is currently being funded on a three-week CR that expires on April 8.  The House Republicans passed a CR in February, but the Democrat Senate defeated it. For the past five weeks, the government has been funded with short-term CRs from the House, which cut spending at a rate of $2 billion per week.  

As the White House and Senate Democrats refused to offer any real spending cuts over these weeks-long negotiations, Boehner offered a one-week CR on Monday to continue to cut spending while preventing a government shutdown.  The short-term CR would cut spending by $12 billion in one week and also fund the Department of Defense for the rest of the fiscal year, which ends on Sept. 30. 

“We’ve introduced a bill that includes $12 billion in cuts over the next week and funds our troops through the year.  We may pass this to keep the government running if Democrats don’t listen to the American people and get serious about cutting spending,” said Boehner.

The one-week CR was cleverly crafted by the Republicans to include all the provisions that the Democrats had already indicated support for so that it would be difficult for the Senate to vote against it.  Reid was outraged on Tuesday when he was double-checked by Republicans, who included all of Reid’s own proposed spending cuts to craft the $12 billion cuts in the one-week CR.

“They took all the domestic discretionary we agreed to do …  stuck them into this short-term CR they have for a one-week extension.  And then they are trying to fund the Defense Department for one year when everyone else is funding it for one week.  And then if that’s not good enough, they stick an abortion rider on this.  It seems that every step we take, it’s something just to poke us in the eye,” said an exasperated Reid.

Despite the fact that the one-week CR has all the spending cuts that the Senate Democrats have put on the table so far in the process, Reid said that the one-week extension would never get passed in his Senate.

Minority Leader Mitch McConnell (R.-Ky.) was more encouraged about Senate passage of the one-week CR.  “We think it’s a credible and sensible proposal. And I hope the Senate will take it up rapidly and pass it before Friday,” said McConnell on Tuesday afternoon.

In an odd political decision, Reid seemed willing to shut down the government rather than accept his own spending cuts for one week and to keep the military funded. And Reid continued to blame the Tea Party for a possible shutdown. 

“The Tea Party is driving what is going on in the House of Representatives, and we cannot do what they want done,” Reid told reporters on Tuesday.

In the House, the Minority Whip Steny Hoyer (D.-Md.) said that he would work to prevent any moderate Democrats from supporting the one-week CR.  “I will oppose this bill.  It is inconsistent with what I think Mr. Cantor said in terms of another short-term CR,” Hoyer told reporters at his weekly pen-and-pad on Tuesday.

One hour later, House Majority Leader Eric Cantor (R.-Va.) responded to Hoyer at his own weekly pen-and-pad.

“We are absolutely accepting of the reality that the Democrats are not joining us in wanting to avoid a shutdown.  That is pretty obvious if Steny Hoyer is out there saying it,” said Cantor.  “So we would certainly be confident if the bill were brought to the floor, we would have the Republican votes to pass it.”

The White House and Senate Democrats are also blocking a deal for including the so-called “policy riders”—which are spending limitations that are for specific ideological causes—which were included as amendments in the original House CR.

After the White House meeting, Boehner said, “We’ve also made clear that policy provisions must be part of any final agreement, because the American people are concerned not just about how much we’re spending, but also how we’re spending it.”

While the House GOP may want more policy riders for conservative causes included in a final package, the leadership offered two of them in the one-week CR.  The legislation would prevent Guantanamo Bay detainees from being transferred to the United States for any purpose and  prevent both federal and local funds from being used to provide abortions in the District of Columbia.

The budget for this current fiscal year was supposed to be passed by Congress last April 15.  However, the Democratic Congress did not pass a budget, which was the first time that has happened since the budget process was put in place in 1974. 

Therefore, when the fiscal year started last Oct. 1, the Democrats had to pass a CR to punt the decisions on government spending until after the midterm elections.  The series of short-term CRs has kept the government funded since December. The budget for next year, FY12, was introduced by Budget Chairman Paul Ryan (R.-Wisc.) on Monday. 

The reason that the budget battle has escalated to a possible government shutdown is because of the Democrats’ inability to do their most basic duty, which is to fund the government.  This reality has not prevented President Obama from blaming the Republicans for the mess.

“Keep in mind, we’re dealing with a budget that could have gotten done three months ago, could have gotten done two months ago, could have gotten done last month—when we are this close simply because of politics,” said Obama on Tuesday.

The President failed to mention that the previous year, his fellow Democrats did not pass the budget at all.  And this year, the Senate Democrats have not put forth a single spending plan that would cut spending.

Boehner and Reid had a one-on-one meeting on Tuesday afternoon, but the outcome was not known at press time.  Obama said that he wanted all the parties back at the White House every day until a deal is struck.  But Boehner said that he will not give into making a bad deal.

“We’re not going to allow the Senate and White House to force us to choose between two options that are bad for America, whether it’s a bad deal that fails to make real spending cuts, or accepting a government shutdown due to Senate inaction,” Boehner said on Tuesday.

By the end of the day on Tuesday, with only three legislative days left to keep the government open, both sides were preparing for a possible shutdown.

Rep. Jeb Henarsling (R.-Tex.), who as Conference Chairman is in charge of communicating to the Republican members, explained the contingency plans.

“We hope that the Senate will not force a shutdown, but the at same time we know the President has already issued guidelines—I believe through [The Office of Management and Budget]—to executive branch personnel,” said Hensarling.  “We believe it is the responsible thing to do.  And so conference has sent out the guidelines that the speaker has put out to all of its members.”

So will the government shutdown on Friday?  Both sides say they do not want that to happen, but the Democrats are unwilling to cut more spending, and the Republicans will not give up their principles.  Congressional staffers mostly put the odds of a shutdown at 60/40.

“We’ve done our job,” said Boehner after meeting with Obama and Reid.  “If the government shuts down, the American people will know it was because Senate Democrats failed to do their job.  We can still avoid a shutdown, but Democrats are going to need to get serious about cutting spending—and soon.”

Sign Up