federal government shutdown

So Much Work, So Little Time

The congressional agenda is chock-full. The congressional calendar is rapidly dwindling. Tax cuts, a spending measure and a debt ceiling increase are pending priorities, with a government shutdown looming as a possibility.

The congressional agenda is chock-full. The congressional calendar is rapidly dwindling. Tax cuts, a spending measure and a debt ceiling increase are pending priorities, with a government shutdown looming as a possibility.

With only a dozen or so working days before the holiday break and the end of the year, Congress faces a daunting agenda that keeps growing longer and more challenging.

Based on published schedules, the Senate has 15 and the House 12 working days left in 2017. In that time, GOP congressional leaders want to pass tax-cut legislation and need to take action on a spending and debt ceiling bill to prevent a government shutdown.

Mixed in the politics of all that is the Dreamer’s Act and extension of funding for the Children’s Health Insurance Program (CHIP) that expired September 30, which has created a budgetary challenge for states trying to keep the popular insurance in place until Congress acts.

Then there are the series of subplots that fill headlines and color the policies and politics on Capitol Hill:

  • The intensifying investigation into Russian election meddling;
  • The Roy Moore scandal and Senate race in Alabama;
  • Unfolding disclosures about sexual behavior by Members of Congress;
  • An attempt by the Senate to repeal the Obamacare individual health care mandate as part of tax legislation; and
  • The Federal Communication Commission’s decision to end net neutrality.

Lurking in the wings are stalled talks over revisions to the North American Free Trade Agreement (NAFTA), continuing tensions over North Korea’s nuclear capabilities and the hope for an infrastructure investment package.

Dealing with all that is more like a year’s agenda, not one for a short month.

Egged on by President Trump, Republicans want to deliver tax legislation to the White House before heading home for Christmas. While GOP leaders continue to sell the tax cut as a boon for the middle class, the push to pass it quickly is aimed at satisfying the expectations of Republican donors.

When the Senate returns to work this week, it will try to pass its version of tax legislation under special rules that prevent a Democratic filibuster. It can only lose two Republican votes. It also will vote on the bill under a cloud of criticism from economists across the ideological spectrum who say it will do little for the middle class and compromise the nation’s ability to deal with an economic downturn by sharply increasing the federal budget deficit.

If the Senate passes a tax measure, it then faces a House-Senate conference committee to iron out differences, which could highlight contentious and regionally divisive issues such as home mortgage and state and local tax deductibility.

Even though Republicans are trying to pass their tax legislation without any Democratic support, they need Democratic votes to pass a spending measure and increase the debt ceiling. The tight time frames before the holiday break amplify Democratic leverage. CHIP funding, which provides coverage for 9 million children, is one enticement the GOP is trying to use. The Dreamer’s Act could be another, but it could backfire and drive away some conservative GOP votes.

The troubled Moore Senate campaign to fill the seat formerly held by Jeff Sessions comes at an especially awkward political moment on December 12. If Moore, who faces accusations of sexual misconduct with minors, loses to Democrat Doug Jones, it will make GOP control of the Senate razor thin, which could be a factor if tax legislation gets pushed into next year.

Congress is also getting some pushback on the tax plan from corporations that have become more concerned about Trump objectives in NAFTA negotiations. A fifth round of talks among Canada, Mexico and the United States failed to produce agreement, which leaves open the possibility that Trump may unilaterally pull out of the trade deal. A business coalition led by the U.S. Chamber of Commerce has lobbied Capitol Hill in opposition to radical changes to NAFTA, warning they could lead to US job losses and ironically lead to more US manufacturing moved offshore.

The special prosecutor investigation into Russian election meddling and possible collusion by the Trump campaign has taken another ominous turn. Former National Security Advisor Michael Flynn has broken off contact with the Trump defense team, signaling a possible plea deal that involves cooperating with the special prosecutor on other targets. There have been signs Special Prosecutor Robert Mueller and his team have expanded their scope to include financial dealings by the Trump Organization with Russian oligarchs associated with money laundering.

The FCC decision to end net neutrality has stirred up a wide range of opponents who fear it will hand too much power to telecommunications companies. Supporters downplay that concern, saying it will lead to more investment in digital technology. But this isn’t just a garden-variety policy issue. Net neutrality supporters have taken to social media to voice their concerns, galvanizing many people who ordinarily shun politics. Those activated voters could make a difference in the looming 2018 mid-term election.

Another Government Shutdown Deadline Approaches

Another federal government shutdown looms unless Congress can pass a spending bill before September 30 over the opposition of the 42-member House Freedom Caucus, which wants to make budget cuts before the November 8 general election.

Another federal government shutdown looms unless Congress can pass a spending bill before September 30 over the opposition of the 42-member House Freedom Caucus, which wants to make budget cuts before the November 8 general election.

If you think the presidential race seems repetitious, think about the prospect of another federal government shutdown. That might just happen on September 30 if Congress can’t pass legislation to fund continuing operations.

This potential shutdown has all the hallmarks of earlier ones – the right-wing faction of the House GOP caucus is balking at a short continuing resolution to push major budget decisions past the November 8 general election when a new president will be elected and Senate control could flip from Republicans to Democrats.

The 42-member Freedom Caucus wants to avoid an omnibus spending package in a lame-duck session of Congress. GOP House leaders, including Majority Leader Kevin McCarthy, have expressed support for approving a continuing resolution this month that would maintain existing spending levels until around Christmas.

If Freedom Caucus members hold firm, House Speaker Paul Ryan will be staring at the same dilemma that bedeviled and ultimately unseated his predecessor, John Boehner – turning to Democrats for the needed votes to approve a spending bill. Democrats have their own priorities and have stymied Republican proposals of late.

House Republicans are huddling to find a work-around after Congress returned earlier this week after a seven-week recess. Preventing a government shutdown is just one of many spending issues up in the air at this point.

Congress left town in July without approving a spending measure to combat the Zika virus, which has emerged as more of a threat in Miami and potentially other parts of the South than previously anticipated.

The presidential contest between Donald Trump and Hillary Clinton is tightening up as the candidates seek to distinguish themselves on a range of issues, including national security, which will be the subject of an NBC-sponsored commander-in-chief forum tonight. Before the event, Trump said he favors releasing the Pentagon budget from the spending constraints that apply across the board to all federal agencies.

Some conservatives in Congress have echoed Trump's view, but they face the problem of what to cut to compensate for higher defense spending. Democrats, including President Obama, oppose selectively excusing defense spending from overall spending constraints.

Congressional Democrats and Obama appear in policy lock-step in support of a short-term spending bill that will push bigger budget questions beyond election day. That position is buttressed by the serious prospect that Democrats could regain control of the Senate though the GOP majority in the Senate hasn’t warmed up to the idea of closing down the federal government.

There is little question the budget priorities of a President Clinton and a President Trump would differ substantially, which makes the looming stalemate over a stopgap continuing resolution even stickier. It also raises the question of whether an actual government shutdown would help or hurt Trump or Clinton.

Trump has positioned himself as a political outsider with the personal experience of knowing how the system works and what needs to change. Clinton has a hard time escaping the “insider” label, but can be expected to argue that now is not the time to threaten or shutter the federal government, given the precarious momentum of the economic recovery and a flurry of foreign threats.

The Freedom Caucus may be wary of Trump in the White House, but they worry more about a Clinton victory in November, combined with a Democratic takeover in the Senate. They may argue now is potentially the last time they have the leverage for major cuts in federal spending and a budget boost for the military. What will be interesting to watch in the next three weeks is whether the Freedom Caucus actually has the leverage it imagines.

Michael Skipper is CFM’s Federal Affairs Associate. Before joining the team in Washington, D.C., Michael worked on state affairs in Oregon, where he also studied political science and environmental policy at OSU. In his free time, Michael enjoys traveling, reading and spending time with friends and family. You can reach him at michaels@cfmpdx.com

Boehner Bombshell Shifts Capitol Landscape

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's surprise announcement to retire at the end of October has shifted the landscape on Capitol Hill and may presage an even more dramatic shift later this year.

No longer beholden to the "Freedom Caucus"  – the far right flank of the GOP, Boehner has the flexibility to push more moderate legislation through the House over the next 32 days. The question is, how much can he really get done and what are the short- and long-term implications for the next House Speaker?

In the short-term, the retirement announcement has provided breathing room for the Speaker. The chances of an October 1 government shutdown have nearly evaporated, bipartisan passage of a drama-free debt ceiling bill is more likely and there is hope for a compromise on a transportation/tax reform package. Without the constant threat of a motion to "vacate the Speaker," other bills could hitch a ride on a fast track, including reauthorization of the Export-Import Bank.

Don't get too optimistic. It's also clear the next Speaker will have to deal with the consequences of an unhinged Boehner. Next in line to the Speakership is Boehner friend and ally, Majority Leader Kevin McCarthy from California. The more bipartisan legislation that moves in October, the higher the level of conservative frustration later in the GOP caucus. To be elected Speaker, McCarthy can only lose 29 votes from the GOP ranks – 24 of whom already voted against Boehner in January. Thus, McCarthy can only lose five more Republicans to avoid an all-out scramble for the Speaker's position. 

If McCarthy is tied to the Speaker's actions over the next month, his ascension to Speaker could be put in jeopardy. So Boehner is still going to have to balance the risks and rewards of moving legislation in his final days. Bipartisan action would continue to stoke tensions within the Republican Party and could bring the confrontation past the boiling point to a full revolt. Boehner is a master politician though, so he may manage to clear the decks of some of the most contentious issues and leave the institution he loves on a high note.

Here is some quick analysis on how key provisions could be impacted by the Speaker's departure:

September 30 Budget Showdown/Shutdown – Boehner is no longer beholden to the far right and word from GOP leadership is the Speaker will offer up a clean Continuing Resolution (CR) to keep the government funded through December 11. The CR will not contain the controversial repeal of funding for Planned Parenthood. Without the Planned Parenthood funding repeal, the GOP will lose 30-50 votes for the CR and Republicans will need to rely on Democrats to pass the bill. The measure will likely pass by Wednesday evening, just in time for the September 30 end of fiscal year deadline.

Debt Limit Increase – Another casualty of Boehner's departure could be a showdown over the debt limit. With an historic debt of $19 trillion, the country needs to increase its credit limit once again before it defaults. Unfortunately, the debt limit increase is becoming an annual affair. 

The timeline for default is not exact, but will likely happen in November. It's expected Boehner will try to act before he leaves office to clear the decks for the next Speaker. Typically, the Freedom Caucus has been steadfast in its opposition to raising the debt limit without a dollar-for-dollar cut in spending. The Obama Administration meanwhile has said the debt limit is not a tool for negotiation, even though in 2011, that's how we got the Super Committee and Sequestration. 

Transportation and Tax Reform– The fate of the transportation bill also could benefit. Word out of leadership and the House T&I Committee is that Chairman Bill Shuster and Ways and Means Chairman Paul Ryan have a six-year package that is ready to be unveiled. With the blessing of the Speaker, a transportation/tax reform package could receive an expedited path to the floor of the House. Many Freedom Caucus members have opposed additional federal spending on transportation. October could be the perfect time to get a popular bipartisan bill through the House.

Sequestration Cap – Without another 2013 Murray/Ryan type of agreement, the two-year sequestration relief bill will expire October 1. Both Republicans and Democrats want to lift the cap, but for different reasons. Republicans generally want more defense spending, while Democrats want more non-defense spending. It is hard to be optimistic that the Speaker can reach a deal to lift the spending caps before he leaves. However, there will certainly be pressure on him to expedite negotiations and resolve the issue.

December 11 – The likelihood of a government shutdown on December 11 has gone up significantly. An emboldened Freedom Caucus, a lame duck President Obama and presidential politics are could conspire to make this a tumultuous December. It will take  fancy footwork from both sides to come together on the FY16 spending package.

Fumbling Away Home Field Advantage

Sports teams know the value of a home field advantage. They do everything they can to preserve it. The U.S. Congress appears on the verge of making an unforced turnover that could surrender our advantage as the global reserve currency.

Even though a handful of conservative lawmakers believe defaulting on the national debt is no big deal, financial leaders around the world think it is. They are beginning to question the stability of the mighty U.S. dollar.

Not waiting to find out if Congress can manage an 11th-hour deal to avoid debt default, the Chinese called for replacing the dollar as the world's reserve currency, citing the "pernicious impasse" on Capitol Hill.

The European Union has sounded alarm bells about the financial crisis that could occur if the United States falls into a technical default later this week. Its central bankers also seized on the occasion to return the lectures American officials gave them during the EU's most recent financial difficulties, saying the United States needs to "get its act together."

The British, our best friends in Europe, haven't been as snarky as other Europeans, but just cut a deal to serve as the main offshore hub for trading China's currency. It is step toward the Chinese yuan taking its place as a world currency. According to a Reuters report, London and Beijing also agreed to allow the yuan to be traded against sterling directly, rather than through the dollar, thereby reducing transaction costs. 

Economists say there is no real alternative to the dollar as the world's gold standard. But the conversation going on around the globe about "de-Americanizing" the world economy should be sobering to Americans.

Like sports team, there are definite advantages to being the world's reserve currency. One of the biggest is reduced transaction costs when an export or import is made with dollars in or dollars out. There also is less risk of currency valuation fluctuations that easily can turn a profit into a loss. Of course, the most significant benefit is attracting investment from around the world, which comes in handy when running domestic fiscal deficits and foreign trade imbalances.

Political Chicken and Economic Checkers

The continuing federal government shutdown and looming debt crisis kept President Obama from attending critical Asia-Pacific trade meetings and perhaps signaled the United States is a less reliable partner than China.The empty American chair at the Asia-Pacific Economic Cooperation meeting in Indonesia speaks of significant external damage wreaked by the continuing federal government shutdown and debt ceiling showdown.

Even though Secretary of State John Kerry replaced President Obama, the absence of our top gun was unmistakable. It left China to dominate this stage and set many Pacific Rim officials to wondering about the financial and political reliability of the United States.

While U.S. politicians bicker over universal health care and domestic spending levels, Asia-Pacific leaders at the meeting talked about the pain of the global economic crisis and the ambitions of the region to become the world's economic engine. They were talking about job creation on a hemispheric scale. 

Before he canceled his trip to remain in Washington while the government was shut down and a fiscal crisis loomed over the debt ceiling, Obama planned on touting a Trans-Pacific Partnership, which The New York Times described as "a trade bloc led by the United States and excluding China." Complex negotiations were to be completed by the end of the year, the newspaper said.

The partnership is intended to address "all economic sectors from intellectual property protection to agriculture to automobiles," The Times reported. It is part of the Obama "Pacific pivot" to focus more energy on building stronger ties in a region with huge potential for economic growth.

The Real Hastert Rule

Thumb through the U.S. Constitution and you won't find the Hastert Rule, which says no bill can come to the House floor unless there are enough votes to pass it in the majority caucus. Turns out former Speaker Dennis Hastert, a former high school wrestling coach, said there never was a Hastert Rule.

This is relevant because current House Speaker John Boehner has invoked the Hastert Rule in blocking legislation that might attract enough Republicans and Democrats to pass, but doesn't have enough votes to pass with just Republicans.

Sound illogical? Perhaps, but it is the leverage exerted by the Tea Party faction of the House GOP conference. They have enough votes to deny Boehner the 218 vote-majority he needs of his fellow party members. This leverage is what has landed Congress in gridlock and led to a partial federal government shutdown, now entering its fourth day.

Republican spokesmen have made a lot out of President Obama and Senate Democrats refusing to negotiate to "find common ground" on defunding Obamacare. But another way to look at the stalemate is that the House is not letting is full membership exercise its collective judgment in deference to a minority that could be as few as 30 members.

Apart from the grandstanding and finger pointing on Capitol Hill, there is a valid question about whether the presumptive Hastert Rule is constitutional or at least in the spirit of the Constitution.

James Madison and other founding fathers detested what they called "factions." They worried that partisan considerations could overtake policy considerations. While senators have the right to filibuster any legislation of which they disapprove, no such privilege extends in the House.