Shutdown and Sequestration Still Possibilities In A Few Weeks

Today is Friday, February 16, and two short weeks from today the last stopgap continuing resolution (CR) will expire, allowing spending authority for many federal agencies, including the U.S. Department of Transportation, to lapse.

Talks have been ongoing behind the scenes for weeks to try and resolve House and Senate differences over the twelve annual general appropriations bills for fiscal year 2024, which began over four months ago.

By normal standards, negotiations on the Transportation-HUD bill are in pretty good shape, with almost all of the House-Senate disagreements that can be solved at the subcommittee chairman-to-chairman level or the full committee chairman-to-chairman level either solved or “kicked upstairs” to the leadership level. This is usually the case for controversial “limitation” amendments a.k.a. “none of the funds provided by this Act may be used for [politically charged item x],” which get kicked upstairs to leadership for solution.

Normally, the four party leaders winnow these outstanding issues down and trade back and forth, in consultation with Appropriations leaders.

However, there are two problems with that.

The first problem is the calendar. The House and Senate are now out of town for the President’s Day District Work Period, and although teleconferences are now a thing, in the past it has been difficult to solve these final deals unless the four majors are all in the same room, physically, at the same time.

The House is not coming back until the afternoon of Wednesday, February 28th. That does not leave any time to make deals and have a bill on the floor in time for the House and Senate to consider it and get it to the President by midnight on the 1st.

But even if all the principals were locked in a big room today, problem #2 is that the reason that the complicated stuff gets kicked upstairs to the party leader level is that the party leaders are presumed to be able to cut deals and that a large majority of each leader’s party caucus will then abide by that deal.

That assumption has been disproved several times by the House GOP in the last year, and the Ukraine-Israel-Taiwan-etc supplemental bill has shown that the Senate GOP is having problems in this regard as well.

When a leader keeps cutting deals after they have proven that they cannot deliver the votes for the deals that they cut, you get a diminishing returns problem.

Which leads us to this jaw-dropping article from Punchbowl News this morning, describing a meeting between Speaker Johnson and a variety of Republican members late on the afternoon of February 14 to try and inform Johnson of what approach he should take towards open issues in the talks with his leadership counterparts. which it described as “a long meeting with spats of yelling.”

The article says that several key Appropriations Committee leaders were in the room, including Transportation-HUD chairman Tom Cole (R-OK), and that the appropriators described the historical difficulty in getting Senate Democrats and Republicans to agree on making significant policy changes in appropriations bills. (This dates back to the agreement between Senators Richard Shelby (R-AL) and Pat Leahy (D-VT) back in 2018 that going forward, they would, on a bipartisan basis, reject all new policy riders that were not already in the FY 2018 Act.)

The article reports that the appropriators urged the ultra-conservative House Freedom Caucus members who were also in the room to pick one or two big and achievable policy provisions and push for those. At which point the Freedom Caucus guys yelled at the appropriators and accused them of surrendering. No one is quite sure what lesson Speaker Johnson took from that.

The real problem is the article makes clear that some of the Freedom Caucus folks are pushing for either a government shutdown or a CR extension long enough to cause a new round of budget sequestration.

The scariest thing in the article is probably this quote in re Rep. Byron Donalds (R-FL): “Donalds, who was particularly animated in the meeting, told Johnson he doesn’t think Republicans would lose a shutdown fight with President Joe Biden because ‘Barack Obama actually had control over the bully pulpit. Joe Biden does not.'”

(This may be a reference to the White House staff keeping Biden from making too many unscripted appearances on camera. But in terms of popularity, if that has anything to do with the success of the bully pulpit, when the government shutdown under Obama with a GOP Congress started, in 2013, Obama had a job approval rate of just 44 percent, per Gallup. Biden’s job approval right now is 41 percent, not that different.)

Beyond that, if a shutdown is somehow avoided, the calendar and the level of House dysfunction tells us that another CR extension will be needed, so the question is duration. There was an error in that Punchbowl News article – it says that the penalty for operating under a CR through April 30 will be a “1 percent across-the-board spending cut.” This is not true. It’s really a 1 percent reduction in the net total spending cap level, but because of some budgetary math, this translates into an across-the-board cut of between 5 and 6 percent in all appropriated non-defense programs.

Including IIJA advance appropriations.

And since it would be executed seven months into the fiscal year, for salary-heavy accounts, it would feel like a lot more than 5 or 6 percent, since those accounts would have been spending at a normal rate for half the year and then five or six percent of the full-year amount would be taken out of the 40 to 50 percent of the full-year amount remaining.

The Speaker will have to make up his mind what to do about the end-of-fiscal-year drama by the 28th, preferably a few days earlier.

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