Mike & Co. —
The fiscal year-endgame for the FY 2016 budget and the budget itself are coming into view. When the dust settles, we will probably have a CR funding the USG at current levels with a few exceptions noticed below throughDecember 11.
Good seeing a number of you in Brooklyn the last few days.
Congress has four legislative days left before the fiscal year ends and the prospects of a shutdown — discounted almost entirely a few weeks ago — seem to be gaining hourly. If by a week from today no action is taken, funding will run out for ‘non-essential’ federal agencies and personnel. Only passage and signing of a continuing resolution (CR) by midnight next Wednesday can avert the dread shutdown.
Senate Majority Leader McConnell likely can’t get the Senate to adopt a CR that stops funding for Planned Parenthood while Speaker Boehner can’t get the House to adopt one that allows it to continue. McConnell has said repeatedly he wants a clean CR; Boehner has yet to articulate a plan.
McConnell has a four-seat majority, but the four GOP senators running for president may not be able to vote for any legislation, even a short-term CR, that would continue Planned Parenthood funding because doing so could damage their candidacies. If Senate Democrats stay united and the four candidates bolt, McConnell won’t have enough votes to do much of anything on a CR.
McConnell introduced a short-term spending bill yesterday designed to spark a series of moves to fund the government through Dec. 11 and avert a shutdown. The stop-gap bill, pre-approved by Senate Appropriations, would defund Planned Parenthood for one year and increase defense spending by approximately $13 billion. It would also:
- provide $700 m. to fight wildfires;
- fund more VA claims processors;
- maintain the launch schedule for the joint polar satellite
- continue rural rental assistance
- provide more small business loans
- extend the Internet Tax Moratorium
- extend E-Verify
- extend the FAA for six months
- extend the federal ban on state and local taxation of Internet access, currently set to expire at the end of the month, through 11
- curiously, ignores recent Pentagon requests to fund a new bunker buster bomb, missile-warning radar upgrades, and new warships
It will almost certainly fail when it comes up for a procedural vote tomorrow as Democrats are expected to object both to the defense funding increase and the effort to strip funds from the embattled women’s health organization. But it will allow McConnell to argue that Senate Republicans tried the hardline tactic proposed by Sen. Cruz, but it couldn’t pass. Once the cloture vote fails tomorrow afternoon, GOP leaders are expected to introduce immediately thereafter a second spending bill funding the government at current spending levels through the same date — a “clean CR” because of its lack of policy riders. The clean CR is expected to clear the Senate on a Saturday vote, with the House following suit early next week.
But in the House, the Speaker has a challenge — close to 40 unconditional GOP opponents to any budget agreement that further funds Planned Parenthood. That’s beyond needing just a couple of Democrats to avert a shutdown. And the price of their cooperation has been made clear: adjust the sequester to restore funding for domestic and some military programs, continued funding for Planned Parenthood, and funding for the implementation of the agreement with Iran. The current betting is that the deals will be made to secure the Democratic votes to get the clean CR adopted perhaps as early as Monday.
The impact of a shutdown is broad and diverse and not fully appreciated by many. The good news for some is that the money won’t stop for those working for agencies that are “exempt” from a shutdown because they don’t get their funding through the congressional appropriations process (for example, through fees they charge for their services, or from trust funds or multi-year budgets). The largest of these is the U.S. Postal Service, which operates on income from postage and the items it sells.
But those who are furloughed could not substitute annual leave or other forms of paid time off for that unpaid time, and previously scheduled leave would be canceled. They could take other jobs but only those allowable under government ethics rules restricting outside income. The Bureau of Labor Statistics would also shut down, which would halt economic data releases, including the September Jobs Report. Given the Fed’s busy fourth quarter and data-dependent approach to rate-setting, a shutdown could influence the behavior of the Fed, forcing it to operate without a key public source of data ahead of its October meeting.