Government Shutdown Avoided (Dec. 8)

Update 233 —  Government Shutdown Avoided
Til the Week Before Xmas, and all thru House
This morning, the President signed H.J. 123, a stopgap measure to fund the government through December 22.  The House and Senate passed the measure yesterday to prevent a government shutdown that would otherwise have occurred today.

With another budgetary band-aid, we must ask: how long will this go on?  More on that below.

In other news this morning: the November jobs report showed 228,000 new non-farm jobs, 40,000 more than the monthly average over the last six months.  The prime-age employment rate has increased to 79 percent, a post-recession high. Despite the tightening labor market, there is little evidence of sustained wage growth.

Back to the budget. Good weekends all,




How it Went Down

The spending bill passed with a 81-14 vote in the Senate and a 235-193 vote in the House. In recent days, there has been an abortive threat from the Freedom Caucus to reject the bill, but Speaker Paul Ryan said that the bill would pass the House as is.

Tentative negotiations for a long-term spending bill started yesterday at the White House, but Republicans are focusing their political efforts on the passage of the Tax Cuts and Jobs Act. Eventually, the GOP will have to come up with a longer-term spending solution. Unlike the tax bill, Republicans will need to cooperate with Democratic colleagues to pass budget resolution, rather than relying on the reconciliation process (which requires only a simple majority).  In the Senate, 60 votes are needed to pass long-term spending legislation.

A Week of Drama for Two Weeks of Spending

The short-term fix will hopefully be geared towards programs with immediate needs, like the Child Health Insurance Program (CHIP), which ran out of funding in September. This is far from certain, as budget negotiations are once again caught up in ideological crossfire.

The Freedom Caucus set off alarm bells on Monday, refusing to send the Republican tax bill to conference committee in order gain leverage on budget negotiation. The conservative group wanted to see a slightly longer budget extension, until December 30th. Representative Meadows argued this would have allowed Republicans to extract greater concessions from the Democrats. Rumor has it Republicans might still be pursuing a December 30th deadline via a second, even smaller extension.

Yesterday, the “Big Four” met with President Trump at the White House, a day before funding was set to dry up. Those present included House Speaker Paul Ryan, House Minority Leader Nancy Pelosi, and Senate Majority and Minority Leaders, Mitch McConnell and Chuck Schumer.

The meeting was originally set for last week, but was cancelled after Trump made disparaging remarks about Democrats on Twitter. Statements given from the attendees suggest that the meeting was not productive.

Moving Forward

Republicans want to increase military spending in a long-term spending bill. The leading negotiating position for House and Senate Minority Leaders Pelosi and Schumer: any increase for defense spending must be matched in non-defense spending.

Democrats want spending to be geared toward relief funding for the opioid crisis, pension plans, investment in rural infrastructure, and assistance for children in the Deferred Action for Childhood Arrivals (Dreamers) program. Some Democrats have gone so far as to suggest they would withhold their votes on a spending bill without action on DACA, something GOP leaders have insisted on dealing with separately.

The Department of Defense has requested $647 billion from Congress, which is 5.4 percent more than the 2017 budget. To meet this request, Congress would have to increase the current spending cap by $54 billion. If non-defense were raised by a like amount, as demanded by Democrats, then discretionary spending, per the DoD request, would increase by at least $108 billion.

Administration officials say Trump’s plan is to increase defense spending without expanding non-defense spending, reach a budgetary agreement for the construction of the border wall, and leave immigration protection out of the budget deal.  Congress also must contend with the need to waive PAYGO provisions in order to avoid a January 15 sequester, which is a round of automatic budget cuts initiated by the Budget Control Act. And a defense supplemental in the next Continuing Resolution is likely; Sen. Collins was promised consideration of the the Alexander-Murray health care to health insurance markets, and funding for the National Flood Insurance Program needs to be extended. All of these will have to be considered during what will be a busy January.

The “Big Four” meeting yesterday to discuss negotiations for the two-year budget deal yielded no results. However, in statements following the meeting, it was emphasized that more meetings of this kind are coming soon — once the tax bill becomes law. That being said, a long-term deal is not expected before December 22 or the day before  and the we can fret over the next stopgap measure inevitably in the works.

Moreover, negotiations will be long and painful. The President has some original ideas of his own, defense hawks want more money for the Department of Defense, and Democrats pledged to stand strong on providing a reliable fix for the Dreamers program.

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