Here’s a Guide to the United States’ Current Fiscal Mess
Lawmakers, who returned to Capitol Hill from the Thanksgiving recess on Monday, have less than two weeks to agree on legislation that will keep the federal government funded after December 11, when the current stopgap spending legislation that finances a majority of the federal government’s activities expires. Standing in the way of compromise between congressional Democrats and Republicans is the issue of immigration reform. The measures President Barack Obama intends to take through executive action — namely the deferment of deportations of millions of undocumented immigrants — have become a sticking point for the GOP. The White House’s decision to offer what Republicans term amnesty offers the opportunity for GOP lawmakers to stick their feet in the doorway of the fiscal process just as they did in 2013. Last year, House Republicans refused (for several weeks) to approve a continuing resolution funding the federal government because it also financed the Affordable Care Act.
It appears likely the Republican leadership will uphold Kentucky Sen. Mitch McConnell’s pledge to avoid the nuclear option to advance the party’s agenda — the government shutdown. By the end of Tuesday, congressional leaders had given tentative support to a deal that would fund the government through the end of September and the 2015 fiscal year, and on Wednesday, sources on Capitol Hall informed The New York Times that House Republicans were finalizing a spending plan to keep the government from shutting down next week that could garner bipartisan votes.
What is House Speaker John Boehner’s plan?
Only a rough outline of how congressional Republican leaders plan to fund the government through the end of the 2015 fiscal year exists. By Boehner’s own admission, the legislation is still a work in progress. Reports show that the Speaker of the House and Republican leaders remain committed to preventing Obama from using his executive authority to defer the deportation of as many as five million undocumented immigrants, which has broad-based support in the president’s own party. But for now the party’s leaders are not considering tying a policy rider to defund Obama’s unilateral reform initiative to the new government appropriations bills — the same tactics they employed in the effort to halt the implementation of Obamacare’s key provision last yet. Instead, the Republican leadership plans to fund immigration agencies, like Immigration and Customs Enforcement, only through the beginning of 2015, at which time the next session of Congress will commence with the Senate’s new Republican majority and the House’s even larger Republican majority. Then more specific action can be taken.
Still, Democrats in Congress have expressed a small measure of support for Boehner’s plan, nicknamed the “cromnibus.” That term is a hybrid of the two financial pieces of the proposed appropriations legislation: the broad omnibus spending package that would fund the government through the end of next September and the short-term continuing resolution that would fund immigration agencies until early next year.
Alongside the “cromnibus,” Boehner has suggested a separate measure, condemning Obama’s executive action,which would be voted on as early as last year.
But isn’t this still fiscal brinksmanship?
In simple terms, even if a financial solution to fund the government is found before December 11, lawmaking is far from normal. The Budget and Accounting Act of 1921 requires the president to submit a budget to Congress for each fiscal year. And following the passage of the Congressional Budget Act of 1974, the Senate and House of Representatives have been mandated to pass budget resolutions in the spring for the next fiscal year, which begins October 1. If the budgets inked by each chamber differ, lawmakers are expected to meet and forge a compromise. But since 2009, the Democrat-controlled Senate has failed to pass a budget, meaning Congress as a whole has failed to pass a budget, leaving lawmakers scramble to agree on short-term funding measures. For the 2014 fiscal year, President Obama submitted his proposal two months late thanks to prolonged negotiations over the so-called “fiscal cliff” — the date on which measure increasing taxes and lowering spending would be enacted simultaneously — and the implementation of the sequester cuts mandated by the Budget Control Act of 2011. While eventually Congress passed and Obama signed the Consolidated Appropriations Act in January 2014, that was not before the 16-day shutdown of the federal government the previous October.
Even if an omnibus spending measure is passed in the next week, the U.S. government will not be back to fiscal normalcy. Without any congressional action, a slew of business and personal tax breaks will expire on January 1. The federal government’s spending limit of $17.2 trillion was only suspended until March 15, although the government may not hit that ceiling until August. Unless lawmakers act, on March 28 physician reimbursements from Medicare drop off a cliff; on May 31, the highway trust fund runs out of money; in June, the Export-Import Bank that contributes funds for overseas purchases of American exports could be shuttered because of Republican opposition; and on September 30, the Children’s Health Insurance Program will face an expiration date. Then, days later, across-the-board spending cuts will happen.
What about immigration reform?
Republican leaders want to save the immigration reform battle for when the party has more power to fight back against Obama. In place of a concerted effort to corral the president’s immigration reform goals, the spending bill will likely reflect a broader Republican agenda, including a scaling back of pieces of the Affordable Care Act, tax cuts, and a stronger trade policy. Of course, some of the more conservative members of the Republican caucus want the party to make use of the congressional right to the power of the purse, the legislature’s check on the executive branch, and “pass a short-term continuing resolution that includes language defunding the implementation of the President’s executive action on amnesty,” as Sen. Ted Cruz (R-Texas) argued in a December 3 statement.
Rep. Raúl R. Labrador (R-Idaho) told Roll Call reporters Tuesday that last year’s government shutdown did not hurt the GOP. He argued that the fact the Republican party “just got the biggest majority we’ve ever had in the House since 1928, and one of the largest majorities we’ve ever had in the Senate” should serve as proof that a shutdown of the government is an option that should never be taken off the table. When asked whether GOP leaders were “gun shy” about a government shutdown, Labrador answered: “I think they are and I don’t understand why.” These comments fit within a broader narrative. A number of conservative lawmakers — who constitute a faction of the party long-antagonistic to Boehner — have expressed their displeasure with the disconnect between the rhetoric of the party’s leadership on such issues as immigration reform and their actions. In the Tuesday interview, Labrador said Rep. Ron DeSantis (R-Fla.) told the Republican conference that this disconnect has made it “impossible to tell the American people that we’re serious” about halting Obama’s immigration plans “when we’re not doing anything serious.”
Since Cruz — whose memorable filibuster last year during the lead-up to the shutdown included the reading of Dr. Seuss’s Green Eggs and Ham — joined the Senate almost two years ago he has made legislative life difficult for establishment Republicans in the House, pushing those lawmakers to forego the pragmatic approach for the principled stand. On Wednesday, Cruz made his appeal for the inclusion of the policy rider to defund the deferred deportation program. When asked by CNN reporters why he was asserting himself in House business, he responded: “I don’t agree with the premise of what you’re saying.” He argued that he merely was “urging Republicans” to “do what we said we would do — honor the commitments of the American voters.” Cruz said the past midterm elections were a “referendum,” and so the Republicans who campaigned on stopping Obama’s “illegal acts” now have a mandate. Sen. Mike Lee of Utah and Sen. Jeff Sessions of Alabama support his position.
But establishment Republicans believe stopping Obama’s executive action is now an unwinnable fight.
Was the 2013 government shutdown so bad?
“Current fiscal policy is unsustainable and large, prospective deficits and debt, driven by ‘mandatory’ spending on social benefits for the aging population and insufficient revenues, pose an eventual threat to the U.S. economy,” begins an October 2013 analysis of the “Cost of Crisis-Drive Fiscal Policy” from Macroeconomic Advisers. “Yet partisan divided government has failed to address this long-run problem sensibly, instead encouraging policy that is short-sighted, arbitrary, and driven by calendar-based crises.” According the firm’s calculations, stalemate in Washington and fiscal uncertainty has created an annual drag of 1 percent on the country’s gross domestic product.
Sure, “history has shown that a shutdown, if relatively brief, is an economic inconvenience not a catastrophe.” Last October’s shutdown cost taxpayers $2 billion in lost productivity from 850,000 furloughed employees, but “flirting” with a federal default is much worse. After narrowly avoiding hitting the debt ceiling in 2011, thanks to an agreement that created the sequester spending cuts, the repercussions were seen for months in the financial markets, Treasury debt was downgraded for the first time, and GDP growth slumped — although crisis in the Euro zone was also a contributing factor. In conclusion, the analysis noted: “one can assert with confidence that the fiscal policies of the last several years have damaged our still-struggling economy.”
What will happen if no agreement is reached?
“This is a gentle reminder: In nine days the government runs out of money,” Sen. Harry Reid (D-Nev.) — outgoing Senate Majority Leader — told his colleagues on Tuesday, reported the Los Angeles Times. “No one wants the kind of cliffhanger fights we’ve had again and again in recent years.”
And it is generally believed Republicans don’t want replay of 2013 government shutdown, which would only drown out the party’s new commitment to building a cohesive agenda that does not rely solely on opposing the president.
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