Stephen Boyd’s weekly Capitol Hill briefing for Alabama’s business, financial, defense and government affairs executives.
As a big week starts on Capitol Hill, here’s the bottom line:
The U.S. government will officially shut down unless Congress passes—and the president signs into law—a government funding bill before Sunday, the start of the new fiscal year. Congress reconvenes tomorrow. That leaves just five days. As of this Monday morning, a shutdown seems more likely than not.
I was pleased to join Alabama Daily News’ Todd Stacy this weekend to look at the funding situation and more on Alabama Public Television’s Capitol Journal. As we discussed, here are five questions to keep in mind as a consequential week in Washington unfolds:
1- What specifically does Congress need to do to avoid a shutdown?
A law called the Anti-Deficiency Act prohibits federal agencies from using funds that have not been legally appropriated. In short, government officials can’t spend money they don’t have, and thus generally can’t keep federal employees on the job when there is no money appropriated to pay their salaries. Because Congress has failed to appropriate money beyond Saturday, government offices are preparing to shutter. To avoid that shutdown, Congress must act.
Under “regular order,” appropriating the necessary funds would be accomplished by the House and Senate each passing 12 annual appropriations bills to send to the President. That takes months of debate and voting. Like most years, Congress is now woefully behind, and given the current time crunch there is no chance that the individual bills will be approved before Sunday.
That leaves the possibility of passing a stopgap Continuing Resolution to temporarily extend current spending levels for a short period—perhaps 15, 30, or 60 days. Congressional efforts to pass a CR that would keep the government open and buy more time to act are what really matter this week.
2- Why hasn’t Congress already acted?
While there’s nothing new about Congress waiting until the last minute, the current situation is more dire than in recent years. First, divided government—Republicans control the House, but Democrats run the Senate and the White House—is always challenging and always requires compromise, which has become a dirty word in some political circles. Making matters more difficult, Republican House Speaker Kevin McCarthy, with only a four-vote margin of error in the House, has no choice but to consider the demands of a five-to-10-member group of vocal Republican hardliners.
That small group of Republicans is leveraging its power. Last week, they again blocked a procedural step to consider an uncontroversial defense spending bill, dealing McCarthy a stinging defeat. Now, those hardliners are lining up against a CR.
McCarthy’s Catch-22: whenever he acquiesces to right wing demands—writing spending bills at levels lower than previously agreed upon, launching an impeachment inquiry against President Biden, or including controversial “culture war” provisions in bills—he erodes the potential for bipartisan support. That, in turn, strengthens the hardliner’s hand even more. And, so far, giving the hardliners what they want hasn’t seemed to produce any additional support for McCarthy’s priorities, including that defense spending bill and, more critically, a CR.
3- If there is a shutdown, what will be the impact on the average person?
If the shutdown is brief—a few days or a week—the direct impact for most Americans will probably be minimal.
But if the shutdown drags on people will see consequences. Many federal civilian employees—there are more than 39,000 in Alabama—will be immediately furloughed. Even those who are deemed “essential” and told to report for work will do so without a paycheck. The same is true for congressional staff and military personnel, though not for members of Congress. Member pay is anchored in a Constitutional provision and thus not affected. (In the past, back pay for all workers has been provided after the shutdown concludes.)
Eventually, disruptions in the workforce cause problems. Staff shortages at the FAA could impact air travel. Inspection and regulatory activities at the Environmental Protection Agency, the Food and Drug Administration, and the Center for Disease Control and Prevention may be reduced. National parks and other government facilities will close. Though the underlying funding for mandatory programs like Social Security or VA health care would not be impacted, the workers who administer the programs might be. Delays in benefits are not out of the question.
Taxpayers will eventually feel the burden. Pausing—and later restarting—billions in government contracts comes with additional costs that the taxpayer must later cover.
4- How will the week unfold?
House Republicans appear poised to take yet another shot at passing individual appropriations bills that satisfy hardliner demands. Even if passed, the bills themselves don’t stand much chance of becoming law. They could, however, be useful in negotiations later and might subsequently open the door to right-wing support on a CR.
An alternative scenario: The Democratically-controlled Senate could act first this week by calling up an unrelated House-passed bill (i.e., the FAA reauthorization bill), stripping its existing text, inserting a CR with provisions of the Senate’s liking, and approving it. That CR would probably also include money for Ukraine and disaster relief. Absent unanimous consent from senators to move quickly, this might not happen until later in the week. Once passed, the CR, with additional provisions that the hardliners vehemently oppose, would go to the House for consideration.
5- What are the political consequences?
As Arkansas Republican Rep. Steve Womack acknowledged, “Eventually, we’re going to get something back from the U.S. Senate and it’s not going to be to our liking. … Then the speaker will have a very difficult decision.”
He’s probably right. McCarthy will eventually have to make a critical decision that will carry significant political and policy consequences. If the Senate sends a CR, McCarthy could ignore it and focus only on moving hardliner-endorsed legislation. If so, a lengthy shutdown is in store.
On the other hand, McCarthy could build a bipartisan coalition to support the Senate’s CR. That’s how he passed the debt ceiling bill in May. Doing so would avoid a significant shutdown, but would almost certainly inflame McCarthy’s right flank.
Recall that in January, McCarthy—in an effort to secure the votes to become the Speaker in the first place—accepted changes to the rules that make it easier for his own members to attempt to oust him from the job. Expect a “Motion to Vacate” to be filed immediately if McCarthy turns to Democrats for the votes needed to keep the government open.
- If not McCarthy, who? It’s easy to call for removal of the Speaker, but most members would turn to the next question of who has the necessary votes to replace him. That’s less clear.
- Those who have been through this before know that shutdowns typically backfire, both substantively and politically. Tearing down the system doesn’t work, and the party that causes the shutdown usually receives the blame. It’s hard to see why this time would be any different.
- In August, Fitch Ratings downgraded its U.S. debt rating from the highest AAA rating down to AA+, citing “a steady deterioration in standards of governance” in the United States regarding government finances. This week in Washington may further prove their point.
Stephen E. Boyd is a Partner at Horizons Global Solutions. Previously, he served as a Senate-confirmed Assistant Attorney General at the U.S. Department of Justice, Chief of Staff for Alabama members in both the U.S. Senate and U.S. House of Representatives, and as a Communications Director of the Senate Committee on the Judiciary. He resides in the Washington, D.C. area. Opinions expressed herein are his own. This news report is not intended to influence or persuade. Contact Stephen at [email protected] or via X at @SEBOYD79 or via LinkedIn.