How Federal Business Might Continue after an October 1st Shutdown

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September 23, 2013; Associated Press


The standard Congressional cycle is staggering to the precipice, peering over, and then dancing along the edge as long as possible. That explains the current dance around the FY2014 federal budget, the needed continuing resolution to keep government operating, and the suicidal strategy of House and Senate Republicans led by an insouciant Sen. Ted Cruz (R-TX).

No one needs a recapitulation of the threats of Republicans requiring the defunding of “Obamacare” or else they’ll force a government shutdown. After more than 40 votes to starve the Affordable Care Act of the needed funds for implementation, the Cruz strategy is old news. If there’s anything that nonprofits might be concerned about now, it’s what might happen to federal government operations if Cruz and other zealots succeed in forcing a shutdown.

Based on an analysis in the Washington Post, it doesn’t look at this writing that a shutdown vote would occur before Monday, the 30th, and there are several opportunities for reaching a deal before then. Ezra Klein of the Post thinks that to avoid the stupidity of a shutdown, the House of Representatives will accept a continuing resolution approved by the Senate by then. Our guess is that even if they don’t cut a full deal on a 12-month CR, they’ll strike a temporary CR deal, much like we had suggested earlier this month, keep government operating for 2-3 months, and use the interregnum to continue fighting and posturing.

Earlier this month, Sylvia Mathews Burwell, the head of the Office of Management and Budget, instructed all federal agencies to update the shutdown plans they had drafted for threatened shutdowns in 2011 and 2012. Our guess is that the specifics won’t differ much from the 2011 shutdown plans that can be reviewed on the OMB website. Based on an inspection of the newly revised shutdown plans, Gregory Korte writes in USA Today that 41 percent of non-defense federal employees will be furloughed for a shutdown, but 59 percent will be reporting for work as normal. Many federal employees might want to show up anyhow, but federal law makes it illegal for furloughed employees to volunteer.

There may be some peculiarities to this year’s version. In past shutdowns, Congress awarded back pay to furloughed employees after the fact, though with this Congress and its anti-government fervor, that might not happen. This may be less of a surprise to those familiar with furloughs, but staff will not get paid for vacations they might have had scheduled during the shutdown, nor paid for holiday days if the shutdown lasts that long. We thought the stock market had basically factored in all of the shutdown nonsense, knowing that budgetary brinksmanship is now standard operating procedure in American government and that the two parties were likely to reach some sort of at least temporary deal by the 30th or soon afterward, but the reaction of the markets already suggests there are fears of a budget standoff and the possibility of a significant stock market downturn reversing the past weeks’ Dow and S&P highs.

Assume, however, that Congress and the White House do cut a deal to keep government operating beyond October 1st. Sometime by the middle of October, the second threshold for brinksmanship negotiations will be reached, as the government will need to raise the $16.7 trillion debt cap. President Obama is on record saying that he will not negotiate over the debt ceiling, but Congressional Republicans are generating a list of items to be put on the debt ceiling trading block, asking for a relatively small amount of spending cuts in return for the trillion in additional debt that they are prepared to offer. Among the items being discussed among the Republican leadership include higher pension contributions for federal workers, higher premiums for upper-income Medicare beneficiaries, reduced payments to hospitals that treat more poor people than average, and eliminating the Social Services Block Grant program. Remember these cuts would be on top of the second year of sequestration cuts—unless a Continuing Resolution somehow eliminates those.

Tell us if you hear of more details in the actual plans for a Continuing Resolution or a debt ceiling trade. Another shutdown? Need we remind anyone that this is no way to legislate or govern? – Rick Cohen