With ominous political clouds gathering as lawmakers prepare to return to Washington early next month, President Obama on Thursday warned Congress not to “kill” the economy with another government shutdown.
In a message posted on his official Twitter account, Obama cautioned: “Amidst global volatility, Congress should protect the momentum of our growing economy (not kill it). We must avoid shutdown/austerity.”
But with virtually nothing accomplished on the fiscal front a month before the government technically runs out of money and Sen. Ted Cruz (R-TX) vowing to cut funding for Planned Parenthood at all costs, one budget expert recently put the chances of another government shutdown at 60 percent.
Lawmakers must either pass new government spending bills by Oct. 1, the start of fiscal 2016, or adopt a series of continuing resolutions to keep the government afloat until a final deal can be struck by the White House and the Republican majority on Capitol Hill. Obama and the GOP leadership are at odds over whether to lift tough legal caps on domestic and defense spending, as the president favors, or keep them in place as the Republicans insist. Then there’s the matter of whether to pass new long-term highway spending legislation to fix the nation’s battered highways or kick the can down the road once again. And by late fall, Congress must approve an increase in the Treasury’s $18 trillion borrowing authority or face a renewed threat of a first-ever default.
Obama contends that it would be a mistake to adopt austere domestic spending policies as theeconomy continues to improve. And yesterday, Obama had two pieces of good news to bolster his argument: a stock market rally after a week of steep declines and a Bureau of Economic Analysis update on second-quarter GDP that showed the economy grew at a faster rate than previously believed.
The weeklong global financial scare and roiling markets have rekindled domestic fears of another downturn or a major market correction. Obama and other Democrats are challenging GOP leaders and Republicans like Cruz – one of five members of the Senate running for president – not to risk damaging the economy for short-term political gain.
White House Press Secretary Josh Ernest said on Wednesday that Congress must pass a budget “that properly funds both our economic and our national security priorities on time.” He added that “given the kind of instability we’ve seen in the global financial markets, added instability in the form of government shutdown is a really bad idea for the U.S. economy and for U.S. middle class.”
In parting comments to reporters before leaving for the August recess, Senate Majority Leader Mitch McConnell (R-KY) declared that members of his party should not hijack a must-pass government spending bill in order to slash spending for Planned Parenthood – and risk another government shutdown like the 16-day crisis in late 203.
“We’ve been down this path before,” he said. “This is a tactic that’s been tried going back to the ‘90s, frequently by Republican majorities that always have the same ending: that the focus is on the fact that the government is shut down, not on the underlying issue.”
But McConnell likely will have little influence over the conduct of Cruz, who recently called the Senate leader a liar for supposedly double- crossing his party on another controversy involving efforts to reauthorize the Export-Import Bank.
Cruz appears ready to challenge the GOP leadership on spending by rallying religious leaders and conservatives to push for a defunding Planned Parenthood regardless of the consequences. Cruz and others want to wipe out $500 million in federal funding for the organization after an anti-abortion group began posting surreptitiously recorded videos purporting to show that Planned Parenthood affiliates illegally profit from the sale of aborted fetuses to researchers.
Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, has blasted Cruz and his Tea Party allies for fomenting controversy over Planned Parenthood that could produce another government shutdown just when Congress should be focused on more important matters, like the murder of a Virginia television reporter and cameraman.
“We just had another tragic shooting in the United States today,” Van Hollen said Wednesday night on MSNBC. “But instead of dealing with the pressing issues of gun violence, which Congress should be doing something about right now – in fact, a long time ago – we have people like Senator Cruz, who is actually threatening to shut down the United States government if he doesn't get his way on defunding Planned Parenthood and harming women’s health.”
“The real problem is he may have enough other Republican Senators, who are using the Senate as a stage to run their presidential campaigns, to actually make good on this threat,” Van Hollen added.
Stan Collender, a veteran federal budget expert, recently upped his forecast for a government shutdown this fall from 40 percent to 60 percent.
“The leadership has already admitted that nothing has been decided about how to deal with this situation,” Collender wrote. “In other words, this will be the kind of last minute, ad hoc decision that in the past has repeatedly failed and led to unwanted consequences.”
Joseph Minarik, a former Clinton administration budget official who is now senior vice president and director of research for the Committee for Economic Development, is slightly less certain about the inevitability of a shutdown but agrees that there are political and ideological forces at play that might make a shutdown inevitable.
“We have all of the ingredients for unintended consequences,” Minarik said in an interview Thursday. “We could start World War I all over again, with people who have their own perspectives on things, are not prepared to see the perspective of the other side and could very well take actions that set deterioration in motion.”