Republican Hardliners Lay Out Demands to Avoid a Shutdown

Republican Hardliners Lay Out Demands to Avoid a Shutdown

Are we heading for a government shutdown this fall?
By Yuval Rosenberg and Michael Rainey
Monday, August 21, 2023

Happy Monday! The political world is focused this week on Wednesday’s first 2024 GOP presidential primary debate, which former president Doanld Trump said he won’t attend. The financial world is awaiting a speech Friday by Federal Reserve Chair Jerome Powell, who is expected to signal hawkishness on the central bank’s inflation fight. Congress is still a couple of weeks away from returning.

Here’s what else we’re watching.

Freedom Caucus Lays Out Demands to Avoid a Shutdown

The House Freedom Caucus shook Washington out of its summer doldrums Monday as it issued a list of demands for negotiators planning what could be a difficult short-term budget agreement in September.

The group of roughly three dozen far-right Republicans announced they will oppose a continuing resolution, or CR, to extend funding for the federal government when the fiscal year ends on September 30 unless their demands are met. Congressional leaders have recently said they hope to pass a CR before the deadline to prevent a government shutdown as they continue to work on a full-year budget this fall.

“[I]n the eventuality that Congress must consider a short-term extension of government funding through a Continuing Resolution, we refuse to support any such measure that continues Democrats’ bloated COVID-era spending and simultaneously fails to force the Biden Administration to follow the law and fulfill its most basic responsibilities,” the group said in a statement. “Any support for a ‘clean’ Continuing Resolution would be an affirmation of the current FY 2023 spending level grossly increased by the lame-duck December 2022 omnibus spending bill that we all vehemently opposed just seven months ago.”

What does the Freedom Caucus want? The conservative firebrands want to cut spending in fiscal year 2024 to the levels seen in 2022 — a topline spending level of $1.471 trillion, below the cap level agreed to earlier this summer by negotiators. In addition, in Monday’s communique, the lawmakers listed three demands that touch on other issues that must be met to gain their support:

1. The continuing resolution must include the “Secure the Border Act of 2023,” which was passed by the House in May but has little chance of passing the Senate. According to the Freedom Caucus, the bill would "cease the unchecked flow of illegal migrants, combat the evils of human trafficking, and stop the flood of dangerous fentanyl into our communities."

2. The lawmakers have sought an end to the cases involving former president Donald Trump and what they call the “weaponization” of the Justice Department against conservatives. In that vein, they are demanding changes at the Department of Justice and the FBI, in order “to focus them on prosecuting real criminals instead of conducting political witch hunts and targeting law-abiding citizens.”

3. Similarly, the Freedom Caucus is calling for unspecified changes at the Department of Defense, to end “the Left’s cancerous woke policies in the Pentagon undermining our military’s core warfighting mission.”

On top of that, the group said it would oppose the passage of a CR that extends until late December, a fairly common approach that sometimes results in, as the lawmakers put it, “the passage of yet another monstrous, budget busting, pork filled, lobbyist handout omnibus spending bill at year’s end.”

Finally, the group said it would oppose including a “blank check” with additional aid for Ukraine.

A headache for McCarthy: The list of demands will make House Speaker Kevin McCarthy’s job that much harder as he attempts to reach a spending agreement that avoids a government shutdown on October 1. Democrats are expected to oppose any bill that satisfies the Freedom Caucus — President Biden has said he would veto the immigration bill conservatives want, for example — and that means McCarthy would need just about every Republican vote to pass a funding bill. But passing a conservative-friendly bill likely means opposition in the Democratic-controlled Senate.

The alternative for McCarthy is to craft a funding bill that can win Democratic support in both chambers. But that could spark a rebellion on his right — and risk his position in Congress, since under the terms of his election to the speakership, any disgruntled member can force a recall vote.

What happens next? Last week, McCarthy indicated that he would support a short-term funding bill, lasting until early December at the latest. House Democrats are meeting this week to discuss the passage of a “clean” short-term funding bill that would leave aside potentially sticky issues, and Senate Majority Leader Chuck Schumer recently said a continuing resolution “makes a good deal of sense.”

The list of demands from the Freedom Caucus, however, suggests that the path ahead could be rocky. Following the Freedom Caucus’s announcement, Democrats accused conservatives of being willing to risk chaos to reach their goals and vowed to oppose them. “House Republicans are determined to shutdown the government and crash our economy,” House Minority Leader Hakeem Jeffries of New York said. “We will fight these MAGA extremists every step of the way. For. The. People.”

Nevertheless, Freedom Caucus members say they plan to stick to their guns. “We have the House, and the House is the originator of spending bills, and we have the power of the purse,” Rep. Chip Roy of Texas said Monday, per The Washington Post. “We should therefore use that power to reclaim our country, to take it back for the people.”

Number of the Day: 16

The yield on 10-year Treasuries hit a 16-year high Monday, touching 4.35%, as investors prepare for interest rates to stay higher for longer in the face of continued strength in the economy. Yields on inflation-protected Treasuries climbed over 2% for the first time since 2009. “The jumps extend the major shift that has raced through the bond market over the past two weeks as the odds of a recession recede and large federal budget deficits increase the supply of Treasury debt,” Bloomberg’s Michael Mackenzie and Liz Capo McCormick report. “That’s driven investors to sharply push up rates on longer-term bonds, which had tumbled deeply below those on short-term ones due to fears the economy was poised for a contraction.”


Medical Debt Is Squeezing the Middle Class: Report

Nearly 17 million middle-class families had medical debt in 2020, according to a new report by the centrist think tank Third Way. The 23.5% of middle-class families with unpaid medical bills is a higher share than for either low-income (22%) or high-income (12.9%) families.

“Middle-class families are less likely than lower-income families to avoid care because of costs and less likely than higher-income families to have the disposable income for high deductibles and other out-of-pocket costs,” the report says.

The report defines middle-income Americans as those with incomes between $50,000 and $100,000 a year.

Lower-income Americans would likely have higher levels of medical debt if they thought they could get and afford care, David Kendall, senior fellow for health and fiscal policy at Third Way, told Axios.

Earlier this year, Third Way released a proposal to end medical debt. The plan called for forgiving debt for patients with adequate insurance coverage, refinancing bad debt with a provider tax and making stronger coverage more affordable.

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