Stumbling Into a Shutdown

Stumbling Into a Shutdown

By Michael Rainey
Friday, September 15, 2023

Happy Friday – and a happy New Year to all who will celebrate Rosh Hashanah this weekend. Congress has headed home for the holiday, but they’ll be back next week as we count down to the end of the fiscal year – and to a possible government shutdown. Here’s what you need to know.

Are Lawmakers Stumbling Into a Shutdown?

Lawmakers left town late Thursday for an extended weekend, following a brief but chaotic workweek during which the odds of a government shutdown seemed to increase by the hour.

Riven by factional disputes, both the House and Senate closed up shop with loads of unfinished business on their plates, leaving just two weeks to figure out how to fund the government for the 2024 fiscal year, which begins on October 1, while making sure the doors stay open in the meantime if they can’t agree on a full-year budget.

"The government is barreling toward a shutdown," Politico’s Burgess Everett and Sarah Ferris wrote Friday. "The Capitol is in crisis. And though Democrats control much of the government, Republican divisions are driving the chaos."

CNN’s Manu Raju reports that numerous lawmakers think there will be a shutdown this fall. "Oh yeah, definitely," Rep. Ralph Norman, a member of the Freedom Caucus, told Raju. "There will be a shutdown."

Idaho Republican Rep. Mike Simpson agreed, saying a shutdown is looking more and more likely. "It seems like you always get some new people in that have got to touch the stove, which is kind of what is happening here," Simpson told Punchbowl News, referring to Republican hardliners. "There are people who say the government could shut down and no one would notice. Really?"

Government spending remains the central point of contention, along with a handful of cultural issues like abortion and gender-affirming healthcare. While hardline conservatives in the House want to spend less in 2024 than the topline figures defined earlier this year in a budget agreement with the White House, Senate spending bills include billions more for both defense and non-defense programs. And the White House is asking for additional funds to cover the cost of natural disasters and aid to Ukraine.

Rep. Patrick McHenry, a Republican from North Carolina who was on the budget negotiating team this past spring, said it will not be easy to reach an agreement with the upper chamber. "The Senate will at every turn spend more when left to their own devices. We have to check them," he told CNN. "At this point, if they don’t want to adhere to the spending numbers, we are going to have a hell of a nasty fall."

Additional aid for Ukraine appears to be a growing problem, as even moderate Republicans begin to question the wisdom of providing more arms for the country. "It’s not just the Freedom Caucus; I think there’s a lot of people that are concerned with funding," Rep. Lisa McClain, a Republican from Michigan who sits on the Armed Services Committee, told The Hill. The Senate is expected to include billions of dollars in additional aid for Ukraine in any short-term funding bill that it passes in the next two weeks, but that could be a deal breaker for House Republicans.

The Senate was supposed to be the better-behaved legislative branch when it comes to passing budget measures in an orderly fashion, with Majority Leader Chuck Schumer saying earlier this week that the Senate provides "the gold standard for good governance." But on Thursday, the Senate’s first appropriations package, covering military construction and the departments of Veterans Affairs, Agriculture, Transportation and Housing and Urban Development, was derailed as conservatives demanded changes in what had been seen as a relatively non-controversial bill.

Wisconsin Republican Sen. Ron Johnson called for the bill to be broken up into three separate ones, which would delay the legislation significantly. The request frustrated Senate leaders, including Sen. Susan Collins, the Republican from Maine who serves as the vice chairwoman of the Appropriations Committee. She scolded conservatives for raising the risk of a shutdown.

Schumer, meanwhile, called on GOP conservatives to stop behaving like their House allies. "Republican leaders have to reject this MAGA Republicanism for the good of the country and for the good of their party," he said.

House Democrats were frustrated, as well. Rep. Rosa DeLauro, a Democrat from Connecticut, said Republicans need to figure out how to pass a short-term continuing resolution, or CR, to fund the government. "I don’t know how long these folks are going to drag their feet," she said. "We gotta start to move ahead. You either have a CR or you shut the government down."

The bottom line: Lawmakers could easily avoid a shutdown by passing a short-term funding bill that kicks the can down the road for a few weeks or months. But a number of hardline Republicans are making demands that are sharply limiting the possibility of cooperation between the parties and legislative chambers. We will find out in the next two weeks just how far those conservatives are willing to push their agenda.

Number of the Day: 3,700

The IRS announced Friday that it plans to hire 3,700 new revenue agents around the country to focus on large corporations and complex business partnerships. The hiring is made possible by the extra funding provided to the tax agency through the Inflation Reduction Act in 2022. Congress provided $80 billion over 10 years, although Republicans have taken steps to reduce that amount significantly.

"This is another important step for the IRS as we work to transform the agency and make improvements," IRS Commissioner Danny Werfel said. "Our first wave of hiring focused on taxpayer service positions to help improve our phone and in-person assistance. This next wave of hiring will help the IRS add key talent like tax accountants to help reverse a decade-long decline of audits for the wealthy as well as complex partnerships and corporations. These new employees will be focused on higher-income and complex tax areas like partnerships, not average taxpayers making less than $400,000."

Werfel said in August that a wave of hiring at the IRS has pushed the agency’s workforce close to its target of 90,000 full-time equivalent employees.

Inflation Expectations Easing: Survey

Americans expect prices to rise by 3.1% over the next 12 months, according to preliminary survey data released Friday by the University of Michigan. That’s a drop from the 3.5% inflation expectation recorded last month, and the lowest reading on the measure in more than two years. It’s also close to the pre-pandemic inflation expectation range of 2.3% - 3.0%.

On a longer horizon, survey respondents said they expect inflation to be 2.7% over the next five to 10 years, the lowest reading since the end of 2020.

"The drop is likely to encourage policymakers at the Federal Reserve and reinforce expectations that they’ll hold interest rates steady at next week’s meeting," Bloomberg’s Augusta Saraiva said.

Quotes of the Day: The United Auto Workers’ Strike

"I've been in touch with both parties since this began over the last few weeks and over the past decade, auto companies have seen record profits, including the last few years, because of the extraordinary skill and sacrifices of UAW workers. But those record profits have not been shared fairly, in my view, with those workers … No one wants a strike, but I respect workers’ right to use their options under the collective bargaining system … The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW."

— President Joe Biden, speaking at the White House about the UAW strike that began Friday. Biden said he is sending acting Labor Secretary Julie Chu and White House senior adviser Jean Sperling to Detroit to facilitate an agreement between the auto workers and the major auto manufacturers.

"The auto workers are being sold down the river by their leadership, and their leadership should endorse Trump … The auto workers will not have any jobs … because all of these cars are going to be made in China."

— Former president and current leading Republican presidential candidate Donald Trump, speaking to Kristen Welker of NBC News in an interview airing this Sunday on "Meet the Press."

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