Shutdown Odds Soar as McCarthy Rejects Senate Plan

Shutdown Odds Soar as McCarthy Rejects Senate Plan

The speaker shot down the Senate's stopgap plan.
By Yuval Rosenberg and Michael Rainey
Wednesday, September 27, 2023

The 2024 Republican presidential candidates will be holding their second debate tonight — well, most of them anyway. But there’s also ongoing drama on Capitol Hill, where the odds of a shutdown keep climbing. Here’s what’s happening.

McCarthy Rejects Senate Plan, All but Guaranteeing a Shutdown

Let’s cut right to the chase: Congress is still on a seemingly inexorable march toward a government shutdown in less than four days.

Yes, the Senate has a bipartisan plan to keep federal agencies running, but hardline House Republicans say it would be dead on arrival and House Speaker Kevin McCarthy reportedly told his members Wednesday that he would not even hold a floor vote on a stopgap bill sent over from the upper chamber.

McCarthy later indicated that he would back a short-term spending bill if it included additional border policy changes.

McCarthy’s members were finally able to advance four of their own annual appropriations bills Tuesday night, but those bills would be doomed to fail in the Senate and the speaker’s plan to try to win some good will for a short-term spending patch still faces serious hurdles since several hard-right Republicans insist they won’t support any stopgap.

In short, a shutdown seems inevitable at this point. Goldman Sachs Economist Alec Phillips told clients in a note Tuesday night that the odds of a shutdown this year had climbed to 90% in his estimation, and nothing happening in Congress right now offers hope that will change.

If you want to spare yourself the headache that might also be inevitable from tracking the ins and outs of Capitol Hill machinations, feel free to skip ahead now. Otherwise, here’s some more detail about how Congress is or isn’t dealing with the shutdown threat.

The Senate: The Senate moved ahead on its stopgap plan Tuesday night with a bipartisan 77-19 vote. On Wednesday, Senate Majority Leader Chuck Schumer urged McCarthy to also set aside partisanship.

“Every bill House Republicans have pushed has been partisan, every CR has been aimed at the hard right, and every path they’ve pursued to date will inevitably lead to a shutdown,” Schumer said in a speech from the Senate floor. “Speaker McCarthy: The only way – the only way – out of a shutdown is bipartisanship. And by constantly adhering to what the hard right wants, you're aiming for a shutdown. They want it, you know it, you can stop it. Work in a bipartisan way, like we are in the Senate, and we can avoid harm to tens of millions of Americans.”

The Senate bill rolled out this week includes about $6 billion each for Ukraine aid and disaster relief but does not include border funding, meaning it would face stiff opposition from House Republicans.

Highlighting the divisions in the GOP, Senate Minority Leader Mitch McConnell followed Schumer in urging lawmakers to avoid a shutdown, which he said would be harmful and unnecessary. “The choice facing Congress is pretty straightforward. We can take the standard approach and fund the government for six weeks at the current rate of operations,” he said. “Or we can shut the government down in exchange for zero meaningful progress on policy.”

The White House has also endorsed the Senate approach. “The Senate’s bipartisan continuing resolution will keep the government open, make a down payment on disaster relief, and is an important show of support for Ukraine,” Press Secretary Karine Jean-Pierre said in a statement. “House Republicans should join the Senate in doing their job, stop playing political games with peoples’ lives, and abide by the bipartisan deal two-thirds of them voted for in May.”

The House: McCarthy’s latest playbook involves trying to deflect blame and pin it on President Joe Biden and the Senate. At the same time, the speaker is reportedly expected to bring up a package Friday that combines a short-term funding patch with spending cuts and Republican border policies. But he still doesn’t have the votes to pass it. Politico notes that multiple Republicans “left a closed-door conference meeting Wednesday morning still vowing to oppose any stopgap funding measures that would prevent a shutdown” and that at least eight hardliners would vote against McCarthy’s continuing resolution.

The bottom line: The House and Senate aren’t on the same page, and Republicans remain divided, with some in the party continuing to embrace the idea of governing by crisis — or not governing at all.

“The different tactics nearly guarantee a government shutdown, unless lawmakers can force some other long-shot solution,” The Washington Post reports. “The two chambers working in opposition to one another probably won’t have enough time to pass a stopgap spending bill.”

Rising Income Inequality Hurts Social Security, Expert Says

Social Security faces a crisis in 2034, when its main trust fund is projected to become insolvent, potentially resulting in significant cuts in benefits. Simple demographics play a major role in the problem, as the massive baby boomer generation continues to retire and fewer young workers pay into the system. But according to one expert, rising income inequality also plays an important role in the funding crunch.

Stephen Goss, the chief actuary of the Social Security Administration, told attendees at a conference earlier this month that “unanticipated economic setbacks,” including the Great Recession along with the rise of income inequality starting in the 1980s, explain some 80% of the program’s shortfall. Due to these two factors, the adjustments applied to Social Security by a committee led by economist Alan Greenspan in 1983 — including raising the retirement age and making benefits taxable — have failed to maintain solvency in the program for as long as originally projected.

Between 1983 and 2000, incomes for the top 6% of earners rose by 62%, Goss said, while the incomes of the bottom 94% rose by just 17%. That means that most income growth occurred among high earners, who don’t pay Social Security taxes above a certain level. (In 1983, the top income subject to the payroll tax, referred to as the Social Security Wage Base, was $35,700 for individuals; in 2000, it was $76,200; it’s set at $160,200 in 2023.)

As a result, the share of total income subject to payroll taxes fell from roughly 90% in the early 1980s to 82% in 2000.

“This is a massive change in the distribution of earnings, and that’s what caused us to have a much smaller share of all covered earnings falling below our taxable maximum,” Goss said, per MarketWatch. “This is a major component of the shortfall we’ve had.”

Number of the Day: 46%

With the number of Covid-19 cases rising around the country as we head into the fall, about half of Americans say they plan to get the latest version of the vaccine that targets new variants of the virus.

In a new poll by KFF, a nonprofit group formerly known as the Kaiser Family Foundation, 23% of respondents said they “definitely” plan to get the booster, while another 23% said they will “probably” get it. On the flip side, 19% said they will "probably not" get it and 33% said they will “definitely not.”

The vaccine continues to be a political marker and divider. While 69% of Democrats said they will definitely or probably seek out the shot, just 25% of Republicans said the same — and the majority of Republicans (53%) said they will definitely not get it.

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