Listening to the debate in Washington this week—from immigration and the next Federal Reserve chair to the president’s new jobs plan—you wouldn’t guess we’re just a handful of voting days away from a potential government shutdown.Congress breaks for summer recess at the end of this week, and then the House and Senate will only be in session for nine days before the deadline for passing a new budget. Without an agreement before October 1, a huge array of government services would cease—from processing veterans benefits to cleaning up toxic waste—and all but the most vital government personnel would stop coming to work.With no clear path toward a compromise between Democrats and Republicans, the question isn’t whether we’re going to have a government shutdown, but how we’re going to manage to avoid one.Here’s the central conflict: Neither party says they want sequestration to stay in place for the next fiscal year, which starts on October 1. That was the whole point of the law in the first place—to have automatic budget cuts that were so unpleasant they’d force a big compromise over deficit reduction.Hope for any kind of “grand bargain” on the budget has evaporated, as the Republican refusal to raise taxes has zeroed out any possibility that Democrats will make entitlements cuts. Congress needs to pass a budget for the next year to keep the government running, but the House and Senate are still $91 billion apart with vastly different funding priorities. The government is also scheduled to hit the debt-ceiling once again just a few weeks after the start of the new fiscal year—the issue that first prompted sequestration and the rest of 2011’s Budget Control Act to begin with.
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Despite the urgent need to negotiate a plan, dealmaking over the budget hasn’t begun in earnest: Senate Democrats want to conference with the House, but Republicans there have refused, insisting that each chamber must finish passing its individual spending bills. The absence of any breakthrough has called into question whether Congress will even be able to accomplish the bare minimum of keeping the government open.Both parties have made it clear where they stand, and insist the public will blame the other guy if there’s a shutdown or anything close to it.Senate Democrats are holding firm against letting sequestration’s cuts take place at all, proposing instead to increase funding for all discretionary funding. They point out that independent economists agree the cuts are holding back the macroeconomy, and the Congressional Budget Office recently concluded that undoing sequestration for the next year will add anywhere from 300,000 to 1.6 million jobs. The White House has already suggested they’re willing to risk a shutdown over the issue, though Democratic leaders say that Republican recalcitrance will be to blame.”If Republicans force us to the brink of another government shutdown for ideological reasons, the economy will suffer. I would suggest to any of my Republican colleagues that has this idea: Give a call to Newt Gingrich,” Senate Majority Leader Harry Reid said on Monday. “It was disastrous for Newt Gingrich, the Republicans, and the country.”House Republicans, for their part, want to increase funding for defense programs only and cut non-defense programs far more deeply, so that total spending is the same as it would be if the sequestration had taken place. And the idea of raising overall spending, they say, is out of the question. “The only way to get rid of it to replace it with smarter spending cuts,” said Michael Steel, spokesman for House Speaker John Boehner.Democrats agreed to pass the sequester, so they should be responsible for it, he continued. “For a president who regularly decries ‘brinksmanship’ to threaten to shut down the government over a law he suggested and signed is…ironic, to say the least,” Steel said.While the public was more inclined to blame Republicans for a shutdown in 2011, the mood seems to have shifted: During the last budget fight in March, Americans were equally inclined to blame President Obama as Republicans for a shutdown, according to a CNN poll at the time. And those odds may be good enough for both sides to risk a shutdown.The biggest hope for a resolution seems to lie within an increasingly divided Republican caucus. Both January’s fiscal cliff deal and the punt on February’s debt ceiling were brokered by moderate Republicans splintering from their more conservative colleagues to strike a deal: Boehner broke from the right flank of his party and found common cause with Democrats. That coalition could pave the way for at least a short-term continuing resolution to fund the government. And the divide between the Republican’s right-wing flank and the establishment has only grown in recent weeks.In early July, a handful of Senate Republicans broke ranks to pass the Democratic transportation and housing bill out of the appropriations committee—and some were explicit about defying the House to do it. “Are we to be just a rubber stamp for the House?” said Republican Senator Susan Collins of Maine, who supported the bill.More recently, the party has been torn over the push by Senators Ted Cruz of Texas, Mike Lee of Utah, and other Senate conservatives to tie the 2014 budget to an amendment defunding Obamacare, threatening to shut down the government if it doesn’t pass. Other Republican members have already shot down the idea as a surefire disaster for the party: The campaign is doomed to fail in the Senate and would place the blame squarely on GOP shoulders for picking a fight that didn’t have to happen in the first place.The messy fight could make the GOP leadership more willing to make a deal. But it could also strengthen Democratic resolve to stick to their guns on rejecting sequestration, demanding far more than they got in January. The fiscal cliff deal truncated sequestration, but still let it take effect for 10 out of 12 months. Democratic leaders like Rep. Steny Hoyer of Maryland now insist the sequestration cuts are completely unacceptable, even for a short-term budget deal.President Obama’s economy tour is intended to stress the same underlying message that what the country needs now is spending and long-term investments, not austerity and cuts. Particularly given the GOP infighting, Democrats could decide they’re willing to go to the brink unless Republicans make significant concessions to increase government spending.
Suzy Khimm