Updated: Federal Government Shutdown Looms
As of noon on Thursday, April 7, U.S. House and Senate leaders conceded that a last minute agreement to prevent a government shutdown is unlikely at this point. Congressional negotiators met with the President and his staff in a late night meeting Wednesday to bridge the gap between the House and Senate budgets to fund the remainder of this fiscal year.
Speaker Boehner and Senate Majority Leader Reid expressed optimism about the negotiations Wednesday night, but both leaders took to their respective floors today to announce that a compromise before the Friday midnight deadline is unlikely.
These announcements come after weeks of disagreements over a final figure to cut from the budget, the source of the cuts, and a number of policy riders proposed by House leadership including provisions to prevent the Environmental Protection Agency from implementing regulations on various industries and ban federal funding for Planned Parenthood.
In the weeks running up to this showdown, a resolution seemed possible as Democrats agreed early on to around $30 billion in cuts and Majority Leader Reid and the President claimed the final numbers were close to agreement Wednesday night (between $33 billion and $40 billion compared to the start of the year). On Thursday, however, Speaker Boehner said while the Wednesday negotiations made progress, the parties were not close to any agreement on the final figure.
The House will vote today on a one-week continuing resolution, which includes $12 billion in cuts and several policy riders, but allows for full funding for the Pentagon. The White House issued a veto threat claiming that the bill was a political tactic.
Economists have expressed the importance of averting a shutdown in recent days and weeks, noting that the economic recovery that is beginning would be jeopardized. On Friday, the Department of Labor reported that the unemployment rate had fallen to a two-year low of 8.8 percent in March and that the economy added 216,000 private sector jobs last month.
What closes during a shutdown?
- The Federal Housing Administration would stop processing loan guarantees, affecting about 30 percent of the housing market, according to Administration officials
- The Small Business Administration would stop processing direct small business loans
- As many as 800,000-plus civilian federal workers — including those employed by the Department of Defense — would be furloughed if the government shuts down Friday at midnight
- Military personnel will be paid through Friday, and will continue to work after that, but they will not get paychecks until Congress approves a spending plan
- The processing of paper-filed tax returns at the IRS, which account for about 30 percent of all returns, would be suspended. Tax audits would be suspended. Returns filed electronically would continue to be processed
- National Parks and Smithsonian Institution museums would close
- Department of Commerce grant-making programs for economic development would cease
- The Department of Housing and Urban Development would cease making payments to State and local governments under the Community Development Block Grant (CDGB)
- The Treasury Department’s Community Development Financial Institutions Fund would suspend its grants and technical assistance to communities delaying investments
What stays open?
- Personnel necessary for the safety of life and protection of property; including the military, law enforcement, air traffic control and Department of Homeland Security functions will still be required to work.
- Medicare recipients would continue to receive their coverage because it is funded through the program’s trust fund
- The Veteran’s Administration would remain open because it operates under a multi-year funding calendar
UPDATES:
- Tuesday, April 12: House and Senate leaders discussed H.R. 1473, a bill released by the U.S. House Appropriations Committee late Monday night that included roughly $38 billion in cuts from FY2010′s enacted levels. See our related action alert to read more!
- 2 Hours before the midnight deadline Friday, April 8th, House, Senate and White House negotiators reached an agreement to fund the remainder of fiscal year 2011. The House and Senate passed a short-term bill to fund the government through Thursday, April 14. The bill also contained restrictions on the use of federal family planning dollars in the District of Columbia and fully funded pay for U.S. troops through the end of FY11. During that time, leaders will hammer out the details for the longer-term bill to fund the government through September 30.
- 12:40 p.m. Friday: There are reports now that Senate Republics would allow a vote on a very short-term resolution to prevent a shutdown if a bipartisan deal is reached today to fund the government for the remainder of FY2011. That would allow a few days during which a longer-term deal could be passed by Congress and sent to the President to sign into law.
- 9:30 a.m. Friday: Various pundit economists echoed their concerns about the increasing likelihood of a shutdown. James O’Sullivan, the chief economist as MF Global, said that when the government shut down for 20 days in late 1995, the nation’s economic growth was slowed by as much as a full percentage point in that quarter. He went on to say, however, that the effect was largely temporary. There is rumor that the White House has set a 10:30 a.m. deadline for agreement between the parties.
- As of 10:30 p.m. Thursday: President Obama called both Speaker Boehner and Senate Majority Leader Reid to the White House twice yesterday as they attempted to hammer out details relating the the continuing resolution. Both leaders issued a statement noting that the two meetings “narrowed the issues,” but they had not reached a final consensus.
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