GOP irresolution could lead to a government shutdown

Reader feedback at end

Political posturing about the debt limit and cutting taxes are always popular, controlling spending not so much. So doesn’t it stand to reason that our political leaders should settle on future spending levels before deciding what to do about taxes?

By observing this principle, it might be possible to navigate the fiscal deadlines that are looming in DC without roiling the waters unnecessarily or derailing tax reform.

A. Debt limit – The government’s official debt limit is $19.8 trillion. The Treasury Department has been employing “extraordinary measures” to stay within it, but on a normalized basis debt is already somewhat higher - $20.4 trillion according to this unofficial debt clock, accessed 8/25/17.

As the government keeps spending more than it takes in and time would be required for any corrective actions to take effect, the debt limit will clearly need to be raised. Treasury Secretary Steven Mnuchin (acting very much like his predecessors in similar situations) has repeatedly urged the members of Congress to do the necessary. See, e.g., his pre-recess letter suggesting a deadline of September 29. Treasury Secretary Mnuchin extends measures to hold off debt-limit default, Michael Sheetz, cnbc.com,
7/28/17.

SAFE would favor abolition of the debt limit because it’s not an effective control, and here’s why. Debt reflects money that has already been spent. You wouldn’t attempt to drive while looking in the rearview mirror, would you, instead of surveying the road ahead? Attention could then be focused on controlling future spending more effectively. Fixing the fiscal problem: work on what matters,
6/26/17.

One additional point: the fiscal hoops Treasury is jumping through to observe the debt limit involve measurable costs for taxpayers (e.g., $2.5B through Sept. 29), plus which this sort of maneuver may tend to inflate the government’s borrowing costs. Congress is procrastinating on the debt limit, and it’s costing taxpayers billions, Erin Kelly, usatoday.com,
8/15/17.

"Uncertainly increases the cost for the government to borrow money," said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. "That's money that's not available for the government to spend on something else we need. It's basically an unforced error, a penalty that is imposed on us because the White House and Congress are so dysfunctional."

Our advice about abolishing the debt limit wasn’t taken before the August recess, and it probably won’t be heeded in September either. The resistance will likely be spearheaded by House conservatives, who view votes to raise the debt limit as one of their few opportunities to push legislation in a more conservative direction. See, e.g., House conservatives won’t surrender meekly in September. A clean debt ceiling is dirty politics, Rep. Mark Walker (chair of the Republican Study Committee), Washington Examiner,
8/7/17.

Rep. Walker’s point about the need for reforms so the debt level can be stabilized (or even reduced over time) is well taken, but why couldn’t such reforms be proposed for inclusion in the budget or spending bills that will be coming up for consideration in the same time frame?

One might think congressional Democrats would support the administration’s request for a “clean” (no conditions) increase in the debt limit, thereby cancelling out Republican defectors, but with the White House now in Republican hands they will likely demand a quid pro quo, e.g., legislative appropriations for GovCare subsidies the president has threatened to cancel. (For more about the deal that’s rumored to be in the making, see section B.) Here’s the real reason Trump is angry with McConnell and Ryan, Robert Donache, dailycaller.com,
8/25/17.

[House] Minority Leader Nancy Pelosi has put the onus of raising the debt ceiling entirely on Republicans, and has hinted on multiple occasions that Democrats will not eagerly support their Republican colleagues in raising the debt ceiling without key concessions.

B. Spending – Last week’s entry reviewed three budget plans that have been proposed for fiscal year 2018 et seq., of which the Republican Study Committee budget establishes the most demanding targets for spending cuts. Let’s hear it for the SAFE budget, 8/21/17.

The Building a Better America budget has already been passed by the House Budget Committee; it will probably be approved by the full House (perhaps with some amendments) and the Senate (filibuster rule doesn’t apply to budget resolutions). In addition to establishing overall spending limits, the budget resolution will help to set the stage for the GOP tax bill.
Ibid.

Passing the budget resolution is just the beginning of the budget process. Step two is to confirm the overall spending levels that have been set and distribute them to operating units/programs via appropriation bills.

In theory, appropriation bills for twelve defined categories should be enacted into law by October 1. Without spending authority for the new fiscal year in place, a government “shutdown” would be required.

In practice, the October 1 deadline has been rarely met. Appropriation bills are typically packaged into one or more omnibus bills in December, with a continuing resolution (CR) being enacted to provide spending authority in the interim. Note that both continuing resolutions and appropriation bills constitute legislation, which is subject to the Senate filibuster rule and requires presidential approval.

The House has approved one appropriation bill to date (covering funding for defense, veteran’s benefits, nuclear programs, and “70 miles of barriers along the U.S.-Mexico border”); it was titled the Make America Secure Appropriation Act (“MASA Act”). House passes spending package with border wall money, Sarah Ferris, politico.com,
7/27/17.

There has been considerable activity at the committee level on other appropriation bills, and a prominent Republican legislator recently stated that House members would like to pass all of the other appropriation bills in September. Budget Chairwoman Diane Black sees momentum for finishing appropriations, Joseph Lawler, Washington Examiner,
8/21/17.

While many in Washington fear that Congress is stumbling again toward a stopgap measure to fund the government this fall, House Budget Committee Chairwoman Diane Black expressed optimism Monday that the lower chamber could finish appropriations bills and a budget for fiscal 2018. "I think there's a stronger movement toward getting through the appropriations process," Black told the Washington Examiner.

No appropriation bills have been taken up by the Senate to date, although there has been action on various appropriation bills (not necessarily the same as the House versions) at the committee level. Appropriations for fiscal year 2018, congress.gov, accessed
8/25/17.

As previously noted, appropriation bills are subject to the filibuster rule, and there has been ample indication that Senate Democrats will seek to block appropriation bills when it suits their purposes. Let’s take the MASA Act as an example.

Democrats will predictably oppose the border barrier funding included in this bill as anti-immigrant, a ridiculous waste of money, etc. This would be consistent with the position they took in March on proposals to begin funding the “wall” that the president promised on the campaign trail. Chuck Schumer calls for chaos, New York Post,
3/19/17.

New York’s senior senator doesn’t like the fact that Republicans mean to insert provisions for border-wall funding and deportation of illegal immigrants in a must-pass bill to keep the government funded past April 28. So he’s threatening a filibuster to block passage — which would result in furloughing government employees, just like last time.

Republicans backed down in the initial skirmish, and since then have seemingly been angling for a lower cost alternative to a wall along the entire length (nearly 2,000 miles) of the US/Mexico border – or at least the portion (nearly 700 miles) that runs overland. How long is the US/Mexican border?
Yahoo.com.

Thus, Senator John Cornyn (R-TX) and others have floated a four year, $15 billion plan to build “smart, multi-layered infrastructure” (e.g., wall, fence, levees, technology or other barriers) along the southern border. $15 billion border bill wouldn’t fund a wall, Seung Min Kim & Ted Hesson, politico.com,
8/3/17.

And the funding in the MASA Act passed by the House was a mere $1.6 billion for “70 miles of barrier.” Border wall supporters labeled this amount as a down payment on total project cost, but there is no guarantee of additional funding being authorized in the future.

Democrats may view this relatively minor appropriation as reason to block a bill authorizing a total of $789 billion in spending (mainly for US defense) and risk triggering a government shutdown. Democrats will shut down government to block border wall, americanactionnews.com,
8/9/17.

There’s also a larger point, which is that given the major increases in defense spending provided in the MASA Act Democrats would like to see a comparable boost in nondefense discretionary spending. This suggests the possibility for a bipartisan deal in which both sides could claim victory, and there have been discussions along these lines already. White House pitches deal for wall money – and no shutdown, Seung Min Kim et al., politico.com,
8/9/17.

Democrats have vowed to oppose funding for a border wall, making it probably the biggest threat to an early October closure. The White House is offering Democrats more funding for their own pet projects in return for allowing construction to move ahead on a barrier along the U.S.-Mexico border — though perhaps not the "big, beautiful wall" with solar panels that Trump has long promised.

Another possibility might be to offer some sort of amnesty initiative, say continuation of the Deferred Action for Childhood Arrivals (DACA) program that was established by executive action during the previous administration, in exchange for beefed-up funding for border security (including barrier enhancements). It’s unclear, however, that Democrats would be receptive. Could Trump hold dreamers hostage for border-wall funding? Ed Kilgore, nymagazine.com,
8/22/17.

For all the talk of internal divisions in the administration over using the extension of DACA as a bargaining chip for a larger immigration deal, it’s not entirely clear congressional Democrats would go along in numbers sufficient to offset Republican immigration hard-liners.

There have been rumors that the Republican leaders in Congress are prepared to make a deal on fiscal issues that would give way on border wall funding again and also make other concessions that the president doesn’t favor. Here’s the real reason Trump is angry with McConnell and Ryan,
op. cit.

Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan are planning to pass legislation that would raise the debt ceiling and fully fund Obamacare subsidies through the 2018 election cycle, a source within the administration told the [Daily Caller News Foundation]. Leadership is also preparing to pass a short-term spending bill — a continuing resolution — that would fund the government through mid-December, include no appropriations for Trump’s border wall, and continue funding to Planned Parenthood

In a Phoenix, AZ rally last week, the president touted a border wall as essential for national security and said Congress was responsible for funding it. Trump threatens government shutdown over border wall funding, Pete Kasperowicz, Washington Examiner,
8/22/17.

President Trump on Tuesday threatened to shut down the federal government if Congress doesn't present him with a spending bill for the next fiscal year that includes funding for a wall on the southern border. "The obstructionist Democrats would like us not to do it, but believe me, if we have to close down our government, we're building that wall," Trump said at a rally in Phoenix.

Republican leaders in Congress weren’t pleased, e.g., House Speaker Paul Ryan stated that no one wanted a shutdown and there was no reason it should be necessary.

For their part, Democratic leaders reiterated their previously expressed objections to border wall funding. Democrats brand Trump as reckless, redouble resist threat on border wall, Stephen Dinan & David Sherfinski, Washington Times, 8/23/17.

“Democrats will stand fast against the immoral, ineffective border wall,” House Minority Leader Nancy Pelosi said. She and fellow Democratic leaders are confident Republicans would take the political blame for a shutdown, just as the GOP has done in previous shutdowns in 1995 and 2013.

A Wall Street editorial likened the president’s threat to a self-destructive act and said he was playing into the hands of the other side. Beating his own head against the wall, Wall Street Journal,
8/24/17.

Don’t expect Senate Democratic leader Chuck Schumer to try to talk Mr. Trump out of it. As the minority party, Democrats will be only too happy to test Mr. Trump’s dare since voters will blame a shutdown on Republicans who run both ends of Pennsylvania Avenue. Senate Democrats are vowing not to spend a dime on the wall and Mr. Trump will need 60 Senate votes to pass a funding bill.

OK, but are 60 Senate votes needed? As the president also said at the rally, Senate Republicans could and arguably should abolish the filibuster rule. Do this and the power of Senate Democrats to block spending bills, etc. would be severely curtailed. Otherwise, Republicans would continue to flounder. Trump-McConnell relationship hits new low, politico.com,
8/23/17.

We have to get rid of what's called the filibuster rule. If we don't, the Republicans will never get anything passed — you're wasting your time. We have to get rid of the filibuster rule. Right now, we need 60 votes and we have 52 Republicans. That means that eight Democrats are controlling all of this legislation. 

We often disagree with the president’s ideas (and/or the manner in which he expresses them), but not this time! Far from facilitating thoughtful debate, as is its purported purpose, the filibuster rule has evolved into an excuse for procrastination and equivocation. Time to bin the filibuster,
4/3/17.

There is no reason a determined minority should be able to block reasonable appropriations to beef up border security, which is viewed by many as a prerequisite for eventual reform of the immigration system. SAFE has suggested other ideas that may be more important, such as eliminating the “jobs magnet” for illegal immigrants, but that doesn’t mean border security shouldn’t be improved if the cost is reasonable ($1.6 billion hardly sounds like a deal breaker). Immigration reform,
June 2013.

More broadly, an effective 3/5 supermajority requirement for all spending legislation promotes legislative logrolling to the detriment of promoting smaller, more focused, less costly government. Barring a major change in the political equation, a fiscal meltdown is highly predictable – it’s just a matter of time. America is heading straight into its most avoidable crisis ever, Justin Bogle, dailysignal.com,
8/16/17.

NEXT WEEK: Efforts to reform the US tax system are also imperiled by the filibuster rule, which could leave both parties with very little in the way of legislative accomplishments to talk about in the run-up to the 2018 elections.

**********FEEDBACK**********

#Establishment Republicans are not truly interested in solving the fiscal problem, etc. except to the extent that they fear their jobs are on the line. – SAFE director

#It is nonsensical and futile to discuss balanced budgets “down the road.” It should be clear from the past that a budgetary reduction scheme over a period of years not only will not work politically--if nothing else, because congressional personnel constantly change, but also because there is no logical RED-LINE on total spending at any point. The only realistic RED-LINE for total budget expenditures is last year's total tax revenue, a number that is unequivocal, logical and commonly understood – by the members of Congress and American householders alike. I would think the president would have to be aware of and approve this procedure, but I think it would appeal to him. – SAFE member (Georgia)

An interesting proposal, but implementing it might prove easier said than done. See previous discussion and feedback. All in favor of responsible budgeting, say aye, 1/4/16.


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