ICYMI: The Consequences of A Republican Shutdown

Just three months after threatening to default on America over their partisan agenda, extreme House Republicans are back at it again, "charging toward a US government shutdown in less than 10 days," writes Bloomberg.

Extreme House Republicans are consumed by chaos and marching our country toward a government shutdown that would damage our communities, economy, and national security.

According to the Washington Post, "Millions of federal employees and active military service members will stop receiving paychecks — but many will be forced to report to work anyway…. And the most pivotal federal aid programs — including those assisting the victims of the deadly wildfires in Maui — could struggle to provide urgently needed support."

Read coverage below:

The Washington Post: U.S. braces for calamitous, costly government shutdown in eight days
[Tony Romm, 9/22/2023]

Millions of federal employees and active military service members will stop receiving paychecks — but many will be forced to report to work anyway.

Some national parks may close, museums could shutter and airports nationwide might see new disruptions and delays.

And the most pivotal federal aid programs — including those assisting the victims of the deadly wildfires in Maui — could struggle to provide urgently needed support.

In only eight days, the U.S. government is set to shut down, unleashing real and wide-ranging financial hardship on American families, workers and businesses. The lapse in funding would mark a fundamental breakdown in an ever-divided, intransigent Washington, where lawmakers this year have struggled — time and again — to fulfill their most basic fiscal responsibilities.

At the heart of the stalemate are renewed Republican demands for deep federal spending cuts, more than three months after House Speaker Kevin McCarthy (R-Calif.) finalized a deal with President Biden that was supposed to prevent this very brinkmanship. Far-right lawmakers have blocked the House this week from adopting a short-term measure that would sustain federal spending at its existing levels and buy more time for the two parties to work out a longer-term arrangement.

If Congress fails to resolve the impasse by Sept. 30, federal appropriations will expire, bringing many agencies to a halt and forcing the sprawling U.S. government to operate at a mere shell of itself. Anticipating the worst, the Biden administration has started to revise and publish a set of intricate blueprints for how agencies should proceed if funds run dry.

As usual, mail deliveries would continue, and seniors would still receive their Social Security checks, because they are not funded through annual appropriations. But older Americans might not be able to obtain new Medicare cards or address some other issues with their benefits until federal funding resumes.

Some federal inspections that ensure food safety and prevent the release of hazardous chemicals in drinking water would be halted, the Biden administration has warned. Federal research toward cancer cures and other innovative therapies would cease. Passport offices in parts of the country are expected to close, snarling some Americans' plans for international travel.

And with each passing day, Washington would further deplete federal safety-net programs that carry over their unused money from past years. Eventually, the government may not be able to provide some poor families with child care, nutrition assistance, housing vouchers or college financial aid. The longer a shutdown persists, the greater the blow it could ultimately deliver to an economy that has teetered for more than a year on the precipice of recession.

"The solution is very, very simple. Extreme House Republicans need to stop playing political games with people's lives," White House press secretary Karine Jean-Pierre told reporters Thursday. "There's so much at stake here."

For the moment, Congress continues to barrel toward another fiscal crisis, in a year that already saw the U.S. government almost default on its debt. Far-right Republicans have made clear that they are willing to use pivotal deadlines — and the threat of economic catastrophe — to extract policy concessions from Biden and, at times, pressure leaders of their own party. McCarthy has largely acquiesced to their demands, even directing committees this month to open an impeachment inquiry into Biden to appease restive conservatives.

On Thursday, House lawmakers departed the Capitol with seemingly no resolution in sight, raising the odds that the country is about a week away from what would be the 21st shutdown since 1977, when the U.S. shifted the start of its fiscal year to Oct. 1. The heaviest initial blow would fall on about 2.2 million federal employees, who would not receive pay for as long as appropriations lapse, said Jacqueline Simon, the policy director of the American Federation of Government Employees, the largest union of federal workers.

"Most Americans cannot go without a paycheck on payday," she said. "The vast majority of our members cannot go even one pay period, let alone two, three, four pay periods, without a paycheck."

The immediate loss of income would arrive as prices remain elevated from high inflation over the past year, and just before the U.S. government is about to resume requiring borrowers to repay their student loans. Many federal workers would not have to report to their jobs, but the government is likely to deem hundreds of thousands of its employees as "excepted" from the shutdown because they deal with national security or public safety.

Even in a shutdown, the nation's approximately 1.3 million active-duty troops would also helm their stations without pay. Once federal funding resumes, though, the government is required by law to repay federal employees and military personnel. Federal contractors, however, would not be compensated for missed time.

While the Pentagon retains broad latitude to continue programs in the name of national security, top defense officials in recent days have signaled that a shutdown next month could prove uniquely disruptive — even inhibiting their ability to provide some foreign military aid. That includes the supply of select materiel to Ukraine as it continues to fend off Russia, which some House Republicans oppose.

Appearing Tuesday on Capitol Hill, Mira Resnick, the deputy assistant secretary of state for regional security, stressed that prior shutdowns have left her agency "unable to process new foreign military sales for any partner," except in emergencies, before imploring lawmakers: "This is something we would like to avoid."

The lapse in funding could prove just as debilitating for Americans outside of government, especially those who are still recovering from recent wildfires, hurricanes and other natural disasters.

The primary federal fund for disaster recovery has fallen to about $2.4 billion, a level that the Federal Emergency Management Agency has described as unsustainable amid hurricane season. In an ominous sign, FEMA spent more than that — about $2.6 billion — just in the first 30 days after Hurricane Ian struck Florida last year.

Last month, FEMA took the rare step to begin rationing its money, pausing about $1.5 billion in longer-term recovery projects to ensure it has enough cash on hand in the event of a major, deadly crisis, said Deanne Criswell, the agency's administrator. Asked what might happen if those funds approach zero without new appropriations, Criswell told lawmakers at a hearing Tuesday that the consequences could be dire.

"Given our current state," she said, the fund balance "would be insufficient to cover all of our ongoing lifesaving operations."

The most recent interruption in federal funding occurred under President Donald Trump, a 35-day lapse in appropriations beginning in the waning hours of 2018 that marked the longest shutdown in U.S. history. Trump held up government funding into January 2019 in an attempt to force Democrats to fund construction of a wall along the U.S.-Mexican border.

Ultimately, Trump failed to secure the money as part of a deal to reopen the government in January, at which point the shutdown had already incurred great economic cost. That month, a federal budget watchdog estimated the political stalemate had delayed about $18 billion in government spending, while reducing gross domestic product by an estimated $8 billion that quarter and interrupting a vast swath of American life.

Nationally, air passengers at the time saw significant delays: Unpaid for a month, some inspectors at the Transportation Security Administration — the federal agents who check bags and protect flights — stopped coming to work "due to the financial toll of the shutdown," a trio of top airline union groups said then. Four years later, the National Air Traffic Controllers Association renewed its plea for congressional action, warning Wednesday that the last shutdown imperiled "safety activities that proactively reduce risk," before adding: "We cannot let history repeat itself."

The exact economic effects of a shutdown may not be immediately evident, because some of the federal officials who produce and release data about inflation and unemployment might come to a stop as well. But a lapse in funding beyond a few weeks — on top of rising interest rates and other economic turbulence — could result in a "meaningful hit to growth," predicted Mark Zandi, the chief economist at Moody's Analytics.

"None of this is any good for the economy," he said.

Two years after lawmakers approved a bipartisan bill to rejuvenate the economy and improve the country's infrastructure, a failure to fund the government would leave it temporarily unable to approve some projects to improve the nation's roads, bridges, pipes, ports and internet connections.

"It hamstrings federal agencies, and there are a lot of them doing infrastructure work," said Maria Lehman, the president of the American Society of Civil Engineers. "There's uncertainty on ongoing projects, [and] new projects can't get underway."

The U.S. would slow down its efforts to inspect workplaces for safety hazards, according to the White House, while the government would not be able to process new applications for loans to cash-starved small businesses. And federal agencies would face escalating challenges in providing critical economic support to Americans under financial duress.

Roughly 10,000 children would lose access to child care starting in October as a result of disruptions to Head Start, a program that provides grants to care organizations, according to the White House, which released its own estimate of shutdown implications on Wednesday. Without those grants, some of these child care centers likely would shutter, leaving parents struggling to balance family and work obligations.

The loss of funding would worsen what is already expected to be a child-care crisis this fall. Even if Congress does fund the government in time, lawmakers are not expected to renew pandemic-era funding that boosted child-care programs. That could result in the closure of 70,000 child care centers, totaling one in three nationally, starting next month, experts have said.

Even in a shutdown, the U.S. government can pay out food stamps and other nutrition aid, provide housing vouchers to low-income families and process financial aid for the neediest college students. But federal agencies in recent days have signaled that they may have to dial back this support after October if the shutdown spans weeks or longer.

One of the programs — a food-and-vegetable benefit for women, infants and children known as WIC — already faces such a funding crisis that the Biden administration previously asked Congress for $1.4 billion in emergency aid. It is unclear how long after October it can provide benefits at the current rate; the U.S. Department of Agriculture, which oversees WIC, did not respond to a request for comment.

Sharon Parrott, the president of the left-leaning Center on Budget and Policy Priorities, pointed to the uncertainty as she acknowledged millions of families could be at risk if congressional inaction causes a lengthy government shutdown.

"The longer a shutdown lasts," she said, "the more problems would emerge."

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Bloomberg: House Republicans Are Charging Toward a Government Shutdown
[Erik Wasson and Billy House, 9/22/23]

House Republicans are charging toward a US government shutdown in less than 10 days as party lawmakers struggle to agree on how much to cut spending and how to explain their brinkmanship to the public.

The GOP's bitter divisions have made them unable to even formulate a concrete set of demands. That foreshadows an extended standoff with the White House and the Democratic-controlled Senate as the US economy absorbs shocks from the shutdown, autoworkers strike and rising gasoline prices.

And the Republican Party's presidential front-runner and most prominent figure, Donald Trump, has further complicated the turmoil, presenting the clash as a way to halt criminal cases against himself and others who tried to overturn the 2020 election.

Republican infighting torpedoed plans for a Saturday House vote on a temporary spending bill crafted to meet conservatives' demands and serve as a starting point in negotiations with the Senate. On Thursday, House Speaker Kevin McCarthy sent lawmakers home for a long weekend after two ultraconservatives ambushed him on a procedural vote.

In a preview of how this might play out in next year's elections, President Joe Biden seized on the decision to forego weekend votes.

"Last time there was a government shutdown, 800,000 Americans were furloughed or worked without pay," Biden said on X, formerly known as Twitter. "But enjoy your weekend."

McCarthy's latest plan is for the House to vote next week on a few spending bills that address conservative demands for deeper cuts, with the State and Agriculture Departments as potential targets. Those measures could then entice holdouts to eventually support a separate short-term funding bill.

"Hell no, they aren't going to become law," Representative Steve Womack of Arkansas, a McCarthy ally, said of those bills. He added, however, that they might give House Republicans a stronger opportunity to have friendlier conversations on resolving differences.

Moderate Backlash

But the divergent agendas pressed by the GOP's quarreling camps and McCarthy's precarious position within his own ranks could make an eventual deal with Democrats harder to accomplish than in previous standoffs. At the same time, muddied justifications for a shutdown heighten the danger to swing-district Republicans, who would face voter backlash over disruptions in government services.

Representative Mike Lawler of New York, one of 18 Republicans who represent districts Biden won in 2020, said Thursday he would join with Democrats to force a House vote on short-term funding for the government — stripped of conservative demands — if his party can't come up with a plan to avoid a lapse.

"I will do everything in my power to avoid a shutdown," said Lawler, who represents the Hudson Valley.

Unlike the unprecedented US default and potential tumult in global financial markets threatened during Washington's debt-limit confrontation earlier this year, the economic consequences of a shutdown largely depend on how long it lasts.

A lapse in federal funding would cut 0.2 percentage points from GDP for the quarter each week it lasts, estimates Bloomberg chief US economist Anna Wong. With forecasters already anticipating slower growth, an extended shutdown risks tipping the US into a recession. A shorter one carries less risk.

The drama would play out at a vulnerable moment for the economy. The peak impact of the US Federal Reserve's interest rate increases is about to hit, oil prices are rising and consumer spending is expected to weaken as student loan payments resume in October.

Financial markets are more focused on the outlook for continued elevated Fed interest rates. A shutdown may push up longer-term Treasury debt yields, further increasing borrowing costs for corporations and government entities.

Treasury yields have typically fallen in previous shutdowns as risk-averse traders migrate to the safety of US bonds. But JPMorgan Chase & Co. warned clients this fiscal showdown may have the opposite effect, given the Fed's hawkish policy resolve.

"Any perceived lack of ability to govern might actually drive Treasury yields higher in the coming weeks," JPMorgan fixed-income strategists led by Jay Barry said in a report.

For all the rancor they generate, shutdowns usually fail to achieve the goals of those who provoke them. The 35-day shutdown after the 2018 midterm elections over Trump's demand for border wall money did not result in the barrier being built, while the 2013 shutdown over Obamacare failed to kill the program.

The turmoil in Washington was vividly displayed Thursday as two dissident conservatives, Representatives Marjorie Taylor Greene of Georgia and Eli Crane of Arizona, voted against bringing up a military spending bill, typically popular with GOP members. McCarthy was left fulminating over what he said was a reversal of stances the two had communicated to party leaders.

"This is a whole new concept of individuals that just want to burn the whole place down," McCarthy said. "That doesn't work."

Representative Chip Roy, a hardliner from Texas, suggested Republicans shouldn't back down despite the disruption involved.

"The shutdown is less the question," Roy said. "It will be more devastating if Republicans don't unite and send a message to the American people about what we're fighting for."