Thursday, October 24, 2019

An Especially Harsh Government Shutdown is Increasingly Likely

David Super

     Prior to the end of Fiscal Year 2019 on September 30, Congress passed and the President signed a short-term continuing resolution (“CR”) to keep the federal government operational through November 21, 2019.  At the time, the House had passed ten of the twelve annual appropriations bills needed to fund the federal government (all but the intensely controversial Homeland Security bill and the parochial Legislative Branch bill).  Then, and indeed even today, the Senate had passed none of the twelve bills. 

     The hope has been that the House, the Senate, and the President would be able to agree on full-year funding levels by November 21 or, failing that, a short additional CR would provide the time needed.  Increasingly, however, it is appearing that no such agreement may be achieved and another partial government shutdown is likely.  Moreover, if a shutdown does occur, it could do considerably more damage even than the one that began in December 2018. 

     Several factors make an appropriations impasse seem increasingly likely.  First, an immense amount of work remains to be done.  Not only has the Senate not enacted a single appropriations bill – it is trying to move several this week and possibly next – but the House and Senate have yet to agree on even the broadest outlines of how to divide up the available funds. 

     Each year when a budget resolution or budget agreement sets an overall limit on the amounts that may be appropriated for defense and non-defense discretionary programs, the House and Senate Appropriations Committees divide up those funds among their twelve subcommittees.  This year, the House and Senate did so quite differently.  The House would largely divide the funds consistently with past years.  The Senate Appropriators, however, would significantly redistribute funds away from anti-poverty and other human services programs.  Thus, despite a modest increase in total domestic discretionary funding for 2020 relative to 2019, the Senate Appropriations Committee would cut programs within the jurisdiction of its Labor-HHS-Education Subcommittee.  Child care, Head Start, job training, family planning, and education for disadvantaged children would be among the important losers, as would the operating budget of the Social Security Administration. 

     Some House-Senate disagreements over subcommittee allocations are common – although generally not ones of this magnitude – but ordinarily the two chambers reconcile their differences much earlier in the year.  Until House and Senate appropriators do so, little work on drafting individual appropriations bills is possible:  subcommittees cannot start to divide up their pots if they do not know how big their respective pots will be.  The source of the delay is mysterious; it may reflect Senate Republicans trying to determine whether the Administration has any particular targets it wants them to meet. 

     Second, as the Administration rolls out more and more rules and executive orders marking sharp breaks from the past, the number of substantive “riders” – restrictions or prohibitions on appropriations bills – that Democrats will be under pressure to pursue will increase.  Similarly, as new disclosures about how the Administration has conducted foreign policy in Ukraine, Syria, and elsewhere emerge, Members of both parties may want to include more mandatory language in appropriations bills rather than relying on general legislation prohibiting impoundments of appropriated funds.  This will multiply the number and complexity of disagreements that could lead to an impasse. 

     Third, President Trump’s declaration of a state of emergency, and his transfer of money from various military construction accounts to support border wall construction, greatly expands the scope of the issues in any appropriations negotiations.  Not only must opponents of spending money on the border wall focus on that account but they also will want to defund, or statutorily protect from transfer, a wide range of other accounts that the President might raid.  Some Republicans who favor the border wall may nonetheless ally with Democrats to protect against transfers out of military construction accounts important to them.

     Finally, negotiations on an appropriations deal seem likely to interact unfavorably with the impeachment process.  One might imagine that the President would seek to avoid alienating persuadable voters and Senate Republicans with a government shutdown.  To date, however, the President seems to be counting on fiery support from his base to scare Senate Republicans with the threat of primary challenges.  That is likely to make him even more reluctant to compromise.  He also has seemed unable or unwilling to compartmentalize his disputes with House Democrats, who naturally will be among the major parties to a budget negotiation.  The Democrats, for their part, may have trouble persuading their constituents that they need to make deep compromises to a President who seems on the ropes.  And some may be inclined to defund officials or agencies that have refused to comply with subpoenas.

     If a partial government shutdown does occur, it is likely to be even more destructive than the one last winter.  The Congressional Budget Office (CBO) estimated that that shutdown cost the economy $11 billion.  This likely does not include a variety of non-monetized effects, such as loss of morale to federal workers and inefficient or failed government procurement by agencies that do much of their work by contract and were left with only a little over half a year to seek bids and award contracts before the close of the fiscal year.  Nonetheless, a new shutdown is likely to be worse in several respects.

     First and most obviously, it could well last longer as compromise remains elusive for the reasons just discussed.  Indeed, it may be that the President will be wholly unwilling to compromise with House Democrats so that the shutdown continues until twenty Republican senators (and, even more difficult, sixty Republican representatives) are willing to vote to override a presidential veto of funding legislation.  (Of course, if the Senate can muster a two-thirds majority to re-open the government, that might ease the way toward other votes requiring similar super-majorities.)

     Second, several major appropriations bills had already been signed into law prior to last winter’s partial shutdown.  This year, as noted, no appropriations bills have even passed the Senate, much less made their way through a conference committee and across the President’s desk.  Much more of the government will be affected.

     Third, some programs simply cannot wait for their funding this year.  Chief among these is the decennial census.  Census spending is heavily front-loaded in the fiscal year, with activities starting in Alaska in January and in the rest of the country soon thereafter.  If the Census Bureau lacks funds to hire enumerators and take other steps to ensure broad participation, the quality of this Census may be irretrievably compromised.  That might not bother the Trump Administration, but it should alarm the rest of us.  In addition, Medicaid funding is approaching a cliff in Puerto Rico and other U.S. territories that lack the secure funding stream available to the fifty states and Washington, D.C.  If they do not receive new funding soon, they will have to shut down much of their programs in January. 

     Finally, in the months since the last partial shutdown ended, the U.S. Government Accountability Office (GAO) has ruled that some of the steps the Trump Administration took to moderate the effects of that shutdown were unlawful.  Last month, GAO ruled that a contorted scheme to pay February’s SNAP food assistance benefits in January violated the Anti-Deficiency Act.  (A more straightforward approach to continuing SNAP benefits was available, but for whatever reason the Administration did not take it.)   And Tuesday, GAO ruled that the Administration’s order for IRS employees to return to work to process tax refunds also violated the Act.  The Anti-Deficiency Act provides serious criminal penalties for knowing and willful violations.  These GAO opinions undermine any federal employees’ ability to claim that these schemes, if attempted again, were inadvertent violations of the Act.  The Administration therefore may find it more difficult to persuade federal employees to implement policies to soften the impact of any government shutdown.  The President’s continued harsh criticism of federal employees also might cause some to question whether he would sign legislation paying them retroactively for unpaid work they did as “essential” workers during a partial shutdown.  

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