Dear ACEC Arizona Members and Colleagues,
Please see below for a short primer on the federal government shutdown, which was shared by the Senior Policy Advisor at the University of Phoenix.
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We thought this would be a helpful primer on what’s going on with the likelihood of a federal government shutdown, what happens if it does, and different ways that this could conclude to reopen the government. Please feel free to share this others who may be interested.
Federal Government Shutdown 101
For the 22nd time in our nation’s history the Federal Government will likely enter a “shutdown” just after midnight on September 30, 2023. Government employees and contractors will be furloughed and normal operations at most federal agencies will cease or be curtailed significantly.
Shutdowns in the past have lasted as little as one day to as long as 34 days.
Some basic numbers
F.Y. 23 Discretionary levels - $1.7 trillion
F.Y. 24 Budget Cap deal - $1.59 trillion
House F.Y. 24 proposed levels - $1.49 trillion
Senate F.Y. 24 proposed levels - $1.59 trillion (plus $23 in additional “side deal” emergency spending for defense and non-defense spending)
White House emergency supplemental request – The White House has also requested roughly $44 billion in additional “emergency spending” for disaster relief, Ukraine, and other miscellaneous accounts. Notably this proposed funding for Ukraine would only last through the end of the calendar year, the White house intends to ask for more money for Ukraine for calendar year 2024.
National Debt: $33.10 Trillion (source: Treasury Department)
F.Y. 23 Projected Deficit: $1.5 Trillion (according to latest CBO estimates)
Federal employees and contractors effected:
2 million military personnel
2 million civilian workers
19,000 contractors - employing as many as 19 million people
Why does the government “shut down”?
Technically, the Antideficiency Act of 1982 prohibits the obligation or expenditure of federal funds before an appropriations bill is signed into law. Since there will not be an appropriations bill signed into law to pay for salaries and expenses (e.g., health care) and general government operations, most non-essential personnel will be furloughed, and agency activities will be reduced. “Essential personnel” will be able to provide limited services, but they will not be paid until a funding bill is passed and signed into law.
Absent an appropriations bill or continuing resolution passing both the House and the Senate and being signed into law by the President, most federal operations will be significantly curtailed.
Why is this happening?
Politically, this is happening because neither the Senate nor the House has yet passed a continuing resolution or the 12 annual appropriations bills to fund the government’s operations for Fiscal Year 2024 and both chambers must pass the same bill that is then signed by the President to avert a shutdown.
Senate
The Senate has been working in a largely bipartisan manner on appropriations so far this year. Chair Patty Murray (D-WA) and Vice Chair Susan Collins (R-ME) have successfully reported out all 12 annual appropriations bills out of the Appropriations Committee, the first time that’s been done in 5 years. None of these bills, however, have been taken up by the full Senate. Additionally, the Senate’s agreement to spend more than the budget cap deal allows, and insistence on adding funding for Ukraine’s efforts to defend itself from Russia’s illegal and immoral invasion, make these complicated bills for resolution with the House.
Majority Leader Chuck Schumer (D-NY) is working to put the Senate on track to pass a continuing resolution but likely not before the Saturday midnight deadline. Leader Schumer and Republican Leader Mitch McConnell (R-KY) worked together on a 6-week “clean” continuing resolution and took the first procedural step on Tuesday night with a vote of 77-19. This continuing resolution would extend through November 17, less than a week before Thanksgiving.
But given procedural hurdles, and likely objection from some Senators to expedite the process due to funding for Ukraine being included and disaster relief not being sufficient, this bill probably won’t pass the Senate before the shutdown deadline of September 30 and would need to be reconciled with the House before being sent to the President for his signature.
House
Traditionally the House operates in a more partisan manner, and this year is no different. House Speaker Kevin McCarthy (R-CA) is trying to rally support for passage of individual or minibus appropriations bills (two or three of the annual appropriations bills lumped together), but at the House’s lower spending levels, and finally made progress Tuesday night by passing a procedural motion to begin debate on 4 of the 12 appropriations bills. Disunity in the Republican conference on overall strategy and funding levels is making that complicated and House Democrats have no interest in voting for spending bills that do not meet the funding levels agreed to in the debt deal.
Speaker McCarthy has not yet tried to pass a short-term continuing resolution, and several Republican members have stated outright opposition to such a bill. Yesterday McCarthy expressed an intent to move to a continuing resolution later this week without funding for Ukraine but with the House Republican bill on border security (H.R. 2 which passed in May 219-213). Hanging over McCarthy’s head is the narrow majority he has (he can lose no more than 4 members of his party assuming full attendance), giving tremendous power to a limited number of confrontational members, and the looming threat of a motion to remove him from his position as Speaker.
When does this happen?
October 1, 2023 at 12:01 a.m. federal agencies no longer have the authority to act on their mission. They will furlough non-essential personnel and minimize functions until a new appropriations bill passes and is signed into law.
What gets shutdown or curtailed?
Most every operation of the federal government relies on the annual appropriations bills to provide funding and authority for actions. Politically the Executive Branch has tremendous ability to make a shutdown as painful as possible to maximize disruption to the country and the economy which typically helps the Executive Branch in negotiations to restore government funding. Some examples of what voters and constituents have paid the most attention to in previous shutdowns include:
Federal parks and trash collection – often called the “Washington Monument effect” the first visible effect of a shutdown usually is the closure of national parks and federally funded museums like the Smithsonian museums and the accumulation of trash left by visitors that ignore the closure of the parks. The previous administration took great efforts to keep national parks open, to minimize the harm felt by voters during a shutdown. An Executive Branch determined to make a shut down more painful can deploy tools to keep parks closed. Previous shutdowns show that the media love reporting on ruined vacations and canceled camping trips and weddings. And piles of trash are too good of a visual to pass up.
Passports – already at historically slow rates of issuance of new and renewed passports, passport operations will be dramatically curtailed as personnel are furloughed.
Firearm permits – the Bureau of Alcohol, Tobacco and Firearms will significantly slow down or halt approval and review of new gun permits.
FDA medical product regulation – The Food and Drug Administration (FDA) has already announced that if a shutdown occurs furloughs for roughly 19% of its staff will take place. This may slow down some routine manufacturing facility inspections, but FDA can continue to operate and carry out activities funded with the resources from user fee programs and the carryover balances within each program which include human and animal drugs, biosimilar biological products, medical devices, and tobacco products. Additionally, FDA activities that address public health safety and imminent threats will continue, this includes responding to public health emergencies and other public health issues, such as drug shortages, outbreaks related to infectious diseases or foodborne illness.
Food safety – The FDA is responsible for guaranteeing the safety of roughly 80% of our nation’s food supply. In previous shutdowns the FDA has limited its “essential” services to active foodborne outbreaks but limited its proactive inspections. Meaning the FDA waited until people got sick from bad or contaminated food before they could act.
The USDA will likely continue their meat and poultry inspections due to the complicated nature of their funding of appropriations and industry fees, so not all food will be of concern.
Government workers – much of the federal government’s 2 million strong workforce can be deemed “non-essential” and furloughed during a shut down. But under the Antideficiency Act, these workers will be paid when operations resume. This means that paychecks won’t arrive on time, but workers will eventually receive full pay for their time not at work.
Military personnel – military personnel will largely be required to continue to work but pay checks will halt until the government reopens (also important to note that all military personnel will receive back pay when the government reopens). Readiness efforts and training programs are curtailed, degrading the readiness of the troops. Some estimate that at least 70% of active-duty military live paycheck to paycheck.
Government contractors – government contractors on the other hand to do not automatically receive back pay for a furlough during a shut down. Efforts in the past to provide back pay to furloughed contractors have been unsuccessful because of the complicated nature of their employment and the financial cost to the government.
What’s not shut down?
Social Security – checks will still be cut for Social Security recipients, but since roughly 15% of Social Security staff are funded through annual appropriations, expect some slower responses for new retirees or people with problems.
Post office – the U.S. Postal Service does not receive appropriations, so the mail will still be delivered.
Courts – at least for a while, most courts can continue to operate using fees they have collected from court filings and other fees.
Special Counsels – Prosecutors assigned to cases involving the former President and Hunter Biden are funded through permanent appropriations, so their activities and the cases will continue unimpeded by a shutdown of any length.
Ways out of this – some options
House passes Senate’s Continuing Resolution – the quickest way out of a shutdown would be if the House were to take up and pass a continuing resolution passed by the Senate.
Currently that would require a bipartisan vote in the House Rules Committee to bring a bill to the floor. Theoretically possible, the House Rules Committee is stacked 9 Republicans to 4 Democrats, so a switch of just 3 Republicans would allow a bill to be reported for floor consideration.
Unless McCarthy convinces his majority caucus to go along with a short-term continuing resolution, this would likely create problems for Speaker McCarthy, possibly leading to a motion to remove him from his position as Speaker, and he has shown no interest in working with Democrats to pass a continuing resolution.
Winners – Schumer, McConnell, Biden Administration
Losers – McCarthy
Senate passes House’s Continuing Resolution – another quick way out of a shutdown, if the House were to actually pass its own continuing resolution first, would be for the Senate to call up and pass the House’s bill.
This is unlikely as a House bill at this point would be purely a partisan exercise, will likely be at lower funding levels, and would include the partisan border security bill.
Winners – McCarthy
Losers – Schumer, Biden Administration
Negotiations between House and Senate begin – nothing prevents the House and Senate from negotiating on a larger package to fund the entire government, even in a shut down. McCarthy, Schumer, McConnell, and Jeffries could engage in bipartisan discussions to reach agreement on top line funding and any major parameters and then give marching orders to the appropriators to work out the details.
This too creates problems for McCarthy unless he can secure additional concessions from his leadership colleagues to bring back to his recalcitrant Republican caucus in the House.
Winners – Schumer, McConnell, McCarthy
Losers – Recalcitrant House Republicans as any likely deal will require more spending than they prefer
Negotiations on a continuing resolution – if the House is successful at passing their own version of a continuing resolution, then the four leaders would need to engage in bipartisan discussions on how to resolve differences between the House and the Senate. Ukraine funding and border security are hot button issues and the anticipated lower level of funding for a House-passed bill will create lots of fireworks if the House can actually pass a continuing resolution.
Winners – McCarthy
Losers – Schumer, McConnell, White House
House discharge petition – the more complicated route. House rules allow 218 members of the House of Representatives to sign a petition to discharge a bill from committee and send it to the floor for a vote. There are lots of arcane rules and procedures that can be better explained by CRS.
This would be a way for McCarthy to avoid the ire of his caucus. If a group of moderate Republicans join with House Democrats to pass the Senate’s continuing resolution, McCarty could avoid blame for ending the shutdown without any policy wins and work to secure a better deal in any larger negotiation on a full year funding bill.
Many questions remain on the feasibility of this method.
Would at least 5 House Republicans work with House Democrats to pass a Senate continuing resolution?
Would the House Parliamentarian require a Senate-passed continuing resolution to sit in the Appropriations Committee for 30 days as original text or could a previous legislative vehicle be amended with the Senate’s bill?
Winners – House moderates
Losers – McCarthy
Concluding thoughts
Shutdowns do not accrue to the benefit of the party that forces a shut down. Republicans have shut down the government many times and never benefitted from the shutdown because eventually the government has to reopen and all functions restored. When Sen. Schumer forced a 3-day shutdown in 2018 over immigration policy, he ended up capitulating and received no policy or political benefit from the shutdown.
Eventually the government will reopen. Maybe to shut down again at a later date. But eventually a deal will be reached to fund the government for the rest of the fiscal year. To follow the journalistic mantra, answers to the following questions will be interesting to watch:
Who benefits politically?
What price is paid by leadership to reach a deal?
Where does Ukraine and border security policy land?
When does it all conclude?
How much will the federal government end up spending?
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