Washington Report Headlines
· Navigating a Path Out of the Shutdown
· Working Group Aims to Spur Solution
Federal Employee News
Navigating a Path Out of the Shutdown
The way out of the political morass in Congress remains elusive as the U.S. enters the second week of a partial government shutdown and with a potential lapse in U.S. borrowing authority just 10 days away.
Though Republican lawmakers and President Barack Obama say they want to end the government shutdown quickly and avoid a historic default, there’s no sign they’re talking to each other and their demands are mutually exclusive.
The standoff, heightened by Obama’s refusal to negotiate on measures needed to keep the government solvent and running and House Republicans’ demand for a delay in the president’s signature health-care plan, means at least one side must make a concession or find a way to describe a concession as a victory.
At least three possible routes include a resolution, based on previous deadlocks: the Senate jam, in which that chamber forces the House to accept a bipartisan compromise; the complete cave, where one party buckles under public pressure; and the fig leaf, where one side accepts a partial defeat while claiming a symbolic victory.
Many parts of the government were shuttered Oct. 1 after a compromise was not reached.
The shutdown has become intertwined with the need to raise the $16.7 trillion debt ceiling. The U.S. will run out of borrowing authority Oct. 17, according to the Treasury Department, and cash reserves will run dry between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Because of the partial shutdown, the U.S. has furloughed about 800,000 workers while others in critical jobs worked without immediate pay. The government shuttered national parks, closed Internal Revenue Service call centers and delayed the release of unemployment data. Some U.S. services, including Social Security benefits, continue.
While both parties plot their strategies behind the scenes, the possible paths to a resolution are becoming more evident -- in part because they’ve happened before.
The Senate jam played out at the last fiscal deadline, the combination of expiring tax cuts and scheduled spending reductions at the end of 2012. Then, Senate Minority Leader Mitch McConnell and Vice President Joe Biden decided which taxpayers would have higher burdens and the Republican-controlled House accepted with only a minority of Republicans voting yes.
Repeat that bipartisan pathway on the debt ceiling, and Boehner could be left with a debt-limit increase, none of the policy conditions he wants and the clock ticking toward a default he’s already said he won’t allow. The speaker’s big decision, as the person who controls the House floor, would be whether to allow a vote.
That prospect of changing a House proposal might be the reason that Senate Majority Leader Harry Reid hasn’t started what could be a week-long process of getting a debt-limit bill without conditions ready for a final Senate vote.
To advance his bill -- as opposed to ending debate on a House bill full of Republican priorities -- Reid probably would have to overcome procedural hurdles requiring 60 votes. That means he would need the support of six Republicans and might have to make policy concessions to get their votes. Even then, the strength of a bipartisan consensus in the Senate could force Boehner’s hand and cause him to accept a deal engineered by Reid.
The second potential path is the complete cave, where one party yields to public pressure. That’s what both parties are trying for now as the standoff continues. Republicans say they think they can move Obama off his no-negotiations stance in two ways. First, they’re passing separate bills to fund parts of the government, trying to force Democrats to choose between programs they champion, such as national parks and infant nutrition, and the president’s insistence that the entire government be opened. Republicans have had some success in this effort, getting some House Democrats to join them in voting for the measures. Second, Republicans are pointing out flaws in the Affordable Care Act, also known as Obamacare, as they insist on changes to the law as a condition of ending the shutdown. They’ve been bolstered by the computer problems that hampered the rollout of the insurance exchanges last week.
For Obama, caving would mean accepting health-law changes and engaging in the kinds of negotiations on entitlement programs he entered with Boehner in 2011 during the previous debt-ceiling fight. So far, Obama hasn’t budged, insisting that avoiding default and reopening the government aren’t concessions to him because everyone wants them. Instead, Democrats have been applying their own pressure to get Republicans to cave, particularly on ending the shutdown.
Democrats also point to the at least 20 Republicans who have said they would vote for a bill to open the government without policy conditions related to the health law.
One other possibility is the fig leaf, in which both parties make concessions and declare victory, even without a negotiated deal that resolves major fiscal disputes.
Boehner has been trying to package the debt limit with as many party priorities as possible, including the Keystone XL pipeline, limits on environmental regulations and cuts to entitlement programs. Representative Paul Ryan, a Wisconsin Republican and his party’s 2012 vice presidential candidate, is pressing for a plan that would resolve the spending impasse and raise the debt limit while extracting entitlement program cuts and making changes to economic policies.
Working Group Aims to Spur Solution
House Republicans will vote on legislation Tuesday to form a new bipartisan, bicameral working group on fiscal issues comprising of 20 members. Majority Leader Eric Cantor, R-Va., briefed GOP lawmakers earlier today on the latest strategy tied to the government shutdown, now in its eighth day. If Democrats agree to go along with the committee, it could be a mechanism to ending the government shutdown and eliminating the prospect of a default, at least in the short-term.
Senate Majority Leader Harry Reid, D-Nev., meanwhile, used his authority to require all senators to report to the Senate floor Tuesday afternoon to again call on the House to reopen government and lift the debt ceiling without conditions.
Republicans will introduce a bill to provide pay to workers who are at their desks but not getting paid because of the shutdown. As part of the legislative push, the House will also approve the creation of a working group that is reminiscent of 2011's Joint Select Committee on Deficit Reduction, commonly known as the supercommittee.
The supercommittee tried and failed to come to a bipartisan agreement for more than $1 trillion in deficit reduction over the next decade. Because they failed, automatic budget cuts known as the sequester have kicked in this year affecting both defense and non-defense spending across-the-board. The cuts will stay in place unless Congress can find agreement for a mechanism to turn them off.
The new group will be different than the supercommittee because it will not have any legal authority, no date certain for a conclusion, and a gauzy framework only to discuss fiscal issues. However, the proposal is intended to create a new opportunity for Democrats to agree to negotiations.
The working group would consist of 20 lawmakers evenly split between the parties including six House Republicans and four House Democrats and six Senate Democrats and four Senate Republicans. The legislation outlines three priorities for the group: to set a top-line spending number through Sept. 2014, to establish conditions for a debt ceiling increase, and to propose spending reforms for mandatory programs like Medicare, Social Security, and the Affordable Care Act. So far, President Obama and Reid have said they will not negotiate budget issues until Republicans vote to first reopen government and approve an increase in the nation's $16.7 trillion debt limit without conditions. On Tuesday, Reid reiterated his call for House Republicans to end the shutdown and raise the debt ceiling first.
Federal Employee News
The Debate on Back Pay
For many furloughed federal employees, their Oct. 11 paychecks may be half their usual amount, and the last for a while. Many workers had already cut back after across-the-board budget reductions known as sequestration resulted in mandatory, unpaid leaves earlier this year.
The Office of Management and Budget said in a statement that the two-week paychecks for many civilian employees on Oct. 11 will reflect only the work they did in the last week of September, before the shutdown. Some employees are on a different pay cycle.
Unless they are paid through funding sources other than annual appropriations, their pay will only cover 9/22-9/30, whether they are excepted or not. The “excepted” workers are those whose jobs have been deemed necessary to protect life and property.
The shutdown sent about 800,000 federal workers home without pay last week. The Defense Department has since recalled most of the 350,000 civilian workers it put on furlough.
About 40 percent of the workers in the union are paid less than $50,000 a year.
Some workers took solace in the passage of a bill in the U.S. House of Representatives Oct. 5 to reimburse employees once they return to work. If an employee receives unemployment benefits, they would have to return it if they receive their accumulated pay at the end of the shutdown.
The longer the shutdown lasts, the more impact to the economy as companies lose revenue from U.S. contracts, tourists cancel reservations to hotels near closed national parks, and federal workers are forced to live on less.
The Defense Department’s decision to bring back about 90 percent of the 350,000 civilian employees furloughed last week mitigates some of the shutdown’s impact.
The Pentagon was able to call the workers back after Obama signed legislation to pay uniformed service members during the shutdown. The Defense Department interpreted that bill as meaning it could call back support employees, as well.
The shutdown cost the economy $1.6 billion during the first week. With Defense Department employees returning to work, the impact to gross domestic product falls to about $800 million this week. Even with retroactive pay, workers probably will be more cautious with spending.
The economic fallout of the shutdown has been limited so far. That could change if it extends through the end of the month. Economic activity could be reduced by as much as 1.5 percentage points in the fourth quarter.
Effects could escalate as more government contract workers feel the sting and companies that do business with the U.S. lose out on orders.
Before the Pentagon recalls, lost compensation would equal about $400 million a day.