Possible Government Shutdown Looms

In the run-up to last year’s contentious elections, Congress was unable to agree on FY 2017 appropriations for most of the government’s departments and agencies, instead passing a stopgap measure (called a “continuing resolution” or “CR”) to keep federal departments and agencies operating at approximately FY 2016 levels.

The initial CR (PL 114-233) was passed on September 28, 2016 to keep the government operating through December 9, 2016.  The bill also included full-year funding for one of the 12 regular FY 2017 appropriations bills — Military Construction, Veterans Affairs – as well as funding to respond to the Zika virus and the opioids epidemic.  On December 9, Congress passed another CR (PL 114-254) to keep the government operating through April 28, 2017.

At midnight this Friday, federal government departments and agencies will run out of funding unless Congress passes an omnibus bill containing the remaining 11 Fiscal Year 2017 appropriations bills or passes another CR – or a combination of the two.

60-Votes Required:  Like most significant legislation in the Senate, annual appropriations bills require 60 votes to bring debate to a close and reach a final vote.  Therefore, Senate Republicans and Democrats must reach bipartisan agreement on appropriations to keep departments and agencies operating.

(By contrast, Budget Reconciliation–the type of bill being used for the ACA-repeal-and-replace legislation and tax reform–is a special category of legislation that is filibuster-proof in the Senate, requiring only 50 votes for passage; however, this filibuster-proof procedure cannot be used for appropriations.)

State of Play:  House and Senate Appropriations Committee leaders of both political parties had hoped to avoid a shutdown this Spring and appropriations bills for FY 2017 are largely ready to be considered, but several politically contentious issues are holding up final agreement:

  • Defense Increase: In March, the Administration made a supplemental funding request for the current year for an additional $30 billion for defense.  This will require either raising the defense spending cap for FY 2017 or designating the additional funds as exempt wartime funds, called Overseas Contingency Operations.
  • Border Wall: The President’s supplemental request also includes $1.4 billion for initial funding for extension and enlargement of the US-Mexico border wall/fence. (About 700 miles of the border wall/fence have been built since first authorized in 2006.) Yesterday (4/23) OMB Director Mick Mulvaney said, “we don’t know yet,” when asked whether the President will sign a government funding bill that does not including funding for the proposed extension and enlargement.  Yesterday, House Democratic Leader Nancy Pelosi (D-CA) said on Meet the Press, “The wall is, in my view, immoral, expensive, unwise.”
  • Domestic Cuts: The President’s supplemental request proposes to offset the defense increase and wall/fence funding with $18 billion in cuts to domestic and other non-defense programs. 
  • Sanctuary Cities: Politico reports that OMB Director Mulvaney has been urging his former GOP House colleagues to include a provision blocking federal grants to so-called “sanctuary cities” –  localities that do not cooperate with federal authorities in identifying illegal immigrants.
  • Obamacare Cost-Sharing Reduction Subsidies: The Affordable Care Act (“Obamacare”) includes cost-sharing reduction (“CSR”) subsidies that reduce deductibles and co-pays for lower income participants.  The subsidies are the subject of ongoing litigation (about whether the payments were formally appropriated).  Democrats want funding for the CSR subsidies included in the FY 2017 spending package.  See our Healthcare WebPage for additional information CSR subsidies.

Can a Shutdown Can be Averted?  A shutdown at midnight Friday can be avoided if: (1) the President and congressional GOP leaders opt to move ahead with a bipartisan omnibus appropriations bill and put off to a later vehicle the supplemental requests; or (2) another short-term stop-gap CR is adopted while negotiations on the outstanding issues continue.

What Happens if the Government Shuts Down?  Congress’ appropriations authority is a serious matter.  The Anti-Deficiency Act provides that no department or government official can make payments or otherwise obligate the U.S. government without congressional appropriations, and establishes criminal penalties for violations.  The Act triggers government shutdowns when appropriations lapse.  The longest shutdown was 21 days in FY 1996 and, more recently, there was a 16-day shutdown in FY 2014.

Government shutdowns require furloughs of most federal employees and negatively impact federal government operations and the broader U.S. economy.  Following are examples of the types of impacts reported by the Office of Management and Budget for the FY 2014 shutdown:

  • patients prevented from enrolling in clinical trials at the National Institutes of Health;
  • $4 billion in tax refunds delayed;
  • halt to the E-Verify system used to check prospective employees’ immigration status;
  • delays to transportation and energy projects due to a halt in Federal permitting, reviews, and licensing activities;
  • delayed food, product, health, and workplace safety inspections;
  • import and export licenses placed on hold;
  • delayed federal loans to small businesses, homeowners, and rural communities;
  • private sector lending disrupted because banks could not access government income and Social Security Number verification services;
  • user fees not collected by the National Park Service and economic impact of lost tourism on surrounding communities;
  • interest payments owed to contractors due to 10,000 stop-work orders;
  • court cases postponed due to continuance requests from the Department of Justice;
  • $2 billion in lost federal worker productivity due to 6.6 million furlough days; and
  • overall, 120,000 fewer private sector jobs created, according to estimates by the Council of Economic Advisers.

For more information on shutdowns, see FedWeb’s Government Shutdown Webpage.