The federal government is now hours away from a shutdown, after House Republicans once again refused to compromise with Senate Democrats and the White House on funding for the remainder of the 2011 fiscal year. The third White House meeting in two days failed to produce a deal last night, with Speaker of the House John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) releasing a joint statement saying, “We have narrowed the issues, however, we have not yet reached an agreement. We will continue to work through the night to attempt to resolve our remaining differences.” President Obama added that he is “not yet prepared to express wild optimism” about avoiding a shutdown, even though the parties are about $5 billion apart when it comes to the level of spending cuts they say are acceptable (which “amounts to one-half of 1 percent of the trillion dollars in spending”). Unless the situation is resolved by midnight, the shutdown will go into effect, marking the first time that the federal government has shut down in 15 years.
NOT ABOUT THE MONEY : Reid took to the Senate floor early yesterday to announce that the parties had essentially settled on a level of spending cuts for the remainder of FY2011, and that the holdup is because of various policy “riders” that Republicans want to include on the funding bill, including one cutting funding for Planned Parenthood and another blocking the Environmental Protection Agency from regulating greenhouse gases. “The two main issues that are holding this matter up are the choice of women, reproductive rights, and clean air,” Reid said. Republicans attached more than 80 riders to their initial funding bill, including several that actually increase federal spending . “We will continue to insist that the policy riders passed in H.R. 1 are on the table. It’s just as important to many of our members as the spending cuts themselves,” Boehner said. If it occurs, this would not be the first time that the GOP has shut down the government over matters unrelated to the budget. In fact, “It was this same insistence on unrelated policy riders by Republicans that prompted the last government shutdown in 1995.” As the Denver Post reported at the time, “[Speaker] Gingrich and [Senate Majority Leader] Dole are offering the funding and higher-debt bills but have loaded them with ‘riders’ such as the Medicare bill that the president won’t accept and with other items such as limits on appeals by death-row inmates.” Sen. Tom Coburn (R-OK) has urged his party to drop the policy riders in order to avoid a shutdown. “And my recommendation to my friends in the House is, you know, it’s highly unlikely many riders are going to get passed…so why don’t you take the spending [cuts] and let’s get on to the budget,” he said. Rep. Mike Simpson (R-ID) had the same message for his GOP colleagues. “If it is repeal Obamacare, do we think in two weeks or a month Obama’s going to go — ‘you guys were right, and sign onto it?’ I don’t think so. So you better look at what your goals are and what you’re willing to accept or don’t do it,” Simpson said.
PROCEDURAL SHENANIGANS : Democrats, after bringing H.R. 1 up for a vote in the Senate and defeating it, eventually agreed to more than $30 billion in cuts, essentially conceding to the GOP’s original position. But House Republicans, in an attempt to shift blame for the shutdown, have been passing various pieces of legislation that they know have no chance of becoming law. The first simply reasserted that, if the Senate approved, H.R. 1 would become law. Yesterday, the House Republicans tried a different tactic, bringing to the floor another stopgap funding bill that would keep the government open for one week. However, the Republicans attached several poison pills to the measure that they knew were unacceptable to Senate Democrats and the administration, including a restriction against the District of Columbia using its own local funds for abortions and several anti-environmental provisions, plus an extra $12 billion in cuts. The White House issued a veto threat against the bill, calling it “a distraction from the real work that would bring us closer to a reasonable compromise.” Because the stopgap measure would have funded the military for the rest of the fiscal year, House Republicans then decried the President for opposing a “troop funding bill.” Of course, they left out of their rhetoric the fact that House Democrats “tried three times to pass a measure that would ensure the troops received pay,” and that the clean continuing resolution requested by the White House would also fully fund the military.
HURTING THE ECONOMY : If the government shuts down tonight, all government functions deemed non-essential will be stopped in their tracks. But non-essential describes a wide variety of important government functions, which, if they stop, can do economic harm to individuals, businesses, and the wider economy. According to analysts at Goldman Sachs, a shutdown “could shave 0.2 percent off the growth of Gross Domestic Product for every week it continued.” Since it would come during tax season, a shutdown would also “delay $42.1 billion of refunds to about 14 million U.S. taxpayers,” the majority of whom are middle-class or low-income. A shutdown could possibly increase the deficit by increasing the costs of funding the nation’s debt (which it did in 1995). $50 million in small business loans per day from the Small Business Administration will be blocked, workplace safety complaints will go unanswered, and insider trading investigations will grind to a halt. And, of course, 800,000 federal employees will be furloughed, costing the Treasury about $174 million per day in back wages. A shutdown also threatens the already fragile housing market, as “the U.S. Department of Housing and Urban Development‘s Federal Housing Administration — which insures and guarantees a large number of single-family mortgages and even more rental and multifamily properties — would cease operations,” thereby preventing home closings and the issuance of new private sector loans.
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