A government shutdown looms as Republicans and Democrats continue to spar over federal budget cuts and spending. Faced with a March 4 deadline, Congress may have to resort to a series of short-term extensions or face the consequences of a government shutdown.
Rep. Mike Simpson, R-Idaho, told reporters on Thursday that there was “a possibility” of a government shutdown, which sparked dissent and debate among GOP Leadership and Democrats. Republican leaders disputed Simpson’s suggestion. “We aren’t talking about a government shutdown,” said a GOP aide close to the budget negotiations. “That does not at all service what we are trying to do here.”
Meanwhile, House GOP leaders emerged from a one-hour closed door meeting with freshmen Republicans on Thursday saying they were united behind the budget cuts proposed by Rep. Hal Rogers, the new chairman of the House Appropriations Committee. Rogers bulked up his plan for spending cuts on Thursday from $74 billion to the promised $100 billion to meet the stated goal in the GOP’s “Pledge to America.” He submitted the final 359-page resolution late Friday night.
Democrats have acknowledged the need for controlling spending, but they disagree with Republicans on how deep the cuts should be, which could lead to a stalemate and roll over into a government shutdown.
“It was disturbing to hear two more Republicans raise the possibility of a government shutdown in the last 24 hours,” said Senate Majority Leader Harry Reid, D-Nev., in a conference call with reporters on Friday. “We do not need extreme threats. When it comes to spending, the question is not whether we cut, it’s what we cut.”
“We are willing to meet the Republicans in the middle on spending, but they keep lurching to the right,” added Sen. Charles Schumer, D-N.Y. “This infighting is causing delays that will take these negotiations right up to the deadline and risk a government shutdown.”
Senate Republican Leader Mitch McConnell fired back. “The only people talking about shutting down the government are a handful of Senate Democrats at a press conference today,” he said on Friday. “As Republicans focus on constructive ways for the two parties to work together on cutting spending and debt, Senator Schumer seems strangely preoccupied with the notion of a government shutdown,” said Don Stewart, a spokesperson for McConnell.
This isn’t the first whiff of a government shutdown in the past two months. As the rhetoric on Capitol Hill has increasingly become more vitriolic, Congress faced the same task of agreeing on a spending plan last fall, which resulted in the current continuing resolution.
Government shutdowns can be nasty business. They have in the past necessitated furloughs of several hundred thousand federal employees, required cessation or reduction of government activities, and affected all sectors of the economy, according to a report by the Congressional Research Service.
Former House Speaker Newt Gingrich was one of the architects of the 1995 government shutdown which lasted 21 days. It was settled when President Clinton submitted a budget that proposed to eliminate the federal deficit in seven years, according to TIME Magazine.
The issues that were presented then and ultimately triggered the 1995 shutdown were the same as today, said June O’Neill, who was the Congressional Budget Office (CBO) Director in 1995. Congress couldn’t agree on a budget resolution for the coming year and they were up against whether or not to raise the debt ceiling, she said. The economy was also recovering from the 1991 recession and sluggish growth, similar to today.
“There was a great deal of posturing then as there is now,” she told The Fiscal Times. “The world would come to an end if the debt ceiling wasn’t raised.”
But in 1995, it was more about Gingrich proving he was just as powerful as the Clinton administration, O’Neill said. Even though the government faces a larger deficit and there are divisions on spending cuts, it’s not about the politicians today.
“Knowing what happened last time it didn’t look very good and it lost points for Gingrich in the long run,” she said. “It would be a loss for the Republicans because they can figure some way of getting around it. I think they could come to some agreement — maybe not an exact number. But that they will by some point agree on a short-term deficit reduction and will work on a plan for deficit reduction.”
What made things worse was a terrible winter storm, which left the federal government in Washington, D.C. paralyzed and closed for close to another two weeks. “The storm added to this overall aura of cataclysmic things happening,” she said. “I don’t know whether anyone could distinguish between the shutdown that was the weather and the shutdown that was because of the pulling out money.”
In the end the government paid $800 million in salaries paid to furloughed employees. “I don’t think there is a full appreciation of the impact of a shutdown would have on the bottom line of government,” said Max Stier, president and CEO at the Partnership for Public Service, a non-partisan think tank. “If you think about the range of activity that government does you get a sense of what the consequence will be.”
When funding for the government expires non-essential services come to a halt, as they did in 1995. But there are no hard and fast rules on what is considered essential versus non-essential services. The president in coordination with the Office of Management and Budget has broad discretion over what departments and agencies should be kept open, making it more difficult to quantify how much it would cost the government if it were to shutdown in 2011.
“Most agencies are ill prepared for the disruption,” Steir said. “They would be scrambling.”
Although a shutdown would not necessarily result in additional costs, it could inconvenience the public and hurt businesses. For example, in 1995 new patients were not accepted into clinical research at the National Institutes of Health. Work on more than 3,500 bankruptcy cases was suspended. Of $18 billion in Washington, D.C. area federal contracts, $3.7 billion (over 20 percent) were affected adversely by the funding lapse. Some 368 National Park Service sites closed — a loss of 7 million visitors. National museums and monuments closed with an estimated loss of 2 million visitors.