U.S. Federal Government Shutdown: Daily Update #9

by Manatt, Phelps & Phillips, LLP
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The Elevator Speech Overview
Friday was the eleventh day of the government shutdown, with less than a week – six days – remaining until the Treasury says the U.S. will hit its debt ceiling. Senate Republicans met with President Obama mid-day at the White House and described the discussion as substantive but failed to reach a deal. House and Senate Republicans are circulating two competing proposals to deal with the shutdown and debt ceiling. Both remain a work in progress as their authors seek additional support. However, the White House rejected the House Republican approach Friday evening because once again it attempts to make increasing the debt ceiling contingent upon a specific negotiation on the budget. Any deal is still at least a few days away.

U.S. House of Representatives
House Republicans put forward a revised proposal Friday that would suspend the debt ceiling until November 20 AND provide a continuing resolution (CR) to reopen the government until December 15. The addition of the CR sets the proposal apart from the initial informal proposal that was sent to the White House Thursday night, which would not have reopened the government. As a requirement of reopening the government, however, Republicans are still requiring broad budget negotiations to be led by Budget Chairman Paul Ryan (R-WI), Ways and Means Chairman Dave Camp (R-MI) and GOP leadership; talks would include tax and entitlement reform. President Obama rejected the proposal Friday evening, citing the contingency for fiscal negotiations. The President wants to continue the discussion, however, and pushed for a six-month deal but once again reiterated that the government must be reopened and the debt ceiling lifted without strings attached.

Rep. Ron Kind (D-WI) and Rep. Charlie Dent (R-PA) have been pressing for an alternative deal similar to Sen. Susan Collins’ (R-ME) proposal in the Senate, which includes a six-month suspension of the debt ceiling, six-month CR, and an adjustment to the Affordable Care Act’s (ACA) medical device tax. The proposal does not seem to be gaining traction with other House Republicans, who still seem to favor the shorter-term deal discussed with the White House.

Continuing its targeted CR strategy, the House passed a measure on Friday that would provide funding for nuclear security and nonproliferation. The measure is expected to be ignored by the Senate.

The mood in the House is slightly more optimistic now that discussions are occurring and proposals are circulating. Nonetheless, a deal is not expected until at least early next week. The House will be in session on Saturday, with House Republicans holding a full conference meeting.

U.S. Senate
After a meeting at the White House Friday afternoon, Senate Republicans continue to flesh out the proposal initially put forth by Sen. Susan Collins (R-ME) on Wednesday. The current plan would suspend the borrowing limit for three months and includes a CR to fund the government at sequestration levels for six months, although Senators like Sen. Rob Portman (R-OH) would prefer to see a year-long CR. Sen. Collins is working with Democratic Sen. Joe Manchin III (WV) on the proposal which would also offer government agencies flexibility on the budget cuts known as sequestration and call for a House-Senate conference on the budget resolution. The proposal initially included a repeal of the ACA’s medical device tax, a tax which is unpopular with both parties, but has since shifted to a delay or softening of the medical device tax. President Obama and Senate Democrats have expressed openness to elements of Sen. Collins proposal, encouraging continued work.

Meanwhile Senate Majority Leader Harry Reid (D-NV) criticized the House Republican plan, saying that a two-month suspension to the debt ceiling was far too short, and asserting the proposal would not pass the Senate. Majority Leader Reid’s bill suspending the debt limit until the end of 2014 is scheduled for its first procedural vote on Saturday.

The White House
President Obama met with Senate Republicans at the White House Friday in a meeting that lasted nearly two hours. Senator Collins took the opportunity to brief the President on the proposal she has been drafting to end the standoff. She reported that the President seemed open to various aspects of her plan. Most Republicans present described the meeting positively, saying the conversation was serious, constructive and substantive. A notable exception, Senate Minority Whip John Cornyn (R-TX), commented that it was “another predictable lecture from the president” rather than a step toward compromise. Republicans expect the conversations to continue. The President also hosted a meeting at the White House with small business owners Friday evening to hear about the impact of the shutdown on their operations. Earlier Friday, President Obama held two conference calls to discuss the same topic with 25 governors and 150 business leaders around the country.

Agency Spotlight: Department of Agriculture
The U.S. Department of Agriculture (USDA) has an individual contingency plan for each of its 23 components. Activities that will continue through the lapse in appropriations are either are either considered essential to protect life, property or national security interests, or are funded by other means including no-year funding or user fees; these activities include: preclearing and inspecting fruits, vegetables and nursery products before they are shipped to the U.S.; agricultural pest detection and control programs; response to agricultural emergencies involving invasive pests and diseases; wildlife damage management activities; Supplemental Nutrition Assistance Program monthly benefits for October; Child Nutrition (CN) Programs, including School Lunch, School Breakfast, Child and Adult Care Feeding, Summer Food service and Special Milk operations into October; field inspection of meat, poultry and egg products; grain and related commodity inspection and weighing program activities supported by user fees; and maintenance of Rural Development’s existing loan portfolio.

Suspended activities include: all activities of the National Appeals Division (NAD); USDA press releases and reports; market news reports, NASS statistics and other agricultural economic and statistical reports and projections; all activities by the Risk Management Agency (RMA); activities conducted by the GIPSA’s Packers and Stockyards Program (PSP); compliance, standardization, methods development and international monitoring activities conducted by GIPSA’s Federal Grain Inspection Service; and new loans or grants by Rural Development. The approximate percentage of furloughed employees for selected components is as follows: Office of the Chief Economist (OCE) - 100%; Risk Management Agency – 100%; Farm Service Agency (FSA) – 99%; Agricultural Marketing Service (AMS) – 16%; Food and Nutrition Service (FNS) – 95%; Forest Service – 59%; Grain Inspection, Packers and Stockyards Administration (GIPSA) – 29%; Research, Education and Economics (REE) – 95%; and Rural Development (RD) – 99%

For more information on specific activities, please see the individual contingency plans for each agency located here.

Public Opinion
Republicans continue to suffer badly in public opinion and their initial goal of discrediting and unraveling the Affordable Care Act (Obamacare) seems to have backfired, with the popularity of the program now rising. According to the NBC News/Wall Street Journal poll conducted Oct. 7-9:

  • Americans have historically said that while they might not like Congress, they tend to like their own representative. Recently, however, that attitude seems to be changing. Asked if they had a chance to replace every single member of Congress, including their own representative, Americans answered:

    • October 2010: 45% Yes, replace them all; 50% No.
    • August 2011: 54% Yes; 41% No.
    • January 2012: 56% Yes; 40% No.
    • July 2013: 57% Yes; 39% No.
    • October 2013: 60% Yes
  • Have you or anyone in your family been affected by the federal government shutdown, in terms of employment, services, or benefits?
    • 31% - Yes, have been affected.
    • 68% - No, have not been affected.
  • Is the country headed in the right direction?
    • 14% Yes (down from 30% last month)
    • 78% No
  • Do you think the economy will improve/worsen next year?
    • 17% Improve
    • 42% Worsen
  • Barack Obama’s health care plan was passed by Congress and signed into law in 2010. From what you have heard about the new health care law, do you think it is a good idea or a bad idea?
    • Good idea
      • September – 31%
      • October – 38%
    • Bad idea
      • September – 44%
      • October – 43%

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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