House of Representatives
On Friday, House Democrats announced they plan to file what is known as a discharge petition on a bill that has been with the Appropriations Committee since March. The discharge petition is the only parliamentary mechanism available to the Minority party to force consideration of a particular piece of legislation on the floor of the House. It is a tool to prevent a Committee Chairman from having a bill referred to his or her Committee and then refusing to consider it. Accordingly, if a majority of the Members of the House sign a petition to “discharge” the bill from Committee it will be immediately taken to the full House of representatives for consideration and bypass the Committee and the regular order. In this case, Democrats selected a bill sponsored by Rep. James Lankford (R-OK), would give 100% funding for 120 days and then reduce the funds by 1% for every 90 days the government goes without funding bills. Through the discharge petition, however, they would substitute the language of current bill with language for a clean continuing resolution (CR). With 20 Republicans who have previously expressed support for a clean CR, Democrats believe they could obtain enough Republican support for the petition to reach the necessary 218 signatories. If successful, the bill would be taken up by the House and could end the government shutdown. On Saturday, 200 Democrats sent a letter to Speaker John Boehner (R-OH) that called for a vote on a clean CR, which Speaker Boehner has yet to allow. House Democrats also offered to give up their right to a “motion to instruct” if Speaker Boehner would appoint Members to a House-Senate conference on the budget. The motion to instruct, a tool that generally works in favor of the minority, is non-binding but essentially tells conferees what position to take in negotiations. The conference on the budget has been called for by Senate Democrats and resisted by Speaker Boehner throughout the shutdown standoff. Despite the offer, Speaker Boehner shows no indications of changing course.
Meanwhile, the House GOP continues to pursue the targeted CR strategy. On Friday, the House passed measures that would provide funds for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) and fund operations at the Federal Emergency Management Agency (FEMA). On Saturday, the House passed a bill to ensure furloughed workers receive back pay (see section below on Possible Bipartisan Legislation). In order to become law, however, each measure would have to be passed by the Senate and signed by President Obama. Both Senate Democrats and President Obama continue to reject the idea of providing piecemeal funding for the government by authorizing the most sympathetic programs. The House also adopted a resolution on Saturday that affirms the military’s right to the continued availability of chaplains and religious services during the shutdown. On Monday, the House plans to consider a targeted CR that would authorize funding for the Food and Drug Administration (FDA).
Relationships are growing increasingly acrimonious between Republican and Democratic leaders in the House, Senate and White House. Leaked emails and flared tempers in recent days have soured already tense interactions, dampening the prospects for negotiations. In fact, many complain that the problem is not poor negotiations but a lack thereof.
U.S. Senate
The Senate continues to decry the targeted CRs sent over from the House and has yet to consider any of the bills on the floor. The Senate did, however, begin the Rule 14 Process for the two House measures related to veteran benefits and funds for National Guard and reservists. Senator Ted Cruz (R-TX) attempted to bring up the House-passed bill related to National Guard funding on Saturday but was blocked by Senate Majority Whip Richard Durbin (D-IL). None of the House measures, which President Obama has promised to veto if they arrive at his desk, are expected to pass. Democratic leadership in the Senate held a press conference on Friday condemning the “Tea Party Shutdown” and again calling for a clean CR.
Senate Minority Leader Mitch McConnell (R-KY) has proven himself to be a pragmatic dealmaker in the past, facilitating bipartisan compromises to resolve other Congressional stalemates. McConnell has been somewhat sidelined during the current stalemate, however, because he is facing the most serious re-election fight of his long career. McConnell is being challenged from the political right by a tea-party backed Republican primary challenger and on the left by a well-funded Democrat who is leading McConnell in most public and private polling. However, despite facing these electoral challenges in Kentucky, McConnell appears to be again becoming active, albeit less visibly, in negotiations. Caught discussing messaging with Rep. Rand Paul (R-KY), McConnell now appears to be coordinating meetings with both fellow Senators and his GOP House colleagues in the past few days.
On Thursday, October 10, the Senate Banking Committee will hold a full committee hearing on the debt limit, entitled “Impact of a Default on Financial Stability and Economic Growth” with witnesses from the American Bankers Association, the Securities Industry and Financial Markets Association, the National Association of Realtors and the Investment Company Institute.
Sunday Talk Shows
Appearances on the Sunday talk shows by many key figures offered little hope for a quick resolution to the shutdown. Leaders on both sides of the stalemate reiterated their positions and showed no indications of compromising. Speaker Boehner dampened hopes that negotiations may be occurring privately (as in past crises), saying “there may be a back room somewhere but there’s no one in it.” Statements by both Speaker Boehner and Senate Majority Whip John Cornyn (R-TX) indicated that the focus of Republican demands may be shifting from defunding the Affordable Care Act (ACA) to measures that would deal with the deficit and federal spending. Speaker Boehner reiterated his criticism of President Obama’s refusal to negotiate, laying responsibility for the threat of default at the President’s feet. Speaker Boehner repeatedly asserted that there will be no clean CR and no clean debt limit increase, looking for a deal that will include either spending cuts or changes in entitlement programs. He refuses, however, to consider raising taxes as part of the deal. Senator Cruz concurred in his appearance on CNN, saying that Republicans would look for three things in a deal on the debt ceiling: reduced federal spending, no new taxes and a way to “mitigate the harms” of the ACA.
Speaker Boehner also told George Stephanopoulos that there are not the votes to pass a clean CR in the House. Sen. Chuck Schumer (D-NY) responded by issuing “a friendly challenge” on ABC’s “This Week,” calling on him to prove it by holding a vote.
Secretary of the Treasury Jack Lew appeared on multiple talk shows warning of the direness of the debt limit situation and admonishing Congress for “playing with fire.” Characterizing the Republican position as “reckless” on CNN’s State of the Union, Secretary Lew said the threat of a U.S. default marks “a very dangerous turn in the political debate” and defended the Administration’s decision not to negotiate on the debt limit. According to Secretary Lew, consequences of a default could include: the interruption of Social Security benefits, the cessation of payments to health care providers under Medicare and Medicaid, and liquidity crises. Secretary Lew denied speculation that the President would act unilaterally to raise the debt ceiling, a move that would immediately be challenged in the courts.
Possible Bipartisan Legislation
On Saturday, the House unanimously passed a bill that would ensure furloughed federal employees receive pay retroactively for their time out of work. The Federal Employee Retroactive Pay Fairness Act has been received in the Senate, where there similarly appears to be bipartisan support for the legislation. The White House released a statement on Friday expressing President Obama’s support for the bill.
Furloughed Employees
On Friday, hundreds of furloughed employees rallied outside the Capitol to protest the shutdown. Calling for a vote on the clean CR so that they could return to work, demonstrators were joined by more than twenty members of Congress. Although smaller scale rallies have taken place at the Capitol since the shutdown, Friday saw a significantly larger turnout.
Friday marked day four of the federal government shutdown and many furloughed federal workers were already overwhelming states by applying for unemployment benefits. Some states have already seen three times as many applications from federal employees than what they normally see in a year. In addition to the sheer volume of applicants, the process is further complicated by the inability to verify employment statuses (normally done through federal agencies) and the uncertainty over whether furloughed workers will receive pay retroactively. If the bill currently pending on the matter is approved and signed, furloughed workers would be expected to reimburse states for the unemployment checks. With so much uncertainty, citizens and business owners relying upon federal payments for goods and services around the country are growing impatient.
There was some good news for furloughed civilian employees of the Department of Defense (DoD) over the weekend. Secretary of Defense Chuck Hagel announced on Saturday that almost all of the 350,000 furloughed civilian workers at the DoD would be recalled to work based on language in the Pay Our Military Act. Signed into law on September 30, 2013, the Pay Our Military Act was passed to protect the paychecks of military personnel during a government shutdown. According to Secretary Hagel, and with consultation from the Department of Justice, the law will “allow the Department of Department of Defense to eliminate furloughs for employees whose responsibilities contribute to the morale, well-being, capabilities and readiness of service members.” Under this guidance, the DoD will immediately work to identify and contact personnel who can return to work.
Economy
Friday marked the absence of the monthly employment report, which has been delayed indefinitely due to the government shutdown. A key piece of economic data, its absence drew attention to the many other critical economic statistics that may not be released this month due to the closure of agencies at the Departments of Commerce and Labor. As a consequence, the Federal Reserve may be forced to make important macroeconomic decisions, such as how to proceed with its bond-buying program, without the necessary information. Officials also fear that important data could be lost if the shutdown drags on too long. The next government survey of households was scheduled to begin in mid-October but a longer wait to collect the data could diminish its accuracy, clouding essential information relied upon by economists.
The week ended with a slight note of optimism in the stock markets as the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite Index all reported gains after falling earlier in the week. The expected passage of the Federal Employee Retroactive Pay Fairness Act and the announcement of the Pentagon’s plans to recall the majority of DoD civilian employees may also partially ameliorate the shutdown’s negative economic impact. Some observers fear, however, that the economic risks of the shutdown provided a critical incentive for politicians to reach a compromise; they worry that with less consequences, the shutdown may drag on longer.
Foreign Policy
The shutdown is disrupting international as well as domestic activity. On Wednesday, the White House announced that President Obama would only visit two of the four Asian countries he was scheduled to visit on his upcoming trip (postponing visits in Malaysia and the Philippines). On Friday, it was announced that the President was cancelling the trip entirely, missing two summits – the Asian-Pacific Economic Co-operation (APEC) meeting in Indonesia and the East Asia summit in Brunei – which Secretary of State John Kerry will attend in his place. With negotiations over the Trans-Pacific Partnership (TPP) ongoing, it had been hoped that President Obama’s presence would create some additional momentum behind the talks. U.S. trade officials have also had to cancel a second round of EU trade talks that were scheduled to take place next week in Brussels.
In addition to possibly hampering U.S. trade strategy, there are concerns about the shutdown’s effect on national security. The Administration had hoped President Obama’s Asian tour would strengthen the recent “pivot” to Asia, which has been a central tenet of its foreign policy strategy. On Friday, the White House press secretary also voiced concerns about the impact on sanctions against Iran and Syria, given that roughly 94% of employees have been furloughed at the Treasury Departments Office of Foreign Assets Control (responsible for issuing new sanctions, investigating sanctions violations and proposing penalties). Director of National Intelligence James Clapper, and many others, also fear the impact of the furlough of more than 70% of intelligence agencies civilian employees, whose intelligence gathering activities are often time-sensitive. Testifying at a Senate Judiciary Committee Hearing on Wednesday, he calls the lack of manpower “a dreamland for foreign intelligence services” and warns of negative long-term consequences. Meanwhile, as the Washington DC climate remains hyper-partisan and policy outcomes uncertain, foreign leaders wonder at the U.S. resolve and ability to continue its current international commitments and general role in the international community. Cabinet members have taken steps to assure world leaders that the U.S. remains committed to its foreign engagements.
Today’s Agency Spotlight: U.S. Army Corps of Engineers
U.S. Army Corps of Engineers (USACE) is funded mostly through individual projects that carry over from year to year, making it unique among federal agencies. USACE activities vary around the country but it typically provides planning, engineering, project management, environmental restoration and construction services as well as recreation park operations. Activities funded with appropriations that have sufficient prior year funding authority will continue until those funds run out; likewise, civilians whose salaries are funded in the same manner will not be furloughed until the funds run out. The amount of prior year funds remaining varies, with anywhere from no funds to two weeks worth of funds available to support ongoing projects. Active duty military employees are not subject to furlough and will continue to report to work.
USACE will continue functions that are considered essential to national security or the protection of life and property, referred to as “excepted” activities, while non-critical operations will gradually cease as the shutdown continues. Excepted activities, which are to continue with minimal staffing, include: Emergency Operation Center (EOC) watch desk activities; operations and minimum required maintenance personnel of hydropower plants and commercial locks; operations of gates and other water control features at flood control projects; USACE emergency response work. Military activities to be at least partially continued include: operation of the Army Geospatial Center (AGC); operation of command and control systems as is necessary to support other excepted activities; operation of the Engineering Research and Development Center (ERDC); and operation of the 249th Engineer Battalion (responsible for providing commercial level power to military units and federal relief organizations). Contracts that were fully obligated upon contract execution or renewal before the lapse in appropriations may continue to be executed, even if they do not meet the exception requirements. USACE will not begin any new projects until Congress authorizes more funding, except as is required to protect threats to life, property or national security. For more information on specific activities, please see the USACE Contingency Plan.
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