U.S. Federal Government Shutdown: Daily Update #5

by Manatt, Phelps & Phillips, LLP

U.S. House of Representatives
On Monday, the House passed another targeted continuing resolution (CR) that would authorize funds for the Food and Drug Administration (FDA). This bill joins the other targeted CRs passed last week by the House that the Senate has already said it will not consider. Senate Democrats continue to maintain the position that “cherry picking” popular programs to fund while leaving the remainder of the government shut down is an unacceptable approach. The House also took the procedural steps necessary to allow consideration of seven more piecemeal CR measures that would authorize funds for programs including Head Start, nuclear weapon security, border safety, and intelligence capabilities, among others. The bills are expected to come to the floor for votes sometime this week.

Over the weekend, Speaker John Boehner (R-OH) was challenged by Senate Democrats to bring a clean CR bill to the floor for a vote to test the Speaker’s assertion that a “clean CR will not pass the House.” With 198 Democrats and 21 Republicans publicly supporting a clean CR, many believe the measure would pass if Speaker Boehner allows a vote. Three Democratic Representatives introduced a discharge petition on October 4, a procedure that could force a vote on a clean CR. The discharge petition needs 218 signatures in order to force a vote in the House. If the House is in session, Members could begin signing it October 12. On Monday, however, three of the Republicans who have expressed public support for a clean CR announced that they would not sign a discharge petition. Their opposition causes onlookers to wonder if other moderate Republicans, in favor of the clean CR, may choose to support their leadership by doing the same.

U.S. Senate
Senate Democrats are preparing to offer a measure providing for a clean debt limit increase, expecting to begin procedural votes on such a measure this week. Republicans have vowed not to pass a clean debt ceiling increase and are looking for federal spending cuts or concessions related to the Affordable Care Act (ACA) to be part of an increase. Senate Republicans have already noted that they are ready with amendments that would tack conditions onto the bill. Worried about the potential precedent, Democrats refuse to negotiate over the debt ceiling increase and are expected to prevent anything but a clean increase from passing. In the event of a filibuster, Senate Democrats would need at least six Republicans to vote with them in order to reach the 60 votes needed to overcome it. It remains to be seen if they will be able to garner the support of even six Senate Republicans for a clean debt ceiling increase.

Senate Republicans are also looking for a solution to the standoff. On Monday, Senator Rob Portman (R-OH) put forth his own proposal to resolve the situation and is actively trying to gain support from his Democratic colleagues. The Portman Plan would both “fund the government for one year at the level favored by House Republicans that would include plans to start lawmakers on an overhaul of the tax code… [and] would raise the debt limit by an amount equal to deficit-reduction measures already backed by Mr. Obama in his most recent budget, including a switch to [chained CPI]… under which Social Security benefits would rise more slowly.”

The bill passed unanimously in the House on Saturday ensuring retroactive pay for furloughed federal workers is now facing some potential Senate opposition. On Monday, Senate Minority Whip John Cornyn (R-TX) said in would be “premature” for the Senate to consider that bill when it has failed to move on any of the targeted CRs bill sent from the House. Senate Minority Leader Mitch McConnell (R-KY) has also been pushing for Senate consideration of the targeted CRs, saying that they are measures about which lawmakers can reach a consensus. Senate Democrats, again, are not likely to change their position on piecemeal CRs and will likely force Republicans to filibuster the guaranteed retroactive pay bill that was unanimously supported by their GOP House colleagues.

The White House
On Monday, Gene Sperling, the National Economic Council Director and senior Administration official, said the White House would consider a short-term debt ceiling increase although they would still prefer a long-term deal. Sperling’s comments marked the first obvert signal that the White House might offer some flexibility in the debt ceiling negotiations. White House press Secretary Jay Carney later affirmed Sperling’s remarks, saying “our position has never been to say that the debt ceiling ought to be raised for a certain amount of time.”

As Washington enters week two of the federal government shutdown, markets are growing more nervous, although they are not yet panicked, at the prospect of a U.S. government default. Stock markets in the U.S., Asia, and Europe all fell in recent days. The price of gold and U.S. Treasury notes rose and the dollar fell against both the yen and the euro. Investor anxiety, measured by the Chicago Board Options Exchange’s Volatility (CBOEV) index, also grew.

Supreme Court
The Supreme Court is back in session, beginning a new term today. After two terms of high-profile cases, the court seems set to continue with more possibly landmark cases this term. One case of significance, McCutcheon v. Federal Election Commission, is set to be argued on Tuesday and will consider whether the current limit on campaign contributions violates the First Amendment. The ruling has the potential to dramatically change the landscape of campaigns and political fundraising. The court is scheduled to remain open and continue operations as normal until October 11. It has not yet announced the continued availability of funds or plans after October 11 if the government remains shutdown.

Agency Spotlight: Department of Justice
A significant portion of Department of Justice (DoJ) divisions are involved in work related to national security, law enforcement, and the criminal justice system. Thus, only approximately 16% of DoJ employees have been furloughed in recent days. The DoJ will continue functions, including: criminal litigation; response to requests for emergency warrants; processing of parole certificates; all FBI existing investigations; new FBI investigations; active counternarcotics investigations; and processing of immigration case and appeals involving detain aliens. The DoJ will cease civil litigation to the extent it can be done without compromising human life or the protection of property. The DoJ’s contingency plan was developed based on a hypothetical five-day lapse in funding and is subject to review after that timeframe. For more information on specific activities, please see the USACE Contingency Plan.

Public Opinion

According to a Pew Research Center poll conducted October 3-6:

  • Is the debt ceiling fix essential?
    • 47% Yes
    • 39% No
  • Should ___ give ground on their health care-related demands for a budget deal?
    • Republican leaders should give ground – 44%
    • Obama should give ground – 42%
  • Lawmakers who share your views should ___
    • Be willing to compromise – 61%
    • Stand by their principles – 29%

According to a Washington Post-ABC poll released October 7:

  • The way Barack Obama is handling negotiations over the federal budget
    • 45% Approve
    • 51% Disapprove
  • The way Republicans in Congress are handling negotiations over the federal budget
    • 24% Approve
    • 70% Disapprove
  • The way Democrats in Congress are handling negotiations over the federal budget
    • 35% Approve
    • 61% Disapprove

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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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