U.S. Federal Government Shutdown: Daily Update #2

by Manatt, Phelps & Phillips, LLP

Today’s Highlights
Little meaningful progress has been made toward a resolution to the current government shutdown. Experienced professionals are expecting a protracted shutdown lasting through October 17, and possibly beyond as the White House is now exploring options on the debt ceiling.

House of Representatives
The House GOP continues to pursue targeted CR measures. The House Rules Committee, which sets the rules and procedures under which any bill will be considered on the floor of the House, approved a closed rule that allows floor action on the three bills that were rejected Tuesday evening (which would have funded the District of Columbia, Veteran Benefits, and the National Park Service) as well as two additional bills funding the National Institutes of Health (NIH) and the National Guard and reserves. A closed rule means that no amendments could be offered by any member, although the privileged Motion to Recommit would be allowed. The measure funding DC was passed in the House by voice vote. Should the Senate also pass this bill and the President sign it into law – a proposition already rejected - it would have permitted the District of Columbia to spend its local funds as proposed in its most recent budget. The House also passed the bills authorizing funding for the National Park Service and the NIH. Rep. Chris Van Hollen (D-MD) attempted to bring the Senate passed clean CR that would fund the government through November 15 to the floor through a Motion to Recommit but the House tabled the measure so that House GOP members would not be faced with an up or down vote on a clean CR.

The Senate is not expected to take up any of these bills.

U.S. Senate
Senate Majority Leader Harry Reid made an overture to House Speaker John Boehner Wednesday, offering via letter to begin negotiations on health care and tax reform if the House Republicans would pass a short-term CR to reopen the government. The men also spoke via phone on Wednesday but Speaker Boehner rejected the offer and held fast to his position of refusing to consider a CR that did not also somehow limit or restrict the Affordable Care Act.

Senate Democrats remain inclined to wait for a clean CR that would require no policy concessions. They are also still expressing strong and unified opposition to the piecemeal, targeted CRs that have been dropped in the house. If Congress fails to show progress on a CR before the weekend, the debt ceiling will most likely be wrapped up in the eventual deal. Most experienced Members already expect the two to be linked.

Moderate rank-and-file Members begin negotiations with themselves
A small group of moderates from both parties have been meeting behind the scenes and are developing a proposal for a path forward on the CR. These meetings, and its work product, remain unsanctioned by House Leadership and it is questionable if the result of any agreement in this group would ever be allowed to move forward. Nonetheless, their plan may look to move a long-term CR combined with repeal of the medical device tax that was included in the Affordable Care Act. The device tax has fairly wide and bipartisan opposition.

White House Exploring Debt Ceiling Options
Looking ahead to the debt ceiling debate, the White House is now very quietly exploring a strategy in which they would treat the existing Congressionally approved spending authorizations as permission to incur debt to fund those expenditures and thereby avoid the need to receive Congressional approval to issue new government debt. With or without congressional action raising the borrowing limit, the White House may simply continue spending after the debt ceiling hits and wait for the courts to decide the constitutionality of the debt ceiling. This has been a matter of repeated discussion and debate during several Presidential Administrations, but has never been tested.

Congressional Leaders Meet with the President
President Obama convened a meeting with House and Senate leaders at the White House at 5:30 pm to discuss both the debt limit and the government shutdown. Prior to the meeting, the President made clear that his stance on the stalemate had not changed, that the meeting was not going to be a negotiation, and he would not be giving House Republicans any concessions. Perhaps seeking to demonstrate the legitimacy of their efforts to reach consensus, the meeting lasted well over an hour but leadership, as expected, did not find a solution to end the shutdown or avoid the debt limit showdown. Speaker Boehner continues to insist the Senate appoint conferees for a short-term CR but Senate Majority Leader Reid wants a budget conference on a full year fiscal year 2014 budget. Leaving the meeting, Speaker Boehner also commented “The President will not negotiate.” House Democratic Leader Nancy Pelosi’s response was that the meeting was “worthwhile” she’s “hopeful that we heard each other” in the White House meeting. Given the outcome of the meeting, it is looking increasingly likely that the CR and debt ceiling agreement will be settled in a combined deal.

A Clean CR - The Whip Count
As the government shutdown continues, some moderate House Republicans have begun to vocalize their support for a “clean” continuing resolution (CR) that would authorize funding for the government without any policy conditions such as defunding the Affordable Care Act (ACA). Assuming it could garner support from all 200 House Democrats, such a measure would require the support of only 17 House Republicans to pass. At least eighteen House Republicans have now publicly expressed support for a clean CR. Even with the necessary votes, however, House Speaker Boehner would need to allow the measure to be brought to the floor for a vote, which is highly unlikely at this time. A majority principle known as the “Hastert Rule” may prevent this from happening. The Hastert Rule is a governing principle for House majorities that guides leaders and says that bills should not be brought to the floor without the support of the “majority of the majority” and has been adhered to by Republican Speakers since the 1990s, including Speaker Boehner. As a result, even with enough potential support to pass the clean CR, under the “Hastert Rule” the vote will not be permitted to take place without the support of the majority of the Republican party.

Today’s Agency Spotlight: Department of Health and Human Services
We have received many requests for agency specific updates. In an effort to begin to address those interests, we will focus on specific agencies in each update, starting with those where we receive the greatest demand. Today we will focus on the Department of Health and Human Services (HHS).

The Department of Health and Human Services (HHS) remains partially open with approximately 48% of its employees still expected to report to work. The Centers for Medicare & Medicaid Services will continue with a large part of its work related to the ACA, including coordination between Medicaid and the Marketplace, insurance rate reviews and assessment of apportion of insurance premiums that are used on medical services. In the short term, the Medicare program will continue largely without disruption during a lapse in funding. Non-discretionary activities including Health Care Fraud and Abuse Control, Center for Medicare & Medicaid Innovation, and Pre-existing Condition Insurance Plan activities will continue.

Many other agency operations will remain in limbo. Operating with 55% of its staff, the Food and Drug Administration (FDA) will continue select vital activities including maintaining critical consumer protection to handle emergencies, high-risk recalls, and import entry review. The Center for Disease Control (CDC) staff is reduced by 68% but will continue minimal support to protect the health and well-being of US citizens. CDC will, however, have reduced capacity to respond to outbreak investigations, processing of laboratory samples, and maintaining its 24/7 emergency operations center. CDC will be unable to support the annual seasonal influenza program, which would be normally gearing up precisely this time of year. The National Institutes of Health (NIH) will continue patient care for current Clinical Center patients but will not admit new patients except under special circumstances. As a result, hundreds of patients who were scheduled to begin new clinical trials every day at NIH are being turned away. For more information on specific activities that will continue, please click here to see the HHS Contingency Staffing Plan.

Public Opinion
We have not observed any new public polling that is of enough merit or note to publish here. We caution against relying on public polls, particularly those based upon automated phone calls or “robo-calls” as they have proven to be highly unreliable in our experience. We expect trustworthy national news organizations to begin publishing public polling data in the next couple days.

Recommended Reading:

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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