House Republicans are threatening to shut down the federal government in an ideological temper tantrum aimed at the president and his signature legislative achievement, the Affordable Care Act (ACA).
A government shutdown is an untenable situation. It's even less tenable for the party that causes it. Should their brinksmanship extend past September 30, House Republicans would be poised to take the overwhelming brunt of the blame.
Veteran Washington budget wonk Stan Collender is predicting a shutdown of at least a week, largely because public ire would be needed to shift the budget battle lines. Conventional wisdom is that once private contractors and companies doing business with the federal government see orders and payments suspended, soldiers stop receiving paychecks, and families are turned away from abruptly closed national parks, people would notice -- and the people's representatives would hear about it.
That blame for this pain would likely take a toll on the GOP in the 2014 midterm elections. But even before the next election, shutdown blowback could provide congressional Democrats with new leverage -- leverage that could be useful in recovering lost ground in the budget wars.
The Current State of Play
Though much of the budget showdown narrative revolves around Republicans' insistence on defunding Obamacare, it's equally noteworthy that the House and the Senate are at a major impasse over actual spending levels, too. Although the budget deal in 2011 nominally set spending levels for 2014 (including the disastrous set of budget cuts known as sequestration), neither side is sticking to that agreement. Senate Democrats added $37 billion to non-defense discretionary spending. House Republicans cut an additional $52 billion.
With such a large gap in policies, a last-minute temporary reprieve seems questionable, and a full-year deal looks completely out of reach for the moment. And that's before we deal with the way that the House GOP leadership has boxed itself in by refusing to level with the GOP base or House Republican caucus about realistic leverage and the inevitable implementation of the ACA.
So, given these obstacles, a shutdown seems quite likely. So what happens if the plug is pulled?
How It Would Play Out
After incurring enough public ire, the House Republicans -- or at least the House Republican leadership -- would blink. Because the "No On Everything" caucus (a group of 30-40 Tea Party Republicans) would live up to its name, Speaker Boehner would probably have to rely on a great many House Democrats to vote for a bill to reopen the government.
Meanwhile, the Senate's bill would continue to be dictated by the Senate's Democratic leadership. (Tea Party Senators Mike Lee and Ted Cruz have a soapbox, but without 38 additional Republicans, they have little leverage. Many senior Senate Republicans remember the last government shutdown thus know that a protracted shutdown is ill-fated political suicide.)
This combination would give Democrats significant leverage in the eventual agreement. Moreover, as the shutdown lingers and the GOP's reputation disintegrates, the Democrats' leverage would only increase. In the event of a shutdown, Democrats should use this leverage to insist on restoring nondefense discretionary funding to its pre-sequestration levels.
Fixing Past Mistakes
Lost in the current showdown is the fact that, in previous face-offs, the GOP has already won major budget concessions. The 2011 debt ceiling fight and resulting Budget Control Act ransomed a necessary increase in the statutory debt ceiling for $1.8 trillion worth of government spending cuts. Earlier budget fights locked in another $500 billion in austerity over a decade.
The austerity the GOP has extracted to date has caused the economy to sharply decelerate, and many signs point to the recovery beginning to reverse.
The $92 billion difference in proposed nondefense spending between the House Republican and Senate Democrat budgets is nontrivial for the anemic economy. If spent in entirely in fiscal 2014, an extra $92 billion would boost GDP by about 0.7 percent and increase employment by roughly 900,00 jobs. The boost from increased spending would actually be felt both in fiscal 2014 and lagged somewhat beyond, likely increasing monthly job growth by an average of 40,000 jobs in fiscal 2014 and 20,000 jobs in fiscal 2015 relative to spending in the House Republicans' budget proposal.
Democrats must not be tempted into a short continuing resolution deal only to take this fight up again when the debt ceiling must be increased in about a month. President Obama has promised that he will not negotiate over the debt ceiling; a lack of simultaneous negotiations over continuing appropriations would make that line easier to hold. A U.S. default on its debts would be disastrous for the U.S. economy, and would likely do tremendous damage to the global economy as well.
Should a shutdown occur, Congressional Democrats would be better off negotiating more favorable full-year funding levels in a budget fight removed from the debt ceiling, when the downside risks to the U.S. economy are far smaller and public opinion more favorable to Democrats' bargaining position.
Democrats would have a real opportunity to use Republicans' systematic refusal to govern as leverage to fix the mess the GOP has created.
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