Federal Relations

April 7, 2011

Shutdown Looms…

With current stopgap funding expiring tomorrow (Friday) night at midnight, negotiators are in a race against time to reach a deal on FY11 funding.  President Obama, Senate Majority Leader Reid, and House Speaker Boehner emerged from a late-night meeting at the White House Wednesday claiming serious progress, but nobody was ready to announce a deal even though they’re only several billion dollars apart in their positions.  Negotiators are thought to be talking about spending cuts of between $33 billion and $40 billion, including cuts to both discretionary and mandatory programs.

The House GOP has a back-up plan in place and will take action today by bringing to the floor their one-week continuing resolution (CR) extension, which cuts another $12 billion from domestic spending while fully funding the Defense programs for the year.  Democrats oppose the measure, which was introduced on Monday, mostly because of its spending cuts but also because it includes policy provisions that they object to.  If a deal on FY11 spending can’t be reached, House passage of the GOP measure would place Senate Democrats and President Obama in the position of causing a government shutdown by either blocking it or vetoing it.  Obama earlier this week said he wouldn’t sign any more stopgap measures unless a deal was reached and a “clean” stopgap measure was needed to give Congress time to enact the agreement.

And it may simply be too late to reverse the momentum that has been building toward a shutdown. Speaker Boehner still contends with a caucus eager to show it’s serious about dramatically cutting federal spending, Majority Leader Reid can’t keep going back to his members with an objectionable list of cuts, and Obama wants to avoid giving away the store to Republicans.   

Meanwhile, the House Budget Committee reported its budget resolution for FY12, which has sparked an intense debate regarding federal spending and fiscal policy.  House Budget approved its FY12 plan last night after a day-long markup in which several Democratic amendments were rejected.  Committee Democrats argued that the budget proposal cuts spending for vulnerable populations and key national priorities too deeply while protecting tax cuts for the wealthy, corporations, and oil and gas interests.  Rejected amendments included those intended to prevent cuts in areas such as education and Head Start, NIH cancer and other medical research, aid to local police and firefighters, veterans’ programs, food safety activities, and financial regulation and consumer protection.

In addition to assuming fundamental changes to Medicare and Medicaid, the GOP budget calls for overhauling tax policy and creating spending caps and other enforcement mechanisms to reduce the size and scope of federal government.  It would cut spending by $6.2 trillion over 10 years compared with Obama’s FY12 proposed budget, and reduce cumulative deficits by $4.4 trillion.  It would also cap discretionary spending for FY12 at $1.019 trillion, roughly holding federal spending at FY08 levels.

The budget proposal moves to the House floor for consideration next week, when several substitute budgets will be considered.  Democrats will offer their own version of the budget, as will the more conservative arm of the Republican party.  Both will likely fall short of votes necessary to replace the current proposal.