With only hours to spare, on September 30th Congress successfully averted a government funding lapse/shutdown, at least for now. Another shutdown showdown will return as the calendar approaches November 17 when the current temporary funding authority expires. Washington’s pathway to pragmatism is usually messy (the comparison to sausage making is trite but true), but this episode was especially disordered and, in the end, cost Speaker of the House, Kevin McCarthy (R-CA), his gavel.
This outcome can be partly explained by tracing the path of progression of three competing continuing resolutions (CRs)—measures that would temporarily fund federal government operations in FY 2024 (which began October 1) until full year appropriations could be enacted.
CR #1: House Republican Fever Dream
The first CR to receive a vote was a partisan measure drafted by House Republicans. Negotiated by a team of lawmakers representing the pragmatic Main Street Caucus and the hardline right House Freedom Caucus, this CR was designed to give House Republicans leverage in spending negotiations with the Democratic-led Senate. It would keep federal agencies open and operating until October 31, but a funding rate 30% less than provided in FY 2023 for most agencies and far below the spending caps for FY 2024 agreed to in the June debt limit agreement. The Departments of Defense, Homeland Security, and Veterans Affairs were exempt from the cuts, which would have forced remaining agencies to absorb even larger reductions (but just for the duration of the CR).
At the request of hardliners, the House Republican CR did not provide any new funding for Ukraine or disaster relief aid despite urgent requests to refill silos hovering dangerously close to empty. The bill also included Republican priorities to secure the border, establish a new fiscal commission, and extend authorization of the National Flood Insurance Program, a key federal program for flood-prone states in the South and Midwest. In essence, it was a Republican fever-dream of legislative priorities.
House members knew this CR would never become law, but it was important to demonstrate to the Senate and President Biden what the House Republican majority’s priorities were (cut spending, secure the border, no new money for Ukraine) and send a message that any final temporary funding patch (or end of year omnibus, for that matter) would have to include compromises for the House in these areas.
When the CR cleared a procedural hurdle in the House with all Republicans voting in lockstep with one another, it appeared on track for swift adoption. Matters took a surprising turn, however, when minutes later, 21 Republicans voted to oppose their own Republican-drafted measure, dooming its chances of ever reaching the Senate. A collective head-scratching “Huh?” echoed across Washington.
CR #2: Senate Bipartisan Jam
Meanwhile, on the other side of the Capitol, the Senate was preparing to do what it always does: draft a bipartisan spending bill and force the House to approve it (or risk blame for a shutdown if they didn’t). This happens so often in D.C. that it has a name: “Jamming the House.”
Eager to exercise the chamber’s collective muscle in favor of its bipartisan priorities—including more economic and military aid for Ukraine, more disaster assistance for fire-, flood-, and hurricane-ravaged communities in the U.S., and keeping the government open—the Senate drafted its own CR and appeared poised to pass it with a wide bipartisan majority.
The Senate’s bipartisan CR would keep the government open through November 17 (two and half weeks weeks longer than the House CR but shorter than the mid-December deadline favored by many Senate Democrats), authorize spending at the same rate as the FY 2023 omnibus spending bill, provide $6 billion in new disaster aid, authorize a total of $6.15 billion in new aid for Ukraine ($4.5 billion in military aid and $1.65 billion in economic/humanitarian aid), provide $3.7 million for pandemic preparedness (as we head into another winter of COVID), and extend the authorization of several essential programs that would expire after September 30.
CR #3: McCarthy Pulls a Pragmatic Rabbit Out of His Hat
On the morning of September 30, the Senate bipartisan CR appeared on track for adoption by early afternoon, after which it would land on the steps of the House with enough momentum (and precious little time on the shutdown clock) to force a vote in acquiescence. But House Speaker McCarthy had one more card up his sleeve—a second CR, this one drafted to appeal to a “majority of the majority” in the House yet still be palatable to the more pragmatic Senate.
It adopted a base spending rate equivalent to the prior year appropriations (a traditional feature of any CR), stripped Ukraine aid from the Senate’s bipartisan CR (to draw House Republican support), jettisoned the controversial border security provisions (which would have been a poison pill to Democrats and President Biden), increased disaster aid to $16 billion (to reflect on-the-ground reality in the aftermath of the Maui fires, Florida hurricanes and Midwest/Northeast floods), and included the Senate’s November 17 expiration date.
Moreover, in a deft procedural move, Speaker McCarthy placed the new CR on the House Suspension Calendar, which waives the chamber’s standing rules, enables the House to move quickly on legislation, and is typically reserved for non-controversial measures that have widespread support. Specifically, a bill brought up “under suspension of the rules”
is limited to 40 minutes of debate, cannot be amended from the floor, is not subject to points of order (budgetary or otherwise), and requires two-thirds of all members present and voting to pass (290 votes in a fully seated, fully present House). Speaker McCarthy could move this CR quickly, but with only 221 members in his caucus, he would need Democratic votes.
Senate Republicans stalled for time to see if McCarthy could muster victory. In the end, McCarthy’s “pragmatic” CR sailed through the House on a bipartisan vote of 335-91. The Senate followed shortly after, passing the bill 88-9. President Biden signed the McCarthy CR minutes before the midnight deadline to avoid a government shutdown.
Crisis Averted—For Now
Washington lawmakers averted a crisis, but only temporarily—the current stopgap funding measure expires on November 17th. Moreover, the House rewarded Speaker McCarthy for his pragmatism by stripping him of his gavel which means the whole CR kabuki dance will repeat in a few short weeks but under the shadow of a contentious and potentially drawn-out Speaker’s race.
One thing is for certain: the inability of Congress to complete even its most basic function—funding the government—comes at a dangerous time. Yields are rising on Treasury securities, reflecting a waning appetite for U.S. debt among bond buyers. The federal debt is at or near 100% of GDP and growing, yet there is no sign Congress is prepared to make the tough choices necessary to stabilize it. Net interest costs are exploding. Two bond rating agencies have already downgraded U.S. debt (Fitch and S&P) and a third (Moody’s) may follow, pushing interest rates higher.
America’s fiscal policy needs rational, serious, thoughtful, adult hands on the tiller—now.
