Though Congress appeared headed for another government shutdown soap opera when the then-current continuing resolution (CR) expired on Nov. 17, we have avoided a closure. The proposal from Speaker Mike Johnson (R., La.) for a “clean” (no cuts, no amendments) two-part CR passed through Congress on a bipartisan basis and was signed into law by President Biden with a day to spare on Nov. 16—albeit with some reservations from the Senate and White House and despite vocal opposition by some House Republicans.
The two-step CR extends government funding until January 19, 2024, for these departments and related agencies: 1) Agriculture, Rural Development, Food and Drug Administration 2) Energy and Water, 3) Military Construction and Veterans Affairs, and 4) Transportation and Housing and Urban Development. These first 4 represent about 25% of the overall funding. It continues funding until February 2, 2024, for these departments and related agencies: 1) Commerce, Justice, and Science, 2) Defense, 3) Financial Services & General Government, 4) Homeland Security, 5) Interior, 6) Labor, Health and Human Services, and Education, 7) Legislative Branch and 8) State and Foreign Operations.
This two-step is different from the initial “laddered” proposal, which would have taken on each of the twelve bills one at a time. This two-step approach is meant to avoid the usual “omnibus” method, which bundles the dozen into one massive bill for a single vote by Congress.
While this CR keeps the government open into 2024 and avoids a holiday-rush omnibus, it sets up future budget battles, as Johnson has said he would not propose any more clean short-term resolutions.
Omnibus? CR? Two-step? Ladders? Confused? We’ll try to explain.
Budgeting Paths
One of the most fundamental responsibilities of the federal government is to set and pass a budget every year, allocating funding towards the nation’s needs and priorities. The fiscal year for the government always begins on October 1. There are twelve different appropriations bills that must be passed each year (one for each appropriations sub-committee) to fund the federal government.
These appropriations bills are typically written, debated, and passed by the House and the Senate during the summer, with legislators and the White House administration negotiating and compromising to iron out differences beforehand. Traditionally, all twelve appropriations agreements are passed in a single omnibus bill.
However, when legislators fail to agree on the appropriations, the result is a government shutdown until a compromise can be reached. This has happened three times in the last decade: for 16 days in 2013, for three days in January 2018, and for 35 days from December 22, 2018, to January 25, 2019 (the longest shutdown to date in U.S. history).
It may seem that there have been more shutdowns than just those three, given the annual brinkmanship over budgeting the nation has faced as a repetitious drama. But, most often, legislators pass a continuing resolution (CR) that freezes spending levels and hiring to give themselves more time to negotiate and debate while keeping the government open.
What is the difference between a CR and an omnibus, and why is the choice so contentious?
The Omnibus Route
An omnibus spending bill packages many of the appropriations bills into one larger single bill that can be passed with only one vote in each house of Congress. The omnibus negotiating process involves reconciling differences in the various bills so that an identical, combined appropriations bill can pass both the Senate and the House and avert a government shutdown.
Often, omnibus spending bills are criticized for being full of added spending that pleases specific constituents or special-interest groups. The bills regularly stretch to more than 1,000 pages. Political scientist Walter J. Oleszek of the Congressional Research Service notes that “omnibus measures usually arouse the ire of the rank-and-file members of Congress because typically little time is available in the final days of a session to debate these massive measures or to know what is in them.”
This Road Closed: Shutdown
If Congress fails to appropriate the necessary funds for the federal government, the government shuts down as a result of the Antideficiency Act, first passed in 1884 and amended in 1950 and 1982. The law “forbids federal officials from entering into financial obligations for which they do not have funding,” such as buying ink, paying for electricity, or paying employees.
A shutdown may seem as if it would lead to some quick and dramatic savings. Non-essential employees are furloughed, the government stops writing checks for huge swaths of programs, and even essential employees come to work without getting paid. But shutdowns end up being more expensive than just the cost of keeping the government operating.
Budget experts have found that a shutdown hurts the nation’s finances in a number of ways.
Furloughed workers almost always get paid retroactively for the time they were out—which means taxpayers are laying out money without getting any work in return. Museums and national parks can’t collect revenue from other sources such as camping fees, special events, and gift-shop sales. Perhaps most importantly, federal workers spend thousands of cumulative work hours preparing for a shutdown and the recovery from the closure, literally shuttering their departments and then getting restarted once the government reopens. The shutdown and reopening process itself requires paid work that is utterly unnecessary to the normal business of running the country, and it takes time away from safety inspections, reviewing research grants, and processing applications.
Shutdowns carry a cost to the economy as well. The Congressional Budget Office (CBO) estimated that the 2018-19 shutdown reduced the Gross Domestic Product (GDP) by a total of $11 billion, including $3 billion that will never be recovered.
On top of that effect, the CBO notes that longer shutdowns negatively affect private-sector investment and hiring decisions as businesses cannot obtain federal permits and certifications or access federal loans. A 2019 Senate report found that the three government shutdowns in 2013, 2018, and 2019 cost taxpayers nearly $4 billion.
If we have a shutdown, government agencies without Fiscal Year 2024 discretionary appropriations in place must halt their operations, and the federal employees that support those programs are furloughed. There are some exceptions for essential services such as active-duty military, air traffic control, and some border protection, plus mandatory spending projections not subject to appropriations such as Medicare and Social Security, as well as programs funded by user fees.
Kicking the Can Down the Road via CR
When Congress and the president fail to agree on and pass one or more of the regular appropriations bills, a continuing resolution (CR) can be passed instead. A continuing resolution continues the pre-existing appropriations at the same levels as the previous fiscal year (or with minor modifications) for a set amount of time. In other words, a continuing resolution freezes overall government funding at levels last passed into law. Congress normally passes a CR that serves as a short-term funding measure to keep the government operating while congressional lawmakers negotiate a longer deal.
While a CR can help avoid a government shutdown, it is a stopgap measure that should be rarely used. However, CRs have become the norm over the past few decades. That has led to disruptions in the federal budget process, hindering legislators’ ability to match resources properly and efficiently with needs while restraining agencies from effectively carrying out their missions.
According to the Government Accountability Office (GAO), continuing resolutions add administrative burdens and limit agencies’ ability to initiate new programs and hire new people. For the Pentagon, a continuing resolution has a negative impact on ongoing readiness because the CR’s temporary nature makes planning difficult.
While CRs help policymakers avoid costly government shutdowns, they undermine the budget process by potentially ignoring new resource needs and by introducing uncertainty to government agencies because of the limited duration of the funding. In fact, a 2018 study by the GAO found that CRs can cause a number of inefficiencies and challenges for government agencies, such as:
- Delayed contracts and grants, which could decrease the level of services provided and increase the costs of administration.
- Delayed hiring, which could affect an agency’s ability to provide services in a timely manner.
- Added work, which can reduce productivity or force shorter-term contracts and grants to reflect the duration of the CR.
The Fiscal Responsibility Act of 2023, passed in June, also gives Congress a disincentive from simply enacting a chain of CRs each year by forcing an automatic overall 1% cut if stopgap legislation is still in place on Jan. 1, 2024. However, Andrew Lautz, senior policy analyst at the Bipartisan Policy Center, noted that the automatic cuts would not be enforced until April 2024 via sequestration order.
Keeping the Ladder in the Garage, For Now
A new approach to extending the current budget that Speaker Johnson called a “laddered CR” would be a novel type of continuing resolution, extending the deadline for each of the 12 individual appropriations bills rather than the budget as a whole.
The proposal would theoretically encourage Congress to consider and pass smaller budget bills—the official process laid out in a 1970s-era law, but which is rarely followed. Those who like this “laddered” approach hope it would put pressure on the Senate to negotiate with the House on each of the 12 annual government funding bills.
But it would also create a series of funding deadlines that, if not met, would shut down sections of the government at a dozen different times. It would also create repeated negotiation chokepoints for a closely divided Congress that has proven particularly fractious.
In the end, a two-step approach was opted for, which as representative pointed out, is essentially a laddered CR, but “it’s two rungs at this point.”
Conclusion: Smooth Holiday Travel, Rough Road in New Year
As noted, the Speaker has stated that he does not intend to present another clean CR, promising not to put any proposal on the House floor unless it includes blanket cuts to government funding. He also faces the same motion-to-vacate rule, in which a single House member can call a vote to remove the Speaker, that caused Rep. Kevin McCarthy (R. Calif.) to lose the gavel in October 2023.
Just before leaving for Thanksgiving, nearly 20 GOP members blocked their own party’s spending bill in retaliation for Johnson’s decision to rely on Democrats to pass the short-term spending stopgap and avert a shutdown.
Given opposition by some representative conference members who oppose any bipartisan solutions, it seems unlikely that Johnson will again attempt to seek the Democratic votes needed to pass any legislation. If he does so, it’s very possible that we may find ourselves witnessing yet another drawn-out vote for a new Speaker of the House.
Congress only has a few weeks of sessions left to reconcile divergent spending levels on 12 different bills and to craft identical legislation that has the chance to go through both chambers. This is not just a partisan matter—House Republicans want deeper spending cuts than some Senate GOP appropriators, who want to hold to bipartisan spending levels based on this year’s debt ceiling deal. So, it’s unlikely the Senate, controlled by Democrats, is going to accept some of the reductions proposed in House legislation.
But failure to meet either of the deadlines in the current two-step CR means the government faces the threat of a partial shutdown nearly a third of the way into the new fiscal year. In other words, the prospect of a shutdown has now been doubled in a hyper-partisan political landscape in a very contentious presidential election year.
For now, the nation and its elected legislators will be able to enjoy the holiday break before returning once again to the shutdown soap opera. Perhaps the season’s good cheer will carry over, but we are not optimistic.
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