With Just One Day Left To Avoid Government Shutdown, Here Is Goldman's Take On What Will Happen Tonight In DC
Today at some point, the House votes (again) on a continuing resolution to fund government past Sept. 30. Will it fail to reach an agreement as it did yesterday, with just a day before yet another break which will likely mean no more votes until the actual shutdown? Goldman explains what to expect from the events this afternoon/evening.
From Goldman's Alec Phillips
Yesterday’s failed vote in the House has led to headlines raising the possibility of a government shutdown, but this seems unlikely. The new fiscal year starts Oct. 1 and Congress has yet to enact any of the 12 annual appropriations bills that provide funding for the various departments and agencies of the federal government. Congress typically misses the deadline, and normally passes a “continuing resolution” to provide temporary funding until the longer-term legislation has been enacted. Yesterday, the House was expected to pass its continuing resolution to fund operations through Nov. 18. Attached to this was $3.6bn in disaster aid to FEMA, partly offset with a $1bn cut to a program that subsidizes advanced vehicle technology manufacturing. That bill was defeated unexpectedly yesterday afternoon (all but 6 Democrats voted against it, as did 48 Republicans). Today, the House is expected to try again to pass temporary funding. It isn’t yet known whether House leaders will try to increase support among Republicans (by trimming the overall amount of spending in the bill) or Democrats (by dropping or changing the cuts used to offset the cost of disaster aid). The Senate has yet to consider the bill, but is unlikely to go along with a lower spending level, and is likely to try to add its own version of disaster assistance (Sen. Majority Leader Reid may offer an amendment to provide $6.9bn to FEMA).
Although the risk of a government shutdown has risen slightly as a result of these events, it is still low; the perceived political cost of a shutdown now is much higher than it was back in April, and the current disagreement is only over a few billion dollars. Moreover, there is still over a week until the deadline, but congressional recess is scheduled to start tomorrow, potentially providing motivation to get a deal done well ahead of the deadline. But this episode reinforces the notion that political sentiment around the super committee could worsen ahead of its November 23 deadline.