Last week, following the shocking news that House Speaker John Boehner had resigned, we analyzed the "flowchart" of next steps for both the US government shutdown and the debt ceiling showdown. The most urgent one, that of the imminent shutdown or passage of a continuing resolution, was as follows: "Boehner will move to advance a "clean" CR -- with the help of Democrats -- before the new fiscal year starts on Thursday." And he will succeed.
This is precisely what happened moments ago when following a 277-151 vote in the House, Congress sent legislation to Obama to prevent a government shutdown and will keep federal agencies funded through Dec. 11.
As the Hill reported, however, more Republicans voted against the spending bill than in favor of it. Republicans objcted to the inclusion of money for Planned Parenthood in the bill, leading 151 GOP lawmakers to vote against the bill, compared to only 91 who supported it. Every Democrat voted in favor of the legislation.
More form the Hill:
The vote also split the GOP lawmakers running for leadership positions in the wake of Speaker John Boehner's (R-Ohio) surprise resignation last week.
Majority Leader Kevin McCarthy (R-Calif.), the heavy favorite to succeed Boehner, voted 'yes,' as did GOP Whip Steve Scalise (R-La.), who is running to succeed McCarthy.
But Scalise's opponent, House Budget Committee Chairman Tom Price (R-Ga.), voted no. So did Rep. Daniel Webster (R-Fla.), McCarthy's only opponent so far in the Speaker's race.
Reps. Pete Sessions (R-Texas) and Dennis Ross (R-Fla.), who are both running to succeed Scalise, each voted 'no,' while Rep. Patrick McHenry (R-Va.), a third candidate, voted 'yes.'
The Senate approved the legislation earlier on Wednesday in a 78-20 vote, and Obama is expected to sign it later tonight. All 20 no votes in the Senate came from Republicans, while Sens. Marco Rubio (R-Fla.) and Lindsey Graham (R-S.C.), who are both running for president, missed the vote.
Without action by Congress, the federal government would have shut down on Thursday.
As previously noted, Boehner's resignation was the key catalyst that prevented a government shutdown: conservatives had warned Boehner that a motion to remove him as Speaker could be filed if he worked with Democrats to move the short-term funding bill. But once Boehner announced he would step down, conservatives lost their leverage.
Planned parenthood wasn't the only issue at stake: Senate Republicans broadly favored moving the short-term measure even if it included money for Planned Parenthood, as did many House Republicans. They worried that provoking a shutdown would cost the GOP politically.
“We should never shut the government down over that or frankly any other issue,” said Rep. Charlie Dent (R-Pa.), a centrist and senior appropriator, said of the Planned Parenthood fight.
And so with government funded for 2 more months, the next question for Congress now is how to prevent a shutdown right before Christmas. And then there is the issue of the debt ceiling. This is what we said last week:
"the Boehner resignation may increase the risks of a government shutdown in December, and also increase the odds of the Treasury violating the debt limit or running out of cash before November. The conventional wisdom is that Majority Leader Kevin McCarthy will replace Boehner as speaker. We're not sure that matters much -- the next speaker will still face the same difficult choices as Boehner, and if he compromises too much with Democrats, his tenure could be short-lived.
... what happens in mid December or whenever a CR expires? Congress will still be faced with the same unresolved budget issues it faces today. Will Boehner's departure make it any easier to come to agreement on spending levels for the full fiscal year? At this juncture, we don't see how it would.
Most importantly, even before December 11, the government wil have to do something to extend the debt ceiling... somewhere in the vicinity of $20 trillion:
"Congress will need to address the debt limit before December. Treasury will have both exhausted its measures that allow it to issue debt and run out of cash in the third week of November. Based on cash flows over the last two weeks, we think the risk is that cash runs out a little bit sooner. September tax collections have been running weaker than our forecast, although there is still some chance for a late-month surprise with individual estimated income taxes coming in stronger than expected."
At the end of the day, just like the Greek farce, this is mostly hollow drama, however the market is so convinced that it will be resolved favorably, it is barely paying attention. And that's where the risk lies, because any deviation from the traditional script for whatever reason, will be entirely not priced in.