By Philip Marey, senior US strategist at Rabobank
The government shutdown has been averted, as House Speaker Kevin McCarthy decided to defy the Freedom Caucus on Saturday and pass a stopgap measure (continuing resolution) to keep the government funded through November 17 with bipartisan support. The Senate adopted the same measure and President Biden signed it into law on Saturday night.
This week we are likely to see a challenge to McCarthy’s speakership from members of the Freedom Caucus.
Before November 17, the House still has to adopt 8 appropriations bills for fiscal year 2024, and then reconciliation of the House and Senate versions of the 12 appropriations bills has to take place. Meanwhile, there is still no agreement about the level of total federal spending for FY2024. What’s more, border security and additional funding for Ukraine are still unresolved.
This means that we could still be looking at a government shutdown after November 17, unless a new stopgap measure is approved.
On Saturday, in an unexpected and courageous move, House Speaker Kevin McCarthy defied the hardliners in his own Republican party and proposed a stopgap measure (continuing resolution) to extend government funding through November 17 at the $1.6 trillion annual rate of fiscal year 2023. The measure includes $16 billion in disaster relief, but still omits any additional aid for Ukraine. It also excludes the border security provisions sought by Republicans. The House of Representatives voted 335-91 in favor of this measure. All but one Democrat voted in favor, but nearly half of Republicans voted against it. The Senate followed with 88-9, despite hesitation about the absence of Ukraine aid, which was a part of last week’s bipartisan Senate stopgap proposal. President Biden signed the continuing resolution into law late Saturday night, just in time to avert a government shutdown on Sunday.
Bring it on
Earlier last week, in an attempt to include the hardliners, McCarthy proposed a continuing resolution (CR) at a lower $1.471 trillion annual rate and with the condition of strict border security measures. This measure already excluded any new support for Ukraine. This proposal was rejected on Friday. It had been expected that McCarthy would take more time to make this switch from appeasing the hardliners and showing that he had done everything in his power to get their demands through Congress. The real world impact of the government shutdown would have given him the cover needed to make his switch to a bipartisan solution to the shutdown. However, last week’s voting behavior by the hardliners seems to have brought McCarthy to the conclusion that he might as well make this switch prior to a shutdown and that delaying the inevitable would not change the position of the hardliners. He seems to accept that a speakership challenge is coming anyway, even if he were to go along with the wishes of the House Freedom Caucus and go into a government shutdown. After Saturday’s vote he said: “If somebody wants to make a motion against me, bring it. There has to be an adult in the room.” He also said: “It’s easy to be a conservative that wants to do nothing, but I believe America wants to find the conservative that can make government work efficiently, effectively and accountable.”
This means that a government shutdown has been averted, at least until November 17, but that we could see a challenge to McCarthy’s speakership as soon as on Monday. Note that at the start of the year, in order to get elected, McCarthy accepted that it would take only one member of the House of Representatives to challenge his speakership. On Sunday morning, Republican Matt Gaetz announced on CNN that he intends to file a motion to vacate against Speaker McCarthy this week. This comes as no surprise as we discussed last week in Shutdown. A key question for the Democrats is whether they should bail out McCarthy if he does not get enough Republican votes. Note that Republicans have a small (221-212) majority in the House of Representatives.
Besides a leadership challenge among House Republicans, the stopgap adopted on Saturday still leaves considerable unfinished business. The stopgap only lasts through November 17, which means that this measure only buys Congress 7 weeks to approve all 12 appropriations bills for fiscal year 2024 (which starts today, on October 1). If the House and the Senate have not approved and reconciled the 12 bills by then, we are looking at a shutdown after November 17, unless a new stopgap measure is adopted. Note that the Senate has already approved 12 appropriations bills, but the House did not get further than 4 of them, 3 of which last week (Defense, Homeland Security, Department of State; the agriculture bill failed). Until recently, only the bill for veterans affairs had passed in the House. Also, there is still no agreement which total federal spending levels should apply for FY2024. All of this has to pass the House, while Republican hardliners want to depose the House Speaker. What’s more, the issue of border security will come up again, by Republicans. The same is true for additional funding for Ukraine, which has been requested by President Biden.
Saturday’s unexpected move by House Speaker McCarthy has averted a government shutdown on October 1, but we are heading for a new deadline on November 17. Meanwhile, several issues about fiscal year 2024 remain unresolved and on top of that we could start the week with a speakership challenge. Political turmoil on Capitol Hill continues, but at least federal workers and contractors will get their money for the next seven weeks.