The White House's recent directive to federal agencies to prepare for a potential government shutdown has cast a cloud of uncertainty over the United States as House Republicans left town for the weekend without a viable plan to fund the government, risking a disruptive and costly interruption of federal services.
As the deadline of September 30 looms, the likelihood of a federal shutdown appears increasingly inevitable unless Speaker Kevin McCarthy can sway the rebellious hard-right faction of Republicans to allow Congress to pass a temporary funding measure while negotiations continue. Instead of pursuing this short-term solution, McCarthy has embarked on a more ambitious plan to attempt passing multiple funding bills once the House reconvenes on Tuesday, leaving just five days to resolve the standoff.
"We have members working, and hopefully, we'll be able to move forward on Tuesday to pass these bills," McCarthy, a Republican from California, stated optimistically during a press briefing at the Capitol. While he expressed a preference for avoiding a government closure, the hard-right faction within his House majority has asserted its influence, pushing for spending cuts that could lead to a government shutdown.
The potential standoff with House Republicans over government funding jeopardizes a range of essential activities, including pay for military and law enforcement personnel, food safety and food aid programs, air travel, and passport processing, all of which could wreak havoc on the U.S. economy.
White House press secretary Karine Jean-Pierre placed the blame squarely on Republicans for the consequences of federal workers going unpaid, emphasizing that it doesn't have to happen. She urged Congress to fulfill its responsibilities and maintain vital programs while keeping the government open.
With the start of the new fiscal year on October 1 and no funding in place, the Biden administration's Office of Management and Budget has begun advising federal agencies to review and update their shutdown plans, potentially leading to furlough notifications for federal employees in the coming week.
President Joe Biden has not hesitated to attribute the impending shutdown to House Republicans, who are advocating for spending cuts beyond those outlined in a June deal that also suspended the government's borrowing authority until early 2025.
McCarthy, facing immense pressure for severe spending cuts from a handful of hard-right conservatives aligned with former President Donald Trump, has struggled to assert leadership in the House. Many on the right flank oppose the budget deal struck earlier in the year and are actively working to dismantle it, at Trump's urging.
Led by Trump ally Rep. Matt Gaetz of Florida, this right-wing faction has effectively taken control of the House debate, publicly challenging McCarthy's leadership. On Thursday, they persuaded McCarthy to consider their proposal to bypass a stopgap funding measure, known as a continuing resolution (CR), in favor of pursuing the 12 individual bills required to fund the government.
The House GOP leadership subsequently announced plans to process a package of four bills funding Defense, Homeland Security, State and Foreign Operations, and Agricultural departments, setting the stage for a vote when lawmakers return next week. Some bills had been delayed due to the same conservative faction now demanding their passage.
Despite the challenges, McCarthy and his allies insist they are working towards both passing annual spending bills and advocating for a conservative stopgap CR with border security provisions in time to avert a shutdown.
Government shutdowns occur when Congress and the president fail to pass a set of 12 spending bills or approve a temporary measure to keep the government operational. Consequently, federal agencies are forced to cease all non-essential activities. Since 1976, there have been 22 funding gaps, leading to worker furloughs in 10 instances.
The last and longest shutdown on record occurred during the Trump administration between 2018 and 2019, lasting for 35 days. It stemmed from a dispute over funding for a border wall and cost the U.S. economy an estimated $3 billion. While substantial, this amount represented just 0.02 percent of U.S. economic activity in 2019.
Despite this relatively minimal economic impact, a government shutdown could still have repercussions for various sectors and individuals. Military and law enforcement personnel would go unpaid, FEMA's disaster relief fund could be depleted, clinical trials for new prescription drugs might be delayed, and food aid programs for millions of Americans could be interrupted. The travel sector could lose $140 million daily, and visa and passport applications would go unprocessed.
While the potential consequences of a government shutdown are significant, the resilience of the U.S. economy has historically mitigated the lasting damage caused by such events. During the last shutdown, the S&P 500 stock index even climbed by 11.6 percent, underscoring the country's ability to weather these political storms.