StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



October Shutdown Will Last At Least A Week

20 Sep 2013
Posted by Stan Collender

This is being written less than 10 full days before the start of the new fiscal year. Four of these days occur over a weekend.

As I said in my previous post, none of the individual appropriations for fiscal 2014 have yet been enacted and none have any chance of being enacted.

The House earlier today passed a continuing resolution that, in theory would keep the government funded until December 15 and, therefore, avoid a shutdown. But the bill includes a poison pill -- defunding Obamacare -- that Senate Democrats and the White House say they absolutely won't accept in any form.

As a result, barely a week before the fiscal year begins, the process for avoiding a government shutdown has barely moved from the situation that existed a week, a month, and six months ago. Because of that, a shutdown has to be considered more likely now than it was when this week started.

It's not that what the House did this week wasn't a more-or-less standard legislative maneuver. It was. Or at least it would have been typical had it taken place in July when preliminaries like this usually happen.

But a purely symbolic vote 10 days before the fiscal year is about to begin is nothing more than legislative masturbation: It may feel good but it doesn't really accomplish anything other than taking up some time.

My reading of the tea leaves is that there are only two ways to avoid a shutdown at this point: If everyone in Washington stops being fierce partisans and starts acting rationally, or if one side totally capitulates to the other.

Because the first is so unlikely that it borders being absurd and the second is so unlikely that it approaches being ridiculous, it's time to stop talking about if and start talking about what happens when a shutdown will occur.

October 1 is on a Tuesday, so it's likely that, if there are any last-minute, stop-the-shutdown discussions, they will occur over the previous weekend and continue through Monday.

Federal facilities will be open on Monday, September 30 because they are funded through midnight that day. But without an early resolution to the standoff agencies and departments will spend much of that day preparing to shutdown. The Office of Management and Budget has already issued guidance about a shutdown. It almost certainly will issue additional information on Monday about which activities will cease, who is to come to work, etc.

OMB, the Office of Personnel Management and the White House may all hold press conferences on Monday both to advise the public about the federal activities that will cease at midnight and to put additional pressure on Congress to conclude a deal.

My guess...and at this point that's all it is...is that if a shutdown occurs on Tuesday it will last through the week.

The reason is simple. Once a shutdown begins, it will take several days for the amusement with the spectacle to change to frustration and anger. It will only be at that point -- when companies that do business with the federal government realize that their invoices aren't being processed and those waiting for visas and passports can't get them and so have to postpone trips, for example -- that the politics of the shutdown will change and members of Congress will feel some additional pressure from their constituents to reopen federal facilities.

Given that most federal offices are closed on Saturday and Sunday, the real pressure will be to get the government reopen by Monday, October 7.

In other words, if a shutdown occurs at the start of October, it will likely last at least a week.

Fatalism

Unfortunately, that sounds realistic.

Oct 7 is close to Oct 18, the estimated day when the Treasury runs out of cash. Stan, any prediction on the debt ceiling? I hope the shutdown leaves the parties so bruised that they sign an annual extension.


House Dems Signal Hardball

The House Dems were generally quiet until the CR was passed. Now we hear that they want more money in a clean CR than the GOP put in their CR. That means that if, as reporting has it, the Senate merely strips the defund out and sends it back to the House, the GOP can't largely stand aside and let the stripped CR pass with mostly Democratic votes.

This will require compromise between the House GOP and the Dems. That will make a solution take longer and a week looks like not enough time for the GOP to come to terms with eating crow. More like thay become enraged and double down, waiting for the pending default to drive the Dems and WH to capitulate.

I think that we might see a CR and debt ceiling increase passed one week after default occurs.


an Obama action fantasy

I agree with the two previous commenters that the problems will merge. On or about Oct. 15, with the government still shut down, I would like to see Pres. Obama recant his positions that the 14th Amendment is not relevant and that the platinum coin solution is not appropriate and exercise both: (1) declare the debt ceiling unconstitutional and (2) deposit ten $1_trillion coins in the Treasury's account. The Justice Department can then argue against standing in any district court in which suits are filed about (1) and assert that (2) is clearly legal, if unintended by the authors of the law. I expect the House would enact a bill of impeachment and the Senate acquit. The platinum coil deposit is big enough to move the debt ceiling past the next Census and redistricting. Capitulation in the House would occur around Thanksgiving.


platinum coin

I agree that backed into a corner on default, declaring the debt ceiling weirdness unconstitutional is a preferable route to default. Unfortunately, I fear the loony right will find this so outrageous as to drive them to violence.


Do Some Homework

"There are two sides to every question and both of them are always equally right!" is the motto of lazy, gutless journalists and commentators.

The Republican Party is solely responsible for this crisis. Their effort to defund a program that was lawfully passed and popularly supported, based on a tissue of lies about its consequences is unconscionable and unamerican.

Dear GOP: Put a diaper on the Teaparty and get your house in order or suffer the consequences next year.


Default will only occur if the situation gets completely chaotic

Political campaigns run on money, and people with lots of money are the best source of money. I am pretty sure the phone calls are being made right now to anybody who ever wants any more money for their campaigning that if they do not get the debt ceiling raised in time, that the big donors are going to stand on the sidelines, or, even worse, support primary challengers or even the opposing party.

So what I think is actually not unlikely is that the House votes to raise the debt ceiling to "cover" their CR and then try to accuse anybody who wants to spend a penny more that they are being irresponsible. The senate will pass that and the president will sign it. So no CR, but yes on the debt ceiling. Sure, it's kind of a silly move, but it preserves your money base, allows you to grandstand on the ceiling, support closing the government, and argue about defunding Obamacare for literally months, quite possibly as you pass an agonizingly long series of short-term CRs.

But I know that the shutdown on October 1 is pretty much baked into the plans of the agencies by this point. Not much has changed in most of them since 2011 (headcount is lower in most agencies, too), so they already know who is going to stay home.

One last point: I think our host is wrong about it taking several days for us to see anger generated by the closure. This is the era of blogging and tweeting, and I can assure you that come Tuesday morning somebody is going to find out they cannot pick up their passport...times 500. And some contractor (times Who Knows) will not be able to make payroll pretty soon after that and will lay off staff, and lots of *them* are going to blog or tweet, and so forth in every odd corner of the government where a check isn't cut or a form is not processed. Remember that it is much, much easier for cable news to cover angry mobs on the internet than it will be for them to cover much of anything else going on, and remember that cable news these days goes wall-to-wall on almost any story that has a pulse (unlike 1995), so even if arguably not much ill effect has been felt yet by most people, everybody will have seen the story, and it is unlikely to be a pretty scene.


shutdown predictions

The problem with making predictions with such absolute certainty is that the same kind of predictions were made last year with the same kind of certainty.

And the year before that, and the year before the year before that.

And each year, there were, of course, special circumstances, that made that particular year different--this is different! this time this is for real!

Just speaking in general--I actually went to the Internet Archive's Wayback machine to see what your record was on these shutdowns and it does look like this is your first forecast. :)

It's not that it won't necessarily happen. But it's just that we at agencies have heard and seen this so often before and, again, speaking in general, it would be so refreshing if people said instead that they don't know... instead of all the dire predictions and hype and all... sigh...

What year was it? 2012, when we powered everything down and then were right back into work the following Monday...

Anyway....


It was 2011

This is key, because nobody wants this fiasco to fall too close to an election.


this is your first forecast. :)

Stan gave a probability for a single event. That isn't a forecast because he also gave a non-zero probability for no shutdown; he'll be right either way.


October

Interesting how Halloween comes early this year. What spooky masks will the rethuglicans wear? Looks like all tricks and no treats.


Does Sec. 138 of H.J.R. 59 (The CR) raise the debt ceiling?

Having nothing else better to do (yeah, I do need a life), I decided to read the House CR which is up on Thomas right now:

http://www.gpo.gov/fdsys/pkg/BILLS-113hjres59eh/pdf/BILLS-113hjres59eh.pdf

So the striking thing about this, in addition to the "defund Obamacare" piece (section 137), the HJR includes a section 138, which seems to be suggesting that interest and principal on the debt do not actually count towards the debt ceiling until the CR ends, which is December 15 or the passage of another CR or actual appropriations bills.

I haven't heard much (any?) comment on this move, which was not in the original version of the CR that came from Rogers on September 10. Does anybody have any thoughts as to what this really does and/or if they can even do this?


Eliminate Programs

The TeaParty wants to eliminate social programs, period. Many of these programs have popular support or they have vested interests that lobby for them. They cannot get their way through normal political channels. The only way to eliminate is to resort to extreme tactics. However, resort to extreme tactics threatens the entire political process. Using the shutdown and debt limit to maximize pain in Congressional districts of shutdown enthusiasts would be a good and necessary lesson for the voters of those districts.


"If everyone in Washington

"If everyone in Washington stops being fierce partisans and starts acting rationally".

Really? "Everyone"?

I would love to hear more about how the Democrats being fiercely partisan is going to shut down the government and breach the debt ceiling.




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