StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



#Cliffgate Update: Now A 90% Chance Of A Shutdown

28 Sep 2013
Posted by Stan Collender

It was virtually inevitable that House Republicans would amend the Senate-passed continuing resolution with changes the Senate has already said it won't accept.

To understand why, I need to again refer back to something I posted more than two years ago, right after I was the first speaker at the first meeting of the House tea party caucus. (You can read all the details here.) 

I was talking informally with a number of the members of Congress who had been there after the meeting ended. There was unanimous agreement among those members that the biggest thing the House GOP had done wrong during the 1995 and 1995-96 shutdowns was that it had given in to Bill Clinton too early. The GOP would have gotten a much better deal, they told me, if it had pushed harder and been willing to keep the government closed longer.

Pushing until the very, very last minute has been one of the mainstays of the House GOP's negotiating strategy on budget issues ever since . With one exception -- House Speaker John Boehner (R-OH) unilaterally deciding nine days before the deadline to cut a deal with the White House to extend the reduction in the payroll tax -- every budget decision since 2011 has gone up to, and in some cases beyond, the deadline.

This is why no one should have been surprised when the House GOP announced earlier today that it will not simply accept the Senate-passed clear CR. even though there are less than three full days before the end of the fiscal year. It may still do that or, rather, the caucus may allow House Democrats and handful of Republicans to do that, but it will only happen at or just after Monday at midnight...and even that's not certain.

Anything else would have violated the tea party negotiating principle I was told in February 2011.

Based on all this, I am increasing the likelihood of a government shutdown from 70 to 90 percent. I'd say 100 percent but nothing is ever that certain in American politics these days.

How can you estimate an even 10% chance of no shutdown?

As far as I can tell (but please correct me, since I could be wrong) the timeline is perilously short even if the Senate were to cave, which is the only way I see to avoid the shutdown. Here is what I think we would need:

  1. House passes the new, amended CR this evening (September 28), as well as H.R. 3210, which would sort of appropriate money to pay active duty military and the civilians and contractors that the SecDef thinks are required to keep them paid (or something; it's kind of a weird bill). Then we get two cases:
    1. The Senate actually does convene tomorrow (September 29) to consider and amend the two new bills that the House will vote on today. But they don't have to do this, and the only reason I can fathom for this is that they think a last ditch re-amendment would get back to the House and get voted on Monday, where I am pretty sure it would either die or be delayed. And, remember, we are dead if even one senator objects since the cloture vote would have to be held Monday, and that gives 30 hours of debate...and we're out of time.
    2. The Senate convenes on Sunday and Reid has decided to cave. But now they need to get the 100-0 vote like before since otherwise they are stuck trying to get cloture on Monday and we're out of time again. Oh: and then Obama has to sign. Now the only reason I can see Reid caving is that Obama has decided to sign, so there's not much extra improbability added, but I think this underlines the difficulty faced here.

      I am pretty sure that the Senate waiting until Monday automatically results in a closure, since the objection of one senator would suffice.

  2. Boehner really does lose control of his caucus completely, despite the rules vote he needed and got earlier this afternoon. In this case the votes of 21 Republicans and all but three Democrats (which is what you would expect) could force a discharge petition to vote on the unamended Senate Bill. Clearly this has to contain almost all of the probability for a non-closure event. And it is a non-zero probability...but I see it as being pretty low. Maybe 2%.
  3. Final possibility is that Boehner notices that they cannot win with the bill they send to the Senate and goes into session tomorrow, gets all of the rules votes, and does a short term CR to give the Senate enough time to act. (But note that they are apparently not proposing that option today.) That could work, but seems pretty low probability, too. Maybe another 2%.

So adding up over the scenarios, I get at best a 5% chance of no shutdown, but maybe I have missed something. And, as our host notes, once we have the shutdown, we need to spend a day or three minimum on the process to get back in business.


So the Senate might need to meet on Sunday, after all

H.R.3210 which provides for the payment of active duty military personnel plus an open-ended assortment of others is going to pass by a huge, possibly unanimous margin. I am guessing that the Senate may need to convene on Sunday to rubber-stamp this, even if nothing else happens. Unless they know they will get the 100-0 vote to take this up on Monday.

But if this means they will be in session...something else unanticipated could happen as well.


But you've been saying this for a while?

I've been following your posts closely over the past couple weeks - and I find you to be the best commentator out there on these topics at this moment.

However, reading your account from March, 2011, I found that you essentially made similar predictions back then. What was different between then and now? "A broken clock will still be accurate twice a day."


Keyser Soze and the Hungarians

Why on earth would the Senate Dems pass the companion bill to ensure military payrolls were still met? If the Republicans want to shut down the government, then let everything get shut down. That means military payrolls. It also means every single dollar of discretionary spending that benefits red states, including any sort of agricultural aid. Turn it all off. And make it clear that if the GOP wants to play the same game with the debt ceiling that Social Security checks and Medicare payments will be the FIRST not the last things to get turned off as well. Let's see how long the octogenarian Tea Partiers in tricorner hats continue cheering the scorched earth policies when their government checks stop showing up.

For the record, it really pains me to say all of the above as I harbor no ill will whatsoever towards the military, farmers, or the elderly, but there comes a point where you have to stop negotiating with terrorists.


How long would a shutdown last?

I think the next question is, how long might a shutdown last? My guess is 2-3 months.

Republicans aren't going to get much credit for demonstrating their convictions from conservative voters if they give up quickly. There are a lot of people who think Obama will cave in quickly, giving Republicans much of what they want, if only the party remains steadfast. Most of the people harmed by a shutdown will be big city dwellers, blacks and hispanics, welfare recipients, liberals, foregners and the like -- not people for whom Republican voters normally feel much sympathy anyhow. And govenment-funded healthcare is the capstone on the liberal effort to eradicate traditional American society, leaving nothing ahead but tyranny and despair.

It's going to take a few months for big-pocket donors to persuade legislators that campaign contributions are going to fall off unless the country begins functioning again.


3 months is clearly longer than this will last

Mike Shupp could be correct about the people who would be relatively more affected (although I am not sure he is), but as we have seen previously, even relatively minor nuisances can have a large effect if they happen to the "right" people, and three months without passports, new government contracts for anything, crop insurance, and the rest of it would never happen. My guess is that this time around, unlike 1996, the impacts of a shutdown will be felt much more quickly because people will tweet and blog about them. Also note that a 3-month shutdown would require both sides to show the kind of discipline I don't think we should be expecting. 25 vulnerable GOP reps could (and would) end the thing by facilitating a discharge petition when the situation became too difficult; the big question is whether they would cave faster than the appropriate number of senators.


You've raised some excellent

You've raised some excellent points, and I'd be happy to see your prediction come true.

I'm less enthusiastic about tweets and bloggers having an impact -- with the possible exception of Larry Summers withdrawal from consideration of the Fed Chairman's post, I haven't seen much evidence that people on the internet change many minds at the higher levels of government. (Granted, I'm not sure tweets and blogs should be having much influence on our elected leaders.)


Tweets and blog posts are considered "news" these days

I agree with you that tweets and blog posts and things people scribble on their FaceBook walls do not have much persuasive impact, but they do get picked up and move around very quickly and from all corners, including ones where reporting is otherwise unlikely to occur. So in particular, one big problem with making a shutdown "newsworthy" is that it is inherently pretty boring because by definition not much is happening. But if people start retweeting their every inconvenience and irritation (and real negative outcomes), this helps turn a very boring and uneventful news stream into a pretty much endless series of events, some of which the press will find easy enough to pick up on, but even if there is no main stream reporting, it will be much clearer what a pain in the rear this is getting to be much more quickly than back in the day when you had to write a letter to the editor or something.


2-3 months??

Three months would be over triple the length of the previous record--the longest shutdown recorded so far is 21 days.

Oklahoma's Tom Coburn predicts the GOP will fold after 8 days. I think if it goes any longer than that, the House will start to be in play next November.

http://www.politico.com/story/2013/09/tom-coburn-government-shutdown-974...


0% Chance of avoiding shutdown

Obama has blinked several times in the past. The current situation is simply that the GOP is going to go all in to find out if he has the balls to stay the course.

A couple days of shutdown is just a minor inconvenience. It's definitely worth it to the wingnuts to find out if Obama will hold his ground or not. It's definitely worth it to the Democrats to expose the full crazy of the Teabaggers, and it's imperative for Obama to change up his negotiating strategy with these idiots.

When everyone wants the same thing - it's going to happen.


I agree with LosGatosCA:

I agree with LosGatosCA: there is 0% of avoiding a shutdown, because one of Boehner and Reid would look much worse if a shutdown is avoided. My guess is that Boehner wants to show the tea-partiers that the Democrats will not fold against their explicite predictions, to say to them: "Now what, you geniusses? Let me steer the ship, OK, and you go to the back benches and keep your big mouth shut this time?"


PBO Blinked?

I've seen him make reasonable compromises and adapt to new opportunities. I can't think of times in which he's backed down or admitted to bluffing.

(Perhaps in my view what are reasonable compromises are blinks in yours. Personally, I expect some give and take in problem solving.)

That said, should we not listen to the message that PBO intends to kill the strategy of messing with funding and the debt ceiling as a political tool?

There comes a time with each youngster at which we simply say "tantrums will no longer get you what you want". I think I'm hearing that message now.

Very clearly PBO has said that he will not compromise.

He's said that if Republicans want changes in funding they can seek it via normal budget negotiations, but threatening the country's economy with default will no longer work.

Obama seems to me to be a person to be taken seriously.

Ask Osama what his view is....


Thanks GOP/TEA Party

I am already down 5% from the pay freezes and at least a few thousand from no bonuses plus furlough. I don't ever want to hear a GOP/TEA party folk question why govt civilians won't support them. Why not defund HHS only! Why make so much collateral damage! At some point moderate Dems will capitalize on folks like me and swing the House.... Because these have been the most ridiuculously stressful times. I don't understand the end game here... and its not like there are counteroffers here. Would the GOP trade sequester relief for the ACA delay?

Congress has been a circus for 3 years....


Forget shutdown: the debt ceiling is the ball game

Can anyone - Stan, anyone - paint a plausible scenario in which the debt ceiling is raised in the next 3 weeks?

I have three possible ways: a) Obama caves (unlikely, but non-zero probability) b) Boehner brings a resolution to the House floor, it passes with Dem support and a handful of GOP reps, Boehner tossed as Speaker (unlikely, slightly higher probability) or c) House GOP, convinced it has leverage, takes US into default.

Anyone?


another debt ceiling option

I see another option re debt ceiling: President Obama takes both of the actions suggested two years ago. He has the Treasury strike twenty $1 trillion coins and deposit them in the Federal Reserve. He also gets the Dept. of Justice to release an opinion that the 14th Amendment renders the debt ceiling law unenforceable. The House impeaches him in parallel with finding a Federal court which will grant them standing on the debt ceiling. The Senate acquits. This Supreme Court likely finds against him, which is why he has to take both options. But these actions get us past the abyss.


debt ceiling will get more absurd

Another possibility is that on the eve of default the President directs the Treasury to continue paying the bills, prevents an economic crisis and forces a constitutional crisis.

And with the government still shut down, the Tea Party dominated congress will impeach the President for paying the bills of that they themselves have previously approved.


Money talks, and its view on the debt ceiling will be heard

To date, the business and financial communities (aka "Money") has not really treated a debt ceiling breach as a serious issue. Now, having seen just how dysfunctional Congress has really gotten, to the point where the Speaker could not get a vote on his (really flawed and silly) debt ceiling bill to the floor, I think they will begin to pick up their phones, send some pointed email, and get in touch with their lobbyists, communicating the very simple proposition:

If the debt ceiling is not raised, anybody held responsible for not getting this done gets zero in campaign contributions, and potentially less than zero (this could flip contribution patterns, for sure). Since the GOP probably only needs 25 people in fear of their careers to join Democrats in the House to push a discharge petition through, I am pretty confident this will happen. I doubt this will help the Speaker's career any, but so it goes.


re: debt ceiling

If the GOP/TEA party forces a shutdown now, I don't think debt ceiling will get more absurd. Boehner was trying to push this fight off until the debt ceiling; but the TEA party forces have chosen to dig their heels in now. Everything hinges on how many Democrats they can swing into the "we'll delay Obamacare by a year" camp.

Don't know what GOP/TEA party will do if they can't swing any Democratic Senators with the delay carrot. Would Boehner bring a clean CR bill up (I would think he would because that's the only thing left to bring up)? Would the Democartic Represenatives be able to push a discharge petition?

Regardless, this has nothing to do with 90% of the government, so why are GOP/TEA folks screwing with the 90% of government they should be "happy" about (the sequestered discretionary spending). In fact, from their policy standpoint, discretionary spending is the only area they've gained in 3 years!


And Thomas has the re-amended CR up right now

So this is a bit difficult to parse, since there are two amendments that both appear to strike the same language out of the Senate version and do rather more things differently than what was being discussed yesterday. Somebody with more experience understanding amended bills might want to tell us what the actual resulting bill will look like.

http://www.gpo.gov/fdsys/pkg/BILLS-113hjres59eah/pdf/BILLS-113hjres59eah...


Actual changes made by the House Amendments to the CR

So I figured it out. The two House amendments both replace essentially the same piece of the CR as amended by the Senate, but before you hit Section 129, the only change is to the date of the CR, which they move back to December 15, 2013. I could be wrong, but that is unlikely to be a deal breaker.

In section 129ff, things get more interesting.

The first amendment replaces section 129 with a new version that additionally deauthorizes the Eisenhower Memorial Commission during the CR. (For those outside the beltway, the design of this memorial has been a political football for some time.)

The new Section 130 appears to allow 2000 additional aliens who helped us in Iraq to get special immigrant status, although they have to apply before December 15, 2013.

The new Section 131 (but see below) repeals the medical device excise tax and makes other adjustments in Chapter 32 of the Internal Revenue code of 1986, presumably to make this happen correctly.

Now, the second amendment wades in and amends the same sections of the senate amended bill, and changes nothing else. Now, as far as I understand this, the Section 131 repeal of the medical device tax introduced in amendment 1 is still in the bill, but would be renumbered to Section 132.

The new amended Section 132 delays the implementation of the ACA by one year and prevents the requirement that group health plans cover contraception and appears to allow health care providers to object to providing contraception based on religious or moral grounds until 2015 and plays with the tax code in ways that I assume are related to the ACA for calendar year 2014 and finally defunds the Patient Centered Outcomes Research Trust Fund for 2014 (no new money, and no spending any money in the trust fund.

I do not recall either of the last two provisions being mentioned yesterday or last night when the bill was being debated. In any case, I don't see any chance that these things will actually happen.


Actual changes made by the House Amendments to the CR

So I figured it out. The two House amendments both replace essentially the same piece of the CR as amended by the Senate, but before you hit Section 129, the only change is to the date of the CR, which they move back to December 15, 2013. I could be wrong, but that is unlikely to be a deal breaker.

In section 129ff, things get more interesting.

The first amendment replaces section 129 with a new version that additionally deauthorizes the Eisenhower Memorial Commission during the CR. (For those outside the beltway, the design of this memorial has been a political football for some time.)

The new Section 130 appears to allow 2000 additional aliens who helped us in Iraq to get special immigrant status, although they have to apply before December 15, 2013.

The new Section 131 (but see below) repeals the medical device excise tax and makes other adjustments in Chapter 32 of the Internal Revenue code of 1986, presumably to make this happen correctly.

Now, the second amendment wades in and amends the same sections of the senate amended bill, and changes nothing else. Now, as far as I understand this, the Section 131 repeal of the medical device tax introduced in amendment 1 is still in the bill, but would be renumbered to Section 132.

The new amended Section 132 delays the implementation of the ACA by one year and prevents the requirement that group health plans cover contraception and appears to allow health care providers to object to providing contraception based on religious or moral grounds until 2015 and plays with the tax code in ways that I assume are related to the ACA for calendar year 2014 and finally defunds the Patient Centered Outcomes Research Trust Fund for 2014 (no new money, and no spending any money in the trust fund.

I do not recall either of the last two provisions being mentioned yesterday or last night when the bill was being debated. In any case, I don't see any chance that these things will actually happen.




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