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By October 1st Congress must pass legislation to fund the annual expenses of the federal government for the next fiscal year. If it does not, a government shutdown will ensue where many government operations will cease, although programs that do not receive their funding directly from the Treasury, provide for national defense, or conduct essential services will continue. Speaker of the House John Boehner (R-OH) hoped to avoid a showdown with the White House in what would be the first fiscal showdown since 2011, but Tea Party Republicans have pressured he and other members of the House Republican leadership to pass a spending measure that would fund the government in the short-term and deny funding for Obamacare, which is set to begin on October 1st with the opening of signups on state insurance exchanges. President Obama and Senate Democrats argue that the spending measure passed by the House is a non-starter and if a compromise is not reached by October 1st it would result in the first government shutdown since 1995-1996. The battle over the shutdown also touches on the nation’s credit rating, since the debt ceiling will have to be raised to avoid a potentially damaging default.
This topic brief will explore the issues behind the latest fiscal battle between House Republicans and President Obama, public opinion on the subject, and some of the implications for this battle for both sides of the aisle.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
The 2013 Fiscal Battle
One of the reasons for large Republican gains in the House in 2010 was the state of the U.S. economy and alarming deficits on Capitol Hill. Under President Obama, federal deficits of over $1 trillion have been the norm, with last year’s fiscal deficit clocking in at $1.1 trillion. The call for fiscal austerity was laughed at by Democrats, who pointed to the deficits of President George W. Bush. It should be noted, though, that the large amount of fiscal spending during the Bush administration contributed to the rise of the Tea Party within the Republican Party, which is demanding strict fiscal austerity and significant cuts to government programs to avoid America’s slide toward Greece. This economic philosophy was echoed by Mitt Romney during the 2012 presidential election, but voters rejected that strategy by re-electing President Obama to a second term. Despite this, the Republican leadership is loathe to continue signing off on deficit spending because the active base of the party finds it unfavorable and Republicans that continue voting for federal spending could find themselves in a bitter primary race.
Despite these concerns, the biggest issue in the latest battle is over Obamacare (or the Affordable Care Act if you prefer). President Obama’s health insurance package, which barely squeaked through Congress at the end of 2009, has been the top target for Republicans from the time that he introduced it. At the time, Democrats controlled the House and had a filibuster-proof majority in the Senate. Thwarted in blocking the bill legislatively, Republicans hoped that the Supreme Court would find the bill unconstitutional. This did not happen either as the Court ruled last summer that the law was constitutional. Mitt Romney campaigned to repeal the legislation during the 2012 election, but failed to win. Still, far right-wing Republicans are undaunted and have continued pushing for the repeal of their legislation. Unilateral delays of the legislation, which are of dubious constitutionality, including the employer mandate and the federal government’s inability to meet dozens of deadlines on the law have strengthened the hand of conservative forces that are pushing for the law’s repeal. In fact, the one year delay of the employer mandate has strengthened Republican arguments for delaying the individual mandate within the legislation for a year. The logic of the Republican argument is that if employers do not have to provide health insurance, then how can employees on fixed incomes be forced to pay for it? The House vote against Obamacare, according to the Chicago Tribune of September 20th, is the forty-second such vote that House Republicans have taken and some Republicans are growing tired of it, as evidenced by Representative Peter King (R-NY) arguing that the current strategy is a joke. However, as the Tribune noted, King still voted for the spending measure. Only Representative Scott Rigell (R-VA) voted against it because he opposes current levels of military spending and he is already being blasted by conservative groups for siding with the President.
In an attempt to delay the legislation, Republicans in the House passed a bill last Thursday that would fund the government until December 15th , which would avoid a government shutdown, but also added to the measure the defunding of Obamacare. This is not a direct attempt at repealing the Affordable Care Act, but instead is seeking to delay its implementation by a year. Political observers view this as a poison pill, since Senate Democrats have already voiced their opposition to the legislation and have said that it is dead on arrival in current form. It is also unlikely that President Obama will cede to a delay in his health insurance legislation, since this year he has already lost battles on gun control, immigration reform, and other parts of his domestic agenda. Giving in ground now, in the wake of the Syria foreign policy debacle, would accelerate President Obama becoming a “lame duck” president and might weaken his support among liberals, who he needs to turn out to polls in the 2014 midterms.
Prior to passing the House legislation, Boehner and House Majority Leader Eric Cantor (R-VA) tried to work out a compromise within the Republican Congress, which is evidence that they view a potential government shutdown as destructive. The New York Times of September 12th explains that Cantor’s plan called for a two prong plan to submit a stopgap spending bill to keep the government running through December and then another resolution that would defund Obamacare. Cantor’s legislation would have presented Democrats with the option of ignoring the resolution on Obamacare while passing the short-term spending measure that would have averted a government shutdown. However, Tea Party Republicans revolted against this plan and the Economist of September 21st explains that 74 of the 233 House Republican measures have sponsored a bill to wipe out funds for implementing Obamacare next year. To pass Cantor’s version of the bill, Boehner would have needed to rely on Democratic support, which was likely not going to come to him in large numbers and trying to get their support would lead to inter-party squabbling that could end his tenure as Speaker of the House.
What is likely to happen at present is that the Democratically controlled Senate is likely to vote on the short-term spending measure without the Obamacare defunding attached and send it back to the House, where Republicans are likely to reject it. If this occurs, then a government shutdown would be the end result. Another problem could occur if Democrats in the Senate attempt to modify the short-term spending measure by adjusting its funding levels. The spending measure pushed by the House kept funding at sequestration levels. Sequestration was an across-the-board spending cut imposed on federal programs after the 2011 debt ceiling showdown between House Republicans and the Democratic Senate and President Obama. Republicans favor it because it bolsters their fiscal austerity argument, but Democrats argue that the cuts have been unwarranted and harmful to millions of Americans. If the Senate votes to fund programs at non-sequestration levels, the House is definitely likely to reject that, which would lead to another source of deadlock.
The debt ceiling is another pressing issue on the minds of House Republicans and this is an issue looming in the background over the latest government shutdown battle. Liberal columnist Eugene Robinson writes in the Washington Post of September 19th that the debt ceiling will need to be raised before October 18th, which is when the Treasury will likely reach its borrowing limit. The current government borrowing limit at $16.7 trillion and the battle over it in 2011 rattled fiscal markets. The Economist of September 21st discusses how the debt ceiling is the legal limit for federal borrowing and the Treasury currently borrows nineteen cents of every dollar it spends, so Congress must raise the debt ceiling for the government to pay its bills. What many Americans do not realize, though, as the Christian Science Monitor of September 20th reveals is that raising the debt ceiling does not mean voting for more debt. In fact, raising the debt ceiling merely pays for debts that have already been incurred by the government. The problem in the current climate is that the debt ceiling is viewed by extreme fiscal conservatives and their base as voting to raise the national debt and that logic is what is leading to the fiscal battles on Capitol Hill at the moment. The Washington Post of August 28th argues that the House will need about $700 billion to raise the debt ceiling through the 2014 midterms or would need to raise it by $1 trillion to get through the next presidential election in 2016. These levels are also subject to the sequester remaining in place and the government not getting involved in another massive expenditure. Reuters on September 19th revealed that the likely approach Republicans will take on the debt ceiling is to tie their vote to raise it to approval of the Keystone oil pipeline project, which has been delayed for five years as the Obama administration reviews its environmental impact, entitlement and tax reform, and energy initiatives. The problem with this is that President Obama has sworn off negotiating over the debt ceiling and Senate Democrats have thrown in the towel as well, saying that it is the duty of the House to raise it. Republicans attaching conditions to a debt ceiling increase is not new, as anti-Vietnam War legislators during the 1960s and 1970s attempted to end the war by attaching demands to debt ceiling bills. Therefore, another lengthy debt ceiling battle might be on the horizon and all of this will be very difficult to solve if there is a government shutdown.
Public Opinion
It is not surprising that the dysfunction on Capitol Hill, which voters inaugurated in 2010 by voting in a Republican House, is wearing on Americans sense of confidence about their government and elected officials. President Obama’s recent approval ratings are below 50%, with most polls placing him between the 45-48% range. Congress’s approval rating is much worse, with only 9% of Americans approving of its leadership in a recent Economist/YouGov survey. According to that same study, only 30% of Americans believe that the country is headed in the right direction. All of this evidence suggests that President Obama might be somewhat unpopular, but Congress is even more unpopular and in general the country believes that the leadership it is getting on Capitol Hill on a host of issues ranging from Syria to taxes to government spending is less than stellar. The wide gap between Congress’s approval rating and President Obama’s, though, does give President Obama some maneuvering room because it suggests a government shutdown would be blamed more on Congress, which is what occurred in 1995-1996. The government shutdown during that period, launched by Congressional Republicans under Newt Gingrich’s leadership, hurt the Republican brand and likely contributed to President Bill Clinton winning re-election in November against former Senate Majority Leader Bob Dole.
On the issue of Obamacare, the public has never shown a great deal of enthusiasm for the legislation, with more Americans in polls opposing it than supporting it. Republicans seized on this anger and used it to win control of Congress in 2010 and Scott Brown in Massachusetts used it to briefly capture Ted Kennedy’s old Senate seat in a special election, which he subsequently lost to Elizabeth Warren in 2012. The problem with deciphering public support for this issue is that it depends on how polls ask the question. If Americans are asked if they favor legislation that would grant more health coverage to the poor they are likely to support it, but when they are asked if they want the government presiding over their healthcare decisions they are more likely to oppose it. The public is generally confused about what Obamacare does and some parts of the legislation, like extending the time that young adults can be on their parents health insurance, have proven quite popular. The lack of understanding about the legislation can be tied to the federal government’s inability to meet deadlines and inability to confront conservative attacks about “death panels” and government intrusion.
On the debt ceiling, public opinion is just as murky. The Los Angeles Times on September 20th explains that the battle to raise the debt ceiling (unsurprisingly) divides along political lines with two-thirds of Republicans opposing an increase, two-thirds of Democrats supporting an increase, and independents almost equally divided (48% support vs. 46% oppose) on the issue. The Christian Science Monitor adds more depth to these findings by pointing out that a recent Washington Post-ABC News poll finds that 43% of Americans do not want to raise the debt limit and 73% of Americans think that going into default by not raising the debt ceiling would do serious harm to the economy. Most surprising, 26% of the public shares both of those views, meaning that some Americans do not want to raise the debt ceiling despite the fiscal damage that it would do the economy. As that same article goes on to explain, some political commentators find polls on the debt ceiling useless since other polls show that a large number of Americans do not understand fiscal policy and concepts like the debt ceiling, default, bond markets, or what it means for the United States to uphold the full faith and credit of the constitution. These commentators find the recent political debates over the debt ceiling dangerous and irrational, but the polling by Washington Post-ABC finds that some Americans are taking fiscal issues seriously and are willing to endure serious pain if that is what it takes to get America’s finances into the black.
Implications
The immediate issue that has to be addressed is avoiding a government shutdown. The Chicago Tribune article cited earlier says that there is a political dimension to the latest showdown over Obamacare since it appears that the Republicans want all sitting members of Congress to vote on how they feel about it before the 2014 midterms. Since Democrats are defending more seats in the Senate and some of them, like Kay Hagan (NC), Mary Landrieu (LA), Mary Pryor (AR), Tim Johnson (SD), and Mark Begich (AK) are in Republican states a vote on the recent spending measure could be used against them by Republican challengers. This aside, it seems as if holding a vote like this is an awful political stunt to play when a government shutdown would be the consequence. Politico on September 12th writes that House Republicans are badly fractured on spending and cannot agree on whether to keep spending at current levels, raise it, or cut it further and implies that these divisions are undermining Boehner’s leadership. The divide within the Republican Party also fails to express a coherent message to voters, especially when more conservative party members like Senator Ted Cruz (R-TX) get more media attention. The Washington Post on September 17th explains that the conservative Wall Street Journal’s opinion-editorial page last week came out against a government shutdown, adding its voice to the ideological battle over spending that is tearing the modern Republican Party apart.
A government shutdown could boomerang on the Obama administration. Republicans are up in arms about his unwillingness to negotiate on the issues revolving around the current government shutdown and his public comments that he will not engage in further discussions on the debt ceiling. Last week’s media was filled with conservative articles and speeches about how President Obama is willing to negotiate with Vladimir Putin on Syria but is unwilling to negotiate with House Republicans. During his time in office, President Obama has not fostered good relationships on Capitol Hill, which is in stark contrast to his immediate predecessors, Clinton and Bush 43, that had to work within a divided government at some point during their presidency (for Clinton it was six years and for Bush 43 it was almost three and a half). One could argue that President Obama has encountered much more heated opposition on his programs and more obstruction than either Clinton or Bush, but at the same time he is the executive figure of the nation and an unwillingness to involve himself in these debates may be taken as a sign of apathy by the American public. President Obama has blasted House Republicans for obstruction in speeches as part of a public relations offensive in order to avoid a government shutdown, but there are Democratic and Republican voices that say he needs to be doing more behind the scenes negotiating if he wants to get his way. Some have questioned whether a delay in Obamacare’s implementation might actually be better since it would allow the federal government to get its bureaucracy in order to better administer to the program and better assess its economic impact. The Economist of August 21st offered a small piece on Obamacare’s economic impact and raised concerns that employers are moving employees to part-time work to avoid the fifty employee threshold that they have to offer health insurance. Labor unions are also expressing concerns that their health packages may be imperiled by new taxes for generous health plans that begin in 2018 and they are similarly concerned that the move of employees to part-time work may hurt the forty hour week that most Americans enjoy at present. Still, it is unlikely that the Obama administration will cave on a delay for the political reasons mentioned earlier in this brief.
The debt ceiling is the more dangerous of the two issues that presently divide House Republicans and the Obama administration. Reuters on September 19th explained that during the last debt ceiling battle the U.S. stock market suffered large losses, with stocks on the Dow Jones Industrial Average falling by 16.9%. The United States has no choice but to raise the debt ceiling because not doing so would imperil the nation’s credit rating and those who hold U.S. government debt. Without a solution there could also be a constitutional crisis because during the 2011 showdown President Obama entertained the idea of raising the debt ceiling unilaterally, saying that this would be legally justified under the Fourteenth Amendment. Section Four of that amendment reads “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” President Obama’s reading of the amendment’s “shall not be questioned” provision is that if Congress failed to raise the debt ceiling then he would need to make sure that America’s debt was serviced. He backtracked off of this after White House lawyers said that interpretation would not pass constitutional muster if challenged. Still, a new debt ceiling battle, especially if it becomes stalled, could result in a constitutional crisis regarding presidential authority and make the current fiscal mess look like a walk in the park.