We are on the edge of our seats waiting to see if Congress can complete a Hail Mary pass to keep the government running and give lawmakers time to pass the dozen annual spending bills.  The Senate has the ball and Majority Leader Chuck Schumer is lined up in the shotgun position, hoping to connect on a last-minute six-week Continuing Resolution. TCS star players Autumn Hanna and Josh Sewell join Steve Ellis on the sidelines with expert analysis and color commentary.

Episode 54: Transcript

Announcer:

Welcome to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending, and tax issues facing the nation. Cut through the partisan rhetoric and talking points for the facts about what’s being talked about, bandied about, and pushed to Washington. Brought to you by Taxpayers for Common Sense. And now the host of Budget Watchdog AF, TCS President Steve Ellis.

Steve Ellis:

Welcome to all American taxpayers seeking common sense. You’ve made it to the right place. For over 25 years, TCS, that’s Taxpayers for Common Sense, has served as an independent, nonpartisan budget watchdog group based in Washington DC. We believe in fiscal policy for America that is based on facts. We believe in transparency and accountability because no matter where you are on the political spectrum, no one wants to see their tax dollars wasted.

We are on the edge of our seats waiting to see if Congress can complete a Hail Mary pass to keep government running and give lawmakers time to pass the dozen annual spending bills that fund government. The Senate has the ball, and majority leader Chuck Schumer is lined up in the shotgun position, hoping to connect on a last minute, six-week continuing resolution. Joining us on the sidelines with expert analysis and color commentary are TCS star players, Autumn Hanna and Josh Sewell. Enjoying the game?

Josh Sewell:

No, this is worse than Super Bowl LV.

Autumn Hanna:

Looking forward to the discussion, Steve.

Steve Ellis:

So Josh, when you talk about Super Bowls, you need to do that in the Roman numbers or whatever, Roman numerals. But I assume that’s one that the Kansas City Chiefs lost.

Josh Sewell:

Yeah. It was the one that was rigged against the Chiefs, yes.

Steve Ellis:

All right. Okay. We’re talking about this in football terms, but Budget Watchdog AF faithful, let’s be clear. A shutdown is a costly fumble that achieves nothing and wastes time and taxpayer’s cash, as you’re soon to hear. Podcast listeners, things are really fluid and rapidly changing, but it could appear that the legislative log jam has loosened and appropriations bills and continuing resolutions are moving. Or are they?

Recognizing that everything can change between now and the start of the fiscal year on Sunday, October 1st, Autumn, let’s start with the House. What’s the state of play?

Autumn Hanna:

Well, Tuesday night, the House approved a rule to govern debate and move forward with defense, home security, agriculture and the state foreign operations spending bills. And they debated ag until 3:00 AM Wednesday morning and went back at it at 9:00 AM with defense.

Steve Ellis:

So they’re speed legislating?

Autumn Hanna:

But to no end. Even if they passed the four bills, and that’s a big, if the war was approved on a 216 to 212 vote.

Steve Ellis:

That’s not a lot of room for error.

Autumn Hanna:

No, it isn’t, Steve. And there’s no legislative way they could pass the four bills, get them over to the Senate, have them approved and sent to the president for signature before the end of the fiscal year. And they still wouldn’t fund all of government.

Steve Ellis:

And of course, the Democrats are in the majority in the Senate and the president is a Democrat, so they’re not just going to sign off on what the House Republicans are passing, right?

Autumn Hanna:

Especially since the bills have gotten more conservative with a lot of hot button issues. So this is a sideshow.

Steve Ellis:

Okay, I’ll bite. So what’s the real show? What’s really happening on the gridiron?

Autumn Hanna:

Actually enacting a CR to keep government running and avoiding a shutdown. In other words, what the Senate is doing.

Steve Ellis:

Okay, let’s elaborate. What is the Senate doing, Autumn?

Autumn Hanna:

As you mentioned at the top, they have moved forward with a CR that will keep government funded for six weeks. It is relatively clean, meaning that not a lot of anomalies that adjust new funding levels are included. The most notable thing is $6 billion in assistance to Ukraine and $6 billion for FEMA to replenish the disaster relief fund.

Steve Ellis:

And we’ve talked about the DRF before. I mean, this is one that’s been exhausted by all the disasters that have occurred and it was actually running on fumes here at the end of the fiscal year, so that’s really important. Autumn, then they passed that and the Senate approved it by a filibuster-proof majority of 77 to 19. And then they just send it over to the House for approval. Easy-peasy, right?

Autumn Hanna:

Actually, that’s wrong. No.

Steve Ellis:

Okay, fill me in here.

Autumn Hanna:

Well, it should be easy-peasy, as you say, but the CR is likely going nowhere in the House. If it came up, it would pass by a wide margin, but it’s unlikely Speaker McCarthy is going to bring it up because a vocal but small, but critical number of House Republicans would be up in arms if McCarthy were to bring this to the floor. And it may cost him his speakership.

Steve Ellis:

So no profile and courage moment there. And I actually saw right before we went to tape that he had reconfirmed that he would not bring it to the floor. And so that is … it looks like we are really heading towards a shutdown.

I’m your host, Steve Ellis, and you’re listening to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending, and tax issues facing the nation. We continue now with TCS Vice President, Autumn Hanna, and TCS Senior policy Analyst, Josh Sewell.

All right, Josh, I’m going to bring you in here. And so you’re a grizzled veteran of the budget gridiron. Give us the Cliffs notes here. Disaster?

Josh Sewell:

Disaster or not, I think it depends on how long this thing lasts. A shutdown is going to be a major inconvenience for some folks, and maybe a minor one for many of us. But frankly, many federal workers will still be working. Others won’t. And so the fact is they all will eventually get paid. And so whether it’s a disaster just depends on how this latest shutdown unfolds. And I know that’s a bit of an amorphous answer, but it all depends on the details. And also, frankly, shutdowns are apparently not rare anymore.

Steve Ellis:

So not rare. So what are some of the more recent shutdowns that we’ve had, and even for how long, and what have been some of the impacts?

Josh Sewell:

Yeah. I mean, the first shutdown that I remember was back in the 90s, in 1995. But in recent memory, it really was almost … it was 10 years to the day, almost, when we had our first shutdown in this new era of shutdowns. And that lasted … the one that happened in 2013 going into fiscal year 2014 was, I think it was 16 days, from what I can remember. And then we had another one, a little hiatus for a while, that occurred under the Trump administration, which it had two major ones. And the first happened in early 2018, and technically for two days, was the one that happened then. And then the big one happened at the end of that congress when Democrats were about to take over after the 2018 election, and it ended up being 34 days. Which in DC, felt like an eternity.

Steve Ellis:

Yeah, 34 days, I mean, more than a month. And that’s a lot of people being paid for a lot of work that they didn’t do. And not at their fault. It’s the work that Congress wasn’t doing.

Josh Sewell:

Yeah. And it was one of those things where it was, frankly, irritating. I don’t know the best word to use for it for those of us who care about fiscal responsibility and just want the government to work, to work well. We’re happy with certain things not being done, but to just sit around and not get anything for the money we end up spending was really frustrating.

Because the thing is, everyone’s going to get paid. It’s not just that we think it’s going to happen, it’s the law. It’s actually mandated that federal workers get back pay because no fault of their own. And so we’re not getting anything. So we’re paying all this money and we’re not getting anything in return, those government services that we all pay for.

Steve Ellis:

So, yeah. So there’s no savings even though people are talking about that’s what they’re fighting for, right?

Josh Sewell:

Yeah, exactly. There’s an actual fiscal cost. There was an analysis done by either GAO or CBO, one of these agencies that actually do real analysis. And they found that that 34-day shutdown had a $11 billion cost, I believe it was. And $11 billion isn’t a lot, I know, compared to say, a $6 trillion federal budget or a $20 trillion economy. But it’s $11 billion and we got absolutely nothing for it. And so you’re just going to have the same issue again under this shutdown, and perhaps for longer.

Steve Ellis:

Well, yeah. And we know $11 billion, it’s more than the annual budgets of some agencies, like the EPA. And so I mean, if somebody’s saying that it’s chump change, well then they’re not really serious about fiscal reform and savings.

Josh Sewell:

No, exactly. And I think the other question that I would have is if it was 16 billion or even $160 billion, if that was the price we had to pay to move our fiscal ship towards the shores of fiscal responsibility, I’d be happy to pay for that. I mean, I could send government workers away for three months if that’s what it took, but I don’t see that happening. I don’t know what the end game is. And that’s where I’m getting exasperated, is I don’t know what if anything is going to come out of a shutdown, whether it lasts for three days or for three months.

Steve Ellis:

So exasperating, you’re not identifying with the metaphor, the football metaphor that we’ve been using here in talking about fiscal ships, but I’ll let that go.

Another thing, Josh, is they’re obviously, the people who say they aren’t really egging on a shutdown by not supporting a CR, they certainly are. I mean, do they get what they want in the end? I mean, what has the history told us about who wins if there’s such a thing in these shutdowns? Or better yet, I guess it is, who loses?

Josh Sewell:

Yeah, historically there’s been a political cost for the people who are seen as advocating for the shutdown. And it has been Republicans in the past have typically not seen a benefit from this, as they were the party seen as doing the shutdown. Whether that holds now in this current era, I don’t know, but will they get what they want? First of all, what do they want? And I’m not trying to be rude. We actually work with Mr. Biggs and Mr. Perry and Mr. Roy, all these folks who are part of the Freedom Caucus. We work with them on a number of issues. On this particular issue or how those folks and others are approaching it, I don’t actually know what they want because the goalposts are continually moved in this debate. And it’s frustrating for me, I’m sure it’s even more frustrating for Speaker McCarthy.

So will they get what they want? I don’t know what they want. But in the end … I think you and Autumn already covered this. In some respects is, no. The math isn’t there, the politics isn’t there. You can hold out for as long as you want, but you’re not going to change who’s in the Senate. You’re not going to change the fact that it’s a 50/50 Senate and then even the Republicans in the Senate apparently don’t support going back on this debt deal that we had. Which by the way, remember back in June, which was like seven years ago, the spending levels for 2024 were set in that deal.

We almost had a debt ceiling breach. And instead, we had an agreement … we being Congress and the president. Saying, we’ve now set the level of spending we’re going to do for 2024 and 2025, and it’s enforceable. It’s lower than it would’ve been. It’s basically back to 2022 levels, so it’s not an increase. And now they are, again, hiding the ball, moving the goalpost, choose your metaphor.

Steve Ellis:

Right. Well, and just to be clear too, it’s actually even more than a 50/50 Senate. It’s actually a Democratic majority in the Senate. It’s tight, but it’s even a Democratic majority, unlike previous Congress.

So Josh, an L would have real world impacts on many Americans, and starting with military personnel and federal workers. What’s to expect here, Josh? I mean, we talked about how long the shutdown is, and so what are some of those impacts?

Josh Sewell:

Well, that’s one difference between this and the last few shutdowns is that unlike in previous years, the military, as of now, as of since we’re taping this, active duty military will not get paid during the shutdown. Prior to previous shutdowns, either the defense appropriations had already been passed, and so it was other parts of the government that were shut down and not the defense because the bill was done. Or in 2013, literally I think it was two o’clock in the morning the day before. And so by the end of the day, they were able to get it done. There was a separate legislation that said military will get paid, essentially, from another pot of funds. That hasn’t happened, so they won’t get their check.

Now the wrinkle is … I think we looked this up and correct me if I’m wrong. I think it’s on the 13th of October, is when the actual paycheck will go out for the military and federal workers. So even though they would be working and not get paid, the actual paycheck hitting the account is not going to happen for about two weeks. So you have a two-week breathing room in some respects before you actually feel that effect with folks who are, frankly, many of them living paycheck to paycheck. Or at least don’t have a huge nest egg, or don’t automatically get paid, like members of Congress do even during a shutdown.

Steve Ellis:

Right. And that doesn’t even mention the anxiety of knowing that you’re not sure if you’re going to get that paycheck and trying to figure out … read the political tea leaves. Which is not something that they’re really paid to do. In this case, aren’t being paid to do. And that also doesn’t get to all the millions of contractors that don’t get paid even when they end the shutdown.

All right. So Autumn, they talked about savings, and a lot of this is all … and shutdowns typically are wrapped around fiscal issues. But if TCS had the clipboard and you were calling the plays here, how would you advocate some quick strikes to actually get sounder financial footing across the budget?

Autumn Hanna:

Yeah. I think there’s a lot of things, Steve, we would do pretty different. I mean, this system is broken and has been for a long time. We haven’t been able to move regular order bills and really have the debates on sound cuts and decisions that would bring in revenue and eliminate areas where we have waste, fraud, and abuse. Many of which we cover in lots of other podcasts. And even just last week we were talking about raising revenue from oil and gas, where we’re selling federally-owned, taxpayer-owned resources at below market rates, and leaving billions of dollars in revenue on the table for decades.

We’re finally trying to correct some of those practices, but there’s plenty of other examples where we can bring in revenue. And I think you really just want to start having those conversations, real conversations outside of these end game or fourth quarter plays, if we’re going the football analogies here. We can’t ignore the whole rest of the game and then get to the end here and expect to turn things around. So starting with real debate across the federal budget and looking at, in particular, areas that I’ve covered over the years in the energy and natural resource space to bring in more revenue. And cut, frankly, a lot of the subsidies that aren’t necessary.

Steve Ellis:

Yeah. And they’re not going to solve all the problems, but they certainly are going to make it less of an issue and actually move the ball down the field, as you’re saying, Autumn. And then we can try to build and do a bigger sweeps on some of the large-ticket issues. Josh, what are some of your ideas?

Josh Sewell:

Well, I think first of all, we shouldn’t become one dimensional in the way we approach this, and we should use the whole field and all the tools in the toolbox. This debate is over annual discretionary spending. It’s a lot of money. It’s about 1.6 trillion, more or less. And the question is, do you go down to 1.47? But that top line, whether it’s 1.5, 1.6, 1.7, it’s only one third of the budget, two thirds of the budget, $4 trillion … actually, it was at about $4 trillion, last year’s, on mandatory. It’s on the mandatory side, it’s automatic. It’s Social Security, it’s Medicare, it’s the farm bill. It’s things that happen even if we don’t … while we’re shut down, that spending is still either actually going out or it’s set to go out. And it will occur.

And so we have to look at that. And I think … I’m not saying don’t look at the discretionary, but we had this fight. There was some resolution. It wasn’t perfect, but it was resolved to an extent. So let’s move forward. There are other bites of the apple. And this is where I very much disagree with some of the statements from our Freedom Caucus friends, is that this is not the last leverage point for this Congress. This Congress still has a whole other year. It’s a year and what, almost two months? It’s a year and a month and weeks until the next election, which means we have a year and a half almost before the next Congress sits. We’re going to have to deal with other issues. Hey, guess what? The farm bill expires in three days as well. So does flood insurance. So does FAA reauthorization. So we’re going to have to deal with those issues at some point.

And no matter what happens, if you pass a CR … at some point we’re going to have a CR. Then we have, is it through November 17th or is it through December 17th? We’re going to be back in this position again to talk about how do we do the underlying bills? There are more bites of this apple. I don’t know what down we are, but we’re certainly not in the fourth quarter of this issue. And so, move on. Let’s do something else. Let’s debate these other big ticket items where we have an opportunity to save money. Take a little bit of the win, take the three yards we got with the debt deal, and now let’s move and get more yardage so we can get down and score that fiscal touchdown.

Autumn Hanna:

Just to piggyback off a little bit of what Josh is saying here, there are things we can do at different points. And there’s discussions now by a fiscal commission again, looking at how we can tackle the debt issues that we’re facing. And we all have our opinions of those, but there are ways forward. And I brought up regular order appropriations before and process and debate on some of these issues, but I think looking at a fiscal commission could be another way to really hopefully get some good things on the table and start to tackle our issues.

Josh Sewell:

You’re certainly right, Autumn, in that it’s something where ideally something does happen if they do a fiscal commission that looks at Social Security, Medicare, major entitlements, other budget changes and things along those lines. And then it’s, does Congress and the president have the intestinal fortitude to actually push forward with those changes. I mean, we saw that Simpson-Bowles, for instance, the fiscal commission back a decade ago, they came up with recommendations. And some people were opposed to them or concerned about them, but they got bipartisan support in the commission, which included people like Senator Coburn, a very conservative Republican from Oklahoma. But it didn’t really get the backing from President Obama and it didn’t get backing from Congress and it went nowhere.

So it really is … is it going to be where lawmakers have a spine and stand up and push these things forward, recognizing that these are difficult political issues? Sort of like what happened, actually going back … and this is even before my time. But back to Alan Greenspan in the mid-80s on a commission there that helped put Social Security back and made it solvent again. And now we’re facing that same motion. So while commissions often fail and they seem like it’s a punt of the responsibility of Congress, in reality, I think it’s one of the only ways forward at this point.

Yeah, I would agree. I mean, I’m no fan of Congress punting its responsibilities, but this Congress and previous congresses have continually fumbled the ball when dealing with these issues. And so you have to do something different. And ultimately, again, I agree that debt is an important issue, that deficits have to get under control, but you can’t just look at one small part of the budget and not look at the rest. And also, set yourself up in a way where … I don’t know if you can poison the well any more than we already have in this Congress. There’s a lot of animosity. But the only way forward is if we actually get people to really grasp with the big issues and come to a compromise.

And I’m not preaching bipartisanship just to have it. There’s plenty of bad stuff that comes in a bipartisan manner. We can talk about the farm bill all day, if you’d like. But in this area, the interests are too diverse, the costs are too high. Having a all-for-me and none-for-you mentality is not going to work. And so even if I supported everything that they wanted, I don’t think it’s going to work because you have a Senate, you have a president, and we’re stuck with this. And so you don’t go to deficit reduction with the Congress and the president you want to have or you hope to have someday, you go with the one that you have. And so we have to figure out what we can get now, because that’s just what we have to do.

And they all ran for this opportunity. They chose to run for Congress or the Senate, and now it’s time to do your job. We’re happy to help, but we’re not the ones who are actually able to go in there and make those votes.

Steve Ellis:

The hope you have, wish you have is very Rumsfeld-ian of you, Josh. All right. So one of the things that’s big in football now are all the betting. So you all put on your FanDuel hats, your MGM, your DraftKings hats, any of those betting sites, and let’s put your odds on. So what are the odds, Josh, that there is … and I’m coming to you after this, Autumn. So think about it. What are the odds that there’s a shutdown, and how long?

Josh Sewell:

I’m from southern Missouri, so I don’t actually bet, I don’t gamble. But I think the odds of a shutdown are 99.9%. The question is just how long? And I think I’m going to give it 22 days, just because I think they’ll exceed … because they got to do more than what they did under Obama. Just because that’s how it works now. And also, but I don’t think it’ll be much passed when there’s a little bit of that financial pain for folks. But I think nothing changes until there’s actual pain.

Steve Ellis:

All right, Autumn, your prognostication?

Autumn Hanna:

Unlike Josh, I love gambling. I’m a big gambler, but I am not a very good gambler. So I see the odds here though, and I think that Josh is right, that we … and I’ve said it already, that we’re headed towards a shutdown. But I want to be optimistic because I couldn’t work in Washington as long as I have if I wasn’t. So I’m going to say that they can remedy this in a long weekend. No, in a week. I’m going to hope for that, but God keep the hope.

Steve Ellis:

So I’ll channel my inner John McLaughlin and just say the correct answer is 85% chance. Actually, I think it is a 99.9 or 100% chance, and 10 days. All right, finally, I want to get a sense of the Moody out there. Get it, Moody? Moody’s, the rating agency? Well, trust me, they don’t find this funny either, podcast listeners. Josh, how bad is the mood when it comes to evaluating Uncle Sam’s credit score right now?

Josh Sewell:

Well, the other two major credit scoring agencies already downgraded us a while back, one of them. And now Moody, who seemed to have been the most optimistic and the least likely to downgrade the US debt has said … I mean, you shut down and that downgrade’s coming. So the mood is not good.

Steve Ellis:

And as you point out, Josh, it’s not going to get better here. And certainly none of this is addressing the major underlying issues that are driving the deficits and debt. And certainly increasing defense spending, drastically cutting federal agencies is not going to fly. And so it’s just people just whistling in the wind.

I really appreciate both of you joining me here on the podcast today to talk about this very serious issue that we tried to put into a football focus.

Autumn Hanna:

Thanks, Steve.

Josh Sewell:

Yeah, always happy to help. I’m always a team player.

Steve Ellis:

Well, there you have it, podcast listeners. With the final seconds ticking off the clock, the Hail Mary pass is in the air. Will it connect or will there be a fiscal fumble? Stay tuned. This is the frequency, mark it on your dial. Subscribe and share. And know this, Taxpayers for Common Sense has your back, America. We read the bills, monitor the earmarks, and highlight those wasteful programs that poorly spend our money and shift long-term risk to taxpayers. We’ll be back with a new episode soon. I hope you’ll meet us right here to learn more.