Volume XVIII No. 39

Like two gunfighters at the OK corral, House Republicans and Senate Democrats are in the final stages of the shootout over the government shutdown. And taxpayers and the economy are caught in the crossfire.

The fiscal year ends midnight on Monday, and absent new funding legislation the government will shutdown starting Tuesday. Last week, the House passed their continuing resolution to fund government through December 15, while also defunding the Affordable Care Act (aka Obamacare). The Senate countered today, amending the legislation to fund government through November 15.  Not surprisingly the Senate did not defund Obamacare.

The ball is back in the House’s court. And while House leadership has indicated they aren’t going to just swallow the Senate bill, it’s pretty obvious Speaker Boehner doesn’t know which way to go: what’s in, what’s out, funding levels, length of time, defunding or delaying Obamacare.

All the while, the country is facing the first government shutdown since 1996 (it started in 1995, but continued into 1996), and no one really knows what its economic impact would be. According to the experts, it could be a blip or it could be the coming of the four horseman of the economic apocalypse (or at least the first one or two). The extent of the damage depends somewhat on how long it drags on, and whether the markets view it as a precursor to a fight over raising the debt limit – allowing the Treasury to continue to borrow after October 17^th when the statutory limit on debt is reached.

After the House acts, which could be this weekend or Monday, the Senate has to have their say. Even if they want to accept and approve the House bill, the Senate is not known for speedy action. If one Senator disapproves, the legislation can’t move by “unanimous consent” and the laborious, possibly lengthy, floor proceedings start.

Before all of that, ther's one thing that the House should fix over the weekend. If the spending levels for both the House and Senate continuing resolutions are extended over a full year, they are not compliant with the budget caps provided for in the Budget Control Act (BCA) of 2011. In subject funding areas, the spending cap is $967.5 billion, and the bills provide $986.3 billion to those areas on an annual basis. The resolutions also violate the mandate that defense and non-defense must share the sacrifice. While non-defense spending is a little more than $1 billion under the capped amount, the defense side is $20 billion over the cap. The extra spending results in – you guessed it – the across-the-board cuts known as sequestration. Senate Appropriations Committee Chair Mikulski’s (D-MD) answer for that is to suspend sequestration for a couple years. It may be a convenient answer, since Congress has demonstrated no ability to make tough decisions, but that is no way to get our country’s fiscal house in order. Tough decisions do need to be made.  Lawmakers should stick to the agreed up on caps established in law unless they adopt equivalent deficit reduction measures to offset them. In fact, starting in Fiscal Year 2015 the capped level of government funding will go up each year until the BCA expires in 2021.

Congress needs to get over itself and stop preening and pandering their respective bases and do what they are sent to Washington to do. Make a deal, find solutions — govern. A shutdown benefits no one. It doesn’t resolve budget issues, it doesn’t stop Obamacare, it’s more of a hostage taking or a war of attrition. The country needs action.