As the federal government’s funding deadline approaches, lawmakers are scrambling to avoid a shutdown that could disrupt vital services and harm the economy. However, deep divisions over key issues such as the debt ceiling, infrastructure spending, and abortion rights threaten to derail the negotiations and trigger a crisis.
A government shutdown occurs when Congress fails to pass, or the president vetoes the appropriations bills that fund the operations of federal agencies and programs. Suppose no agreement is reached by midnight on Sept. 30. In that case, at the end of the fiscal year, most non-essential government activities will cease, and hundreds of thousands of federal employees will be furloughed or forced to work without pay. Some critical functions, such as national security, law enforcement, and health care, will continue, but at a reduced capacity or with delayed payments.
The consequences of a shutdown could be severe, especially amid the ongoing COVID-19 pandemic and the recovery from natural disasters. According to the Congressional Budget Office, a shutdown could reduce the gross domestic product by 0.5 percentage points in the fourth quarter of 2021 and cost the economy $10 billion weekly. Moreover, a shutdown could undermine public confidence in the government’s ability to manage its finances and address the nation’s challenges.
The main obstacle to reaching a deal is the partisan standoff over the debt ceiling, which is the legal limit on how much the government can borrow to pay its bills. The Treasury Department has warned that it will run out of cash and extraordinary measures to avoid default by mid-October, unless Congress raises or suspends the debt ceiling. However, Republicans have refused to cooperate, arguing that Democrats should use their slim majorities in both chambers to pass a debt ceiling increase on their own, as part of their $3.5 trillion reconciliation package that aims to expand the social safety net and combat climate change. Democrats, on the other hand, have insisted that the debt ceiling is a bipartisan responsibility and have accused Republicans of playing a dangerous game of chicken with the economy.
Another source of contention is the fate of the bipartisan $1.2 trillion infrastructure bill that passed the Senate in August, and the reconciliation package that is linked to it. The infrastructure bill, which would fund roads, bridges, broadband, and other projects, faces opposition from some progressive House Democrats, who want to ensure that the reconciliation package, which would fund child care, health care, education, and clean energy, also passes. However, the reconciliation package faces resistance from some moderate Senate Democrats, who are concerned about its size, scope, and impact on the deficit. The House Speaker, Nancy Pelosi, has pledged to bring both bills to a vote by September 27, but it is unclear if she has the votes to pass them.
In addition, the negotiations are complicated by the controversy over abortion rights, following the enactment of a restrictive law in Texas that bans abortions after six weeks of pregnancy and allows private citizens to sue anyone who aids or abets an abortion. Democrats have vowed to protect women’s reproductive rights, and have included provisions in the reconciliation package that would expand access to health care and family planning services. Republicans, however, have denounced the Democrats’ proposals as radical and immoral, and have threatened to use procedural tactics to block them.
With so many issues at stake, and so little time to resolve them, the prospects of a government shutdown are growing. Both parties have blamed each other for the impasse, and have appealed to their respective bases for support. However, the American public, which is already weary of the pandemic and the political polarization, may not be so forgiving if the government fails to function work by early January.