Let’s start with the facts. Shortly after midnight on January 20th, a bipartisan group of 49 Senators led by Democratic Leader Schumer (D-NY) voted 49-50 to block action on a Continuing Resolution (CR) that would have funded the government through February 16th. Under Senate rules, adoption of that measure required 60 votes. Shortly after noon on Monday, January 22nd, Schumer and Senate Majority Leader McConnell (R-KY) agreed on a plan to pass a CR through February 8th. Under the Senate agreement, if the government remains open and no deal emerges on the Deferred Action for Childhood Arrivals (DACA) issue by February 8th, the Senate will take up an immigration bill addressing DACA and border enforcement with an open and fair amendment process. Once Schumer publicly endorsed the deal, the Senate voted 81-18 to end the impasse. Monday evening the House voted 266-150 to pass the fifth FY18 CR.
Why did the government shutdown occur? Fundamentally, it boils down to election-year politics, and lack of trust between Congress and the White House. Senate Democrats saw the January 19th CR deadline as an opportunity to publicize DACA, a popular base-broadening legislative priority. According to recent polls by ABC, CBS and others, over 85 percent of Americans support legislation that would block deportation of roughly 690,000 “Dreamers” (individuals brought to the US illegally as children). Senate Democrats cite high job-disapproval ratings for President Trump (55.5 percent) and the Republican-controlled Congress (73.5 percent) as factors that persuaded them to support Schumer. But disrupting the lives of military personnel, federal workers and their families, and those who rely on government services is a risky maneuver, one that McConnell and other Republicans hope will backfire.
Schumer tried to blame the shutdown on President Trump, complaining, “Negotiating with this White House is like negotiating with Jell-O. It’s next to impossible. As soon as you take one step forward, the hard-right forces the president three steps back.” But Trump didn’t propose the shutdown.
The most telling comment came when McConnell explained why DACA was kept out of the CR. “I’m looking for something that President Trump supports, and he has not yet indicated what measure he is willing to sign. As soon as we figure out what he is for, then I would be convinced that we were not just spinning our wheels.”
This manufactured political drama highlights the challenge of governing a politically-polarized country with a fractured caucus and an unpredictable President in a mid-term election year. That is precisely why we argued that the best time to finalize the budget deal held hostage to DACA was in late 2017, not early 2018.
How does the shutdown impact our forecast? The answer is very little.
Forecast
We expect a 2-year (FY18-19) budget cap boosting deal to emerge that raises the Budget Control Act spending caps by $225 billion or more with 60% of the increase dedicated to defense.
Those estimates are based on a series of House and Senate votes and actions by the Trump Administration on budget, appropriations and defense policy legislation. They have been reinforced over the past several weeks by conversations with staff involved in the negotiations.
McConnell and Speaker Ryan (R-WI) believe that a 2-year budget agreement is necessary to reduce prospects for a pre-election government shutdown. They know that getting that deal requires bipartisan support and concessions to Democrats that a majority of House and Senate Republicans are likely to oppose. As this episode demonstrates, Trump’s inconsistency complicates that task. With 16 days remaining before the next CR deadline, the priority, to paraphrase McConnell, is figuring out what Trump is for.