When Washington Goes into Deep Freeze

One day before the deadline expired, even seasoned observers of U.S. policy wondered whether both parties would approach a compromise. To get an idea of how likely a government shutdown within the next 24 hours was, you had to pay close attention to the body language of the persons involved, according to CNBC White House correspondent Eamon Javers. A few hours later, President Donald Trump and top Democrats and Republicans got together to avert the impending government shutdown at the last moment.

Late in the afternoon, both houses of Congress finally agreed on a short-term spending package that will secure the funding of government agencies and programs for the next two weeks. But this does not solve the problem: Congress has to agree on another spending package no later than Dec. 22.

If that fails, the threat of a shutdown faces Washington once more: Hundreds of thousands of government employees would be forced to stay home, tax refunds would be delayed and applications for unemployment or disability support would remain unprocessed. Food programs would be put on hold, investigations by the Environmental Protection Agency postponed, and hundreds of public parks closed. Homebuyers would have to wait for mortgages, and small and medium-sized companies hoping for loans or government contracts would be put on hold.

Shutdown Will Cost Billions Every Week

The economic consequences would be enormous. The rating agency Standard & Poor’s 500 Index estimates that a shutdown would cost at least $6.5 billion per week. The Office of Management and Budget calculates that the last shutdown in 2013 cost the U.S. economy $24 billion in 16 days and reduced the gross domestic product by between 0.2 to 0.4 percent per quarter. “A shutdown affects not only Washington and its employees, but has ripple effects across sectors throughout the country,” experts wrote in August.

Pressure to prevent a shutdown under Republican leadership is enormous. Failed negotiations may strain not only the economy, but overshadow recent successes with tax reform.

Despite their majority in both houses of Congress, conservatives have a problem: In order to approve the spending package, they need 60 votes in the Senate. Without the Democrats, there is no deal. This provides the liberals with plenty of room for negotiation. Republican Sen. Trent Franks of Arizona complained this week that his party is being forced to create a “fundamentally Democratic document.”* The current fiscal year started on Oct. 1, but so far, both parties have been unable to agree on a long-term spending package. While Democrats demand an increase in all budgets, the Republicans and the president want to confine spending to defense and national security.

According to critics, the allegedly routine procedure has set the stage for a political showdown, with both sides trying to leverage the budget to impose their ideologies and take advantage of the impending deadlock to advance their own agendas. Increasingly, both parties are risking an emergency. Since 1981 alone, 12 shutdowns have occurred, paralyzing the government anywhere between one and 21 days. A year ago, a shutdown was just barely prevented when, until the very last minute, the Democrats insisted on linking the health care of former miners to the spending law, thereby drawing protests from fiscal conservatives. This summer on Twitter, Trump threatened to bring the government to a standstill should the spending package not also secure the financing of his border wall with Mexico.

Next Deadline before Christmas Break

Even now, negotiations are threatening to turn into a power struggle about the future political course. In the past several weeks, Democrats have repeatedly announced they would make their consent contingent on, among other things, a resolution meant to prevent the deportation of millions of illegal immigrants who arrived in the country as children or teenagers. The conservatives in turn consider making a long-term compromise contingent on an end to the financing of programs such as Planned Parenthood − a nonstarter for liberals.

A week ago, the president asked for a meeting with the two most important Democrats in Congress to negotiate a compromise. But after Trump criticized Nancy Pelosi and Chuck Schumer on Twitter, the two Democrats quickly cancelled the meeting, fueling fears that a deal might not be reached before the deadline. The president railed at Pelosi and Schumer, claiming they were accountable for a potential government standstill.

Even if the parties can agree on a short-term plan, insiders think it is questionable whether they will manage to find a long-term compromise before the next deadline, which is just days before the Christmas break. On Thursday, U.S. media reported that both parties were already preparing for another short-term solution, which would postpone the decision until January. Democratic Sen. Martin Heinrich, a member of the Senate’s Joint Economic Committee, warned his colleagues not to further delay a decision: “If the Republican Congress cannot even keep the government open, how can it rebuild our infrastructure, reform taxes, or achieve a host of other legislative priorities?”

*Editor’s note: The original quotation, accurately translated, could not be verified. In addition, Trent Franks resigned from Congress on Dec. 8, 2017 in the wake of accusations that he offered $5 million to a female aid to be a surrogate mother for his children.