Another Government Shutdown Threat?

September 21st, 2011
in econ_news

no-government Econintersect:  Another government shutdown is waiting in the wings.  Current funding for the government runs out on September 30 and a continuing resolution is necessary before that date to keep the government operating.  The house voted down a bill Wednesday afternoon (September 21).  The negative votes came from 48 Republicans who joined most of the house Democrats for total "no" tally of 230.  The 195 "yes" votes came from Republicans.

Follow up:

The point of contention?  The Republican written bill contained spending cuts to offset emergency funds for the response to damage from hurricane Irene and tropical storm Lee.  Democrats strongly opposed the move to make spending offsets for emergency appropriations.  Such a bill would be unlikley to pass the Senate, controlled by Democrats, so passage by the house would have been largely symbolic anyway.

The situation was described prior to the vote by The New York Times:

Setting up a showdown with the Senate, the House on Wednesday is set to pass the short-term spending measure, known as a continuing resolution, which will include a total of $3.65 billion for disaster aid. The stopgap bill is needed because Congress has so far failed to pass any of the 12 annual spending bills due by Oct. 1.

Of the House aid money, $1 billion is designated for the 2011 fiscal year, and would be offset by a $1.5 billion cut to the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program. In addition, $2.65 billion for the emergency management agency would be provided in the 2012 fiscal year, which begins Oct. 1. House Republicans say they are skeptical of making a larger upfront allocation to the agency for fear it would be wasted.

When that bill makes it to the Senate, Democratic leaders plan to strike the House language on the aid and substitute a bipartisan version passed by the Senate last week that provided the agency with $6.9 billion in the aftermath of Hurricane Irene, with none of the spending offsets that have offended Senate Democrats as much as the lower dollar figure.

“I was disappointed to see that the House shortchanged the Federal Emergency Management Agency,” Senator Harry Reid of Nevada, the majority leader, said on the Senate floor Tuesday morning, “failing to provide the funding to adequately help Americans whose lives have been devastated by floods, hurricanes and tornadoes.”

But a top House Republican predicted Tuesday that if Mr. Reid changed the bill, it would most likely fail on the House floor, raising the possibility of a government shutdown, similar to the impasse last spring, but over a single issue rather than many.

“I don’t see the votes on the floor for him,” Representative Kevin McCarthy of California, the No. 3 House Republican, said in a news conference on Capitol Hill.

At the same news conference, Representative Eric Cantor, the majority leader, said that the House was firm on offsetting the costs of disaster relief for the current fiscal year, and that he was confident that the short-term spending bill would pass his chamber, even as some Republicans are making noises about wanting more cuts and Democrats are unhappy about the disaster relief component.

The vote later in the day came as a surprise to many congressional observers and to many House leaders as well.

The final defection of Republicans came from two camps.  From the Huffington Post:

Two factions of Republicans had major problems with the bill as they headed into the vote: Conservative lawmakers wanted more spending cuts, and GOP lawmakers affected by recent disasters were uneasy with the bill's provision that tied $1.5 billion in emergency disaster aid to cuts to a fuel-efficiency loan program.

The Los Angeles Times added the following:

In a surprise defeat, the legislation was narrowly rejected Wednesday after a tense afternoon of vote counting. House Speaker John A. Boehner (R-Ohio) had hoped to avoid another budget battle after the summer's debt ceiling fight and an earlier threat of government shutdown left voters sour on both Republicans and Democrats in Congress.

Congress has just days to resolve the impasse, as lawmakers are expected to recess Friday for next week's Jewish holiday of Rosh Hashana. The new fiscal year begins Oct. 1.

Sources:  Los Angeles Times,  Huffington Post and The New York Times

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