Train Wreck Alert on Capitol Hill
Author: Greg Valliere
August 22, 2023
PERHAPS McCARTHY WILL GET LUCKY and find a way to avoid a shutdown on Oct. 1, but his chances are fading. The hard-liners have the votes to reject a so-called continuing resolution, which usually is the “kick the can” option every autumn that gets Congress to a December showdown. But that may not happen this year.
THE SLEEPY AUGUST CALM was jolted yesterday by about 30 members of the House Freedom Caucus, which said it would oppose any stopgap bill on Oct. 1 without sweeping concessions. Congressional leaders — McCarthy, Chuck
Schumer and Mitch McConnell — have declared that an extension will be necessary.
THE KEY DISPUTE will be over spending, including the hard-liners’ opposition to a “blank check” for Ukraine, which we said yesterday will become a growing concern for Kyiv. Other demands by the militants include passage of a sweeping GOP border bill that has stalled in the Senate; addressing “the unprecedented weaponization” of the Justice Department and FBI, and ending “woke” Defense Department policies.
BUT SPENDING IS THE MAIN ISSUE, as conservatives seek even deeper cuts than Congress passed earlier this summer as part of the debt ceiling deal. Further spending cuts are a non-starter with Democrats, but the Freedom Caucus made its intentions clear yesterday:
THE GROUP ASSERTED that it will “oppose any attempt by Washington to revert to its old playbook of using a series of short-term funding extensions designed to push Congress up against a December deadline to force the passage of yet another monstrous, budget busting, pork filled, lobbyist handout omnibus spending bill at year’s end.”
McCARTHY HAS BEEN PRAISED by many members of Congress for his ability to navigate budget issues through the House, but this could be a difficult autumn for him. We’d put odds of an October shutdown at 55%, with budget uncertainty prevailing throughout the fall. In desperation, McCarthy may have to seek votes from Democrats, which could provoke the conservatives to end his Speakership.
A SHUTDOWN WOULDN’T NECESSARILY CRIPPLE THE ECONOMY, but the smackdown from the Fitch Ratings firm was a jolt earlier this summer: the U.S. budget process has become dysfunctional, according to Fitch. Other ratings agencies may join in the downgrades if there’s a train wreck at the end of this fiscal year.
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