Changing Our Odds on a Government Shutdown
Author: Greg Valliere
February 27, 2024
IT’S INCREASINGLY DOUBTFUL that Congress will reach budget deals by the March 1 and March 8 deadlines, which means a government shutdown is looking likely, starting this Friday night.
JUST A COUPLE OF WEEKS AGO, a shutdown seemed unlikely – but the chaotic House of Representative seems unable to reach an agreement without votes from Democrats, which probably would cost Speaker Mike Johnson his job.
WITH THE KEY PLAYERS SET TO MEET later today at the White House, there are only two likely scenarios, both of which seemingly rule out a final deal by this Friday:
Scenario One: An agreement in principle – with Republicans getting some votes from Democrats – on a wide range of budget issues, which would require an extension of another couple of weeks to iron out all of the details.
Scenario Two: A government shutdown, not even an agreement in principle, starting this Friday.
THERE ARE NO OTHER PLAUSIBLE SHORT-TERM SCENARIOS, which raises a major wild card – if there’s no deal by April 30, an across-the-board spending cut of 1 percent would be imposed, which would hit defense spending hard. This provision was part of the debt ceiling deal last spring.
THE GROWING LIKELIHOOD OF NO DEAL BY FRIDAY has stunned Washington insiders. A month ago, we thought chances of a shutdown were about 25%. Last week it looked like 40%. Now it appears likely – perhaps 60% – that there will be no deal by Friday and possibly many days longer.
THE HOUSE FREEDOM CAUCUS senses that it has mainstream Republicans on the run, so the hard-liners have been making new demands almost daily – abortion restrictions, more spending cuts, no aid for Ukraine, strict new border laws, etc.
THE SPOTLIGHT IS SHINING on rookie Speaker Johnson, who can’t get a deal without seeking votes from Democrats. John Boehner, Paul Ryan and Kevin McCarthy all tried that tactic, and they all lost their jobs, forced out by a handful of radicals who have little interest in negotiating.
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