Next week’s efforts on advancing a short-term extension will be critical in determining how likely a shutdown will be on 1 October. (ddp)

Government Shutdown Threat. As we mentioned last week, if Congress doesn’t approve a spending plan for government operations by September 30, there will be a shutdown in many government services beginning on October 1 (the new fiscal year). Since Congress will be unable to pass a full-year spending plan by then, many lawmakers instead are trying to pass a short-term plan that will fund government agencies at current levels for October and possibly November. While this approach would avert a government shutdown on October 1, the shutdown threat would return later this year. However, this strategy stumbled this week in both the House and Senate. Pressing demands for spending reductions and other policies, Republicans in each chamber successfully derailed bills that could have carried a short-term extension. With the setbacks this week, the chance of a government shutdown on October 1 is increasing. House and Senate leaders will try again next week to get around these roadblocks, but it is not clear if they will prevail. With that in mind, it is worth asking what the primary actors in Washington want in this debate.

President Biden/Most Democratic Lawmakers. They prefer a temporary bill to be passed as soon as possible. They want that extension to include the President’s request to add over $50 billion for further military and security assistance to Ukraine, extra funding to help natural disaster victims in Hawaii, Florida and other states, and for a wide range of other domestic spending provisions.

Republican Lawmakers. Most Senate and House Republicans are comfortable with the above Democratic approach as long as any extra money requested by the President is offset—fully or partially—by corresponding reductions in other federal spending. About 40 of the most conservative House Republicans have insisted on offsets. In addition, they also are demanding immigration reforms, changes to Defense Department employee policies relating to abortion and conditions on Justice Department investigations. Those demands will not be accepted by House and Senate Democrats. Hence, the current stalemate.

Bottom Line. We had earlier projected a more difficult fight over government spending to take place later this fall rather than now. However, neither the House nor Senate seems capable at this moment of passing even a short-term extension. This means the threat of a government shutdown has shifted to October 1. Next week’s efforts on advancing a short-term extension will be critical in determining how likely a shutdown will be on October 1. Eventually a compromise will have to be made that is accommodating of at least some of the concerns raised by Republicans or House Speaker Kevin McCarthy (R-CA) could lose his job.

Biden Impeachment? A smaller number of House Republicans have insisted that they will not vote for a temporary spending plan unless it is accompanied by a pledge by House Speaker McCarthy to take action to try to impeach President Biden. In that context, the Speaker early this week requested an impeachment inquiry, which involves an escalation of House committee investigations into the President and his family on alleged corruption and bribery. Such investigations in committees have been ongoing for the past year and have uncovered some new information on Hunter Biden’s and the broader Biden family’s business dealings, but existing evidence is likely to be insufficient to impeach the President at this time. The impeachment inquiry gives House investigators more tools to get additional information from government agencies which may or may not have more information about Biden family financial activities. As the committees advance their work, the Speaker will have to make a decision about whether to schedule an actual impeachment vote. That vote would not pass the House if held today but it could pass if additional evidence is gathered over the next few weeks and is compelling to at least a dozen House Republicans who don’t feel there is currently enough evidence to impeach. While there is little chance that the Senate would convict President Biden, any vote on impeachment will be a major development and further distract the House at a time when legislative priorities are piling up with their own deadlines to meet.

Another Note on Impeachment. With the official opening of an impeachment inquiry into President Biden over allegations of bribery and corruption in the House, we expect a heightened tug-of-war between House Republican committee chairmen and the federal government on information requests on the Biden family. House Republicans have felt stymied so far by a lack of information from the agencies, which they believe is part of a deliberate effort by executive agencies overseen by Biden-appointed officials to withhold damaging information. That conflict between the investigators and agencies will escalate significantly with an official impeachment inquiry now in place. It is possible that this roadblock to get information to whatever extent it exists alone will whet the appetite of many Republicans to want to hold an impeachment vote. The direction of where this impeachment inquiry will go and whether it will lead to a vote on impeachment will be influenced by this interaction between the Republican chairmen and the federal agencies fielding their requests. This will play out in public over the next few weeks and beyond. Voters have so far been quiet about whether they would support an impeachment vote, but there should be polling out on this in the next week to give us a better idea.

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Approval Date: 9/15/2023
Expiration: 9/30/2024
Review Code: IS2305542