The most likely scenario is that both chambers will eventually pass separate bills next week that the other can't support, which means a new bipartisan bill will have to be negotiated. (UBS)

Government Shutdown Threat.

With a new fiscal year approaching on October 1, a government shutdown seems inevitable. Lawmakers from both the House and Senate still are not close to passing even a short-term funding bill to extend current government funding for a few weeks. Some House Republicans agreed to a deal this week that would apply funding cuts in most areas (except for defense, veterans’ programs and assistance to natural disaster areas and victims) and would include immigration reforms. However, not all Republicans are currently on board for this short-term extension. House Speaker Kevin McCarthy (R-CA) wants unanimous support within his caucus. While the Senate is expected to pass a short-term extension with bipartisan support next week, it was stalled on a longer-term funding bill for some agencies this week. The most likely scenario is that both chambers will eventually pass separate bills next week that the other can't support, which means a new bipartisan bill will have to be negotiated.

This process seems certain to extend beyond October 1, and parts of the government will be closed after that date.

Focus on Immigration Reforms.

The small faction of House Republicans who have held up the government spending bills have made numerous demands, but their highest priority seems to be immigration reforms dealing with the large influx of undocumented immigrants along the southwest border. They want a resumption of the construction of the border wall favored by President Trump, more border patrol personnel and reforms to the asylum process that is allowing non-citizens to enter and stay in the US. President Biden also has asked for USD 4 billion of extra funding this year to address immigration, but his priorities are additional placement facilities for asylum-seekers and more asylum judges. Republican lawmakers want to focus on keeping the asylum-seekers out of the US, while Democrats want to ensure that those immigrants seeking such status can stay in the US until their legal cases are heard.

This is a difficult bridge to gap, but these issues are a current focus and could, if successfully negotiated, unlock an agreement.

Shutdown-Affected Government Services.

In a government shutdown, all federal agencies will write their own shutdown plan by prioritizing their functions and designating each as “essential” or “non-essential.” Generally, the former activities would continue to be performed, while the latter would not. There are some exceptions to this that we will not outline here. Many government services will be impacted. We expect the following to be partially or fully shut down: national parks; Smithsonian museums; the Library of Congress; issuance of new cards to new joiners of Social Security and Medicare; EPA and FDA site inspections; and admittance of patients at the NIH. We also would expect delays in such areas as passport approvals; small business loan processing; some payments and awarding of federal contracts and pay to most federal employees.

Government Services Not Affected.

Services not affected would include: public safety (border protection, air traffic control, law enforcement); in-hospital medical care through Medicare and Medicaid; Social Security payments; immigration services funded by user fees; most veterans programs and benefits (VA centers and hospitals to remain open); normal IRS tax collection/investigation work; food stamp benefits; the vast majority of defense programs/activities; Treasury payments on the federal debt; federal court activity; unemployment benefits/compensation; federal retiree benefits; operation of US embassies abroad; federal assistance to natural disaster victims; postal services and, of course, pay to members of Congress.

For more, see Washington Weekly: Government Shutdown Threat , 22 September 2023.

Washington Weekly Podcast: UN General Assembly, Government shutdown, Geopolitics

Approval Date: 9/22/2023

Expiration: 9/30/2024

Review Code: IS2305686