US Fiscal: Short Dated CR Looms

Published on September 27, 2013

The Senate is moving quickly, surprisingly so, to pass its amended Continuing Resolution H.JR. 59 as early as this afternoon. It does, however, face an unforeseen need to win Republican support to waive a budgetary point of order that may still cause a delay and give Minority Leader Mitch McConnell some new leverage to negotiate tweaks to the Senate bill.

And it may be needed, for any extra time afforded to the House in moving the Senate CR more rapidly is in fact making it more, not less, difficult to shape a response in the House before the Monday midnight deadline to avoid a government shutdown.

Instead, the high stakes political battle over the CR is for now more likely than not to be extended by at least another week.

*** As of this morning, lacking a minimum of 217 Republican votes, the House Republican leadership will not bring to a House floor vote the Senate-amended CR that strips out the Obamacare delayed funding and debt prioritization language. But they also lack agreement so far within the Conference on which among a virtual wish list of Republican legislation they could add as amendments to ping pong a new House amended back to the Senate. ***

*** The debt ceiling bill is likewise stalled in the House, due to the same fierce resistance by Tea Party dissidents defying House Speaker John Boehner. Right now, Boehner is understood to have 200 of the 217 needed Republican votes to ensure House passage of the debt ceiling, but still leaving him short of being able as planned to shift the focus of the Tea Party objections to the debt ceiling and allow a smoother passage of the CR. ***

*** Barring a breakthrough in whittling down Tea Party opposition to no more than dozen, a likely fallback plan may be to shift gears to passing a short dated CR of one week to provide more time to get to an agreement within its House ranks and hopefully with the Senate Democrats. ***

*** To win House support for even the short CR, an amendment is likely to be added delaying Obamacare funding for the same one week of the CR. The House Republican leadership is betting Senate Democrats will go along for a week’s delay since there are software and operational difficulties plaguing the Affordable Care Act’s insurance exchanges due to start October 1 anyway. ***

A Deeply Divided House

The House leadership has been trying to chip away at the Tea Party numbers ever since 43 Republicans signed a letter earlier this month promoting their alternative to the original CR written with leadership support by House Appropriations Chairman Hal Rogers.

It had set aside the Tea Party demands to delay the discretionary funding to implement the Affordable Care Act as an easily rejected Concurrent Resolution. The Tea Party went into immediate revolt when it was unveiled, pushing the Republican leadership to the CR now being amended by the Senate. The leadership is now essentially dealing with the same objections in assessing how to move the Senate-amended CR once it reaches the House this weekend.

The Tea Party faction numbers no more than 43 to perhaps 50 Republican House members. They essentially break down into three groups, though they all share a deep distrust of the Republican leadership and mainstream of the party. The hard core refusing any compromises probably number no more than 16 — which is enough to make the leadership back away from risking a defeat if come short of 217 — but with the bulk of the Tea Party dissidents wavering to varying degrees, depending on the issue or the arguments and amendments being offered to win their support.

In this instance, the resounding defeat and humiliation earlier this week of Republican Senator Ted Cruz, the emergent leader of the Tea Party on the Hill, has proved helpful to the leadership effort. It is being held up as what failure looks like, and that it would be better to avoid such a stark climbdown and instead support whatever amendments are needed to ensure a comfortable 220-222 margin to clear the 217 vote hurdle needed to pass a bill in the House with a Republican majority.

If there isn’t firm evidence of such a number in the leadership’s whip counts by Monday, they will move forward with the short dated CR in the hope of winning more time to find a mix of amendments to get a longer CR back out of the House to the Senate.

But even with the short dated CR, there are doubts enough of the Tea Party will come round.

That is why the Republicans leapt on the remarks by Joe Manchin, the Democratic Senator from West Virginia, that he could vote for a delay of some length on the first round of the insurance exchanges set to be launched October 1. The hope is that this points to an amendment that will get both the necessary Republican votes on a short dated CR but a begrudging acceptance to pass such a short CR in the Senate as well since it helps to avoid the embarrassment of a poor launch of the insurance exchanges.

But the short dated CR, of course, only delays passage of a longer CR and even then still leaves the FY2014 budget issue unresolved. More alarmingly from a market perspective, a viable bill authorizing an extension of the federal debt ceiling is also stalled and likely to be delayed until next week as well.

That means the battle over the debt ceiling, which is likely to prove even more difficult than the stalled CR, is going to be pushing right up against the mid-October threshold for when the default risk starts to rise sharply.

And Problems in Senate

Meanwhile, the assumption is that Senate Majority Leader Harry Reid will more or less push his amended CR to a Senate floor vote with relative ease.

But even then, there is a potential hiccup to such an assumed smooth glide path in that Reid will still need Republican support on a budgetary point of order to deal with the sequestered $986.7 billion spending levels of both the Senate and House CRs. In theory, under the Budget Control Act of 2011, the annualized spending level should be some $20 billion lower, which Democrats would find impossible to stomach, and with deep cuts in defense spending, so will many Republicans.

Reid then will need at least a half dozen Republicans to join Democrats in a procedural vote to override the BCA budget caps before the Senate-amended CR can indeed be kicked back to the House.

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