The 16 day partial federal shutdown is over. Over half a million furloughed federal employees have returned to work; national parks are again welcoming visitors; and the threat of our nation defaulting on its debts has been averted. But what began as a fight over funding of the Affordable Care Act (a/k/a “Obamacare”) has turned into the latest round of a long term fight over taxation and spending priorities that culminated in the $1.2 trillion in domestic and defense spending cuts mandated by the Budget Control Act of 2011 (Public Law 112-35) . And the limited nature of the agreement reached by the President and Congress indicates that the next round over the reach of these spending cuts is just around the corner.
The main terms of the deal that re-opened the federal government are (1) the operations of the federal government will be funded through January 15th ; (2) the debt limit is extended till February 7th; and (3) budget negotiations over a long term taxation and spending fix are set into motion and must be concluded by December 13th. That leaves only a few weeks for members of Congress to decide how to fund the federal government for the remainder of the 2014 Fiscal Year, and avert yet another shutdown. The question is whether the pain of the close to $1 billion in annual spending cuts begun under the Budget Control Act is enough for Members of Congress and the President to agree on a different combination of spending cuts and tax increases. We would note that before the automatic cuts put in under the Act’s “Sequestration” process, there was the so-called congressional “Supercommittee” that was tasked with finding an alternative. It was the failure of the Supercommittee that led to the indiscriminate cuts under Sequestration. The latest spending brinksmanship indicates that these dynamics have not changed.
But hopefully this time, things will be different. The damage to the economy, people’s lives and their faith in political institutions was devastating. There will be plenty of opportunities to see if those in Washington will remember this.