U.S. Congress avoided a government shutdown by the wire and passed a stop-gap spending bill that will keep federal agencies open through December. At the same time, it has postponed what would have been difficult negotiations over federal spending and policy decisions, giving lawmakers more time to try to reach a longer-term deal. But the question is now: what will we get in December and how does an agreement to kick this down the road impact things down the line?
So What is a Government Shutdown?
A government shutdown happens when Congress does not pass legislation to author large-scale funding for federal agencies. In so doing, non-essential government services come to a stop, and federal employees might be furloughed, while even critical things like national defense and public safety can be disrupted.
The current fiscal year’s funding was due to expire at midnight on Monday and Congress had faced a shutdown. Without the bill, the U.S. government would have lost funding for a range of activities, impacting millions of Americans and exacerbating the nation’s deep political divide.
Summary of the Short-term Spending Bill
They say the spending bill, called a Continuing Resolution (CR) was passed with bipartisan agreement which will see government operations go on through December. It not only keeps the government running — at existing funding levels — but also is a holding pattern, buying time for future budget talks along broader lines.
Six Elements of the Legislation
Continuing government finances at present levels;
A pause in some of the toughest policy battles on Capitol Hill, including on defense spending, social services, and other appropriations.
Assistance for Disaster Areas—FEMA and wildfire fighting | flood (in the absence of a global warming Pigouvian tax) other: habitat preservation/homicide relief forest fire prevention provision snow critical natural disasters
But the temporary fix still leaves more controversial choices ahead for lawmakers, including how to fund defense, healthcare, and education.
How Did Congress Justify Passing Yet Another Short-term Measure?
The measures were deemed necessary after a series of political spats over budgetary issues — with the threat of government shutdowns looming in January and October. Among the issues being considered were defense spending and funding for domestic priorities such as healthcare and education, sparking debates within Congress. Rather than chance a shutdown, Congress approved a temporary fix for more time to debate.
While passing a continuing resolution provides relief, it pillows those issues for future fights. Lawmakers will have December to agree on the long-term solution for federal spending.
Impact of the Temporary Bill
No Immediate Shutdown The bill prevents an immediate government shutdown, keeping federal workers on the job and essential services up and running. National parks, social security offices, and federal courts will be open and federal contractors can continue their projects.
Kicking The Can Down The Road the stop-gap funding measure only prolongs the day of reckoning that Congress must confront. Defense spending, climate policy, and some social services are all on the slate for December. With the two political parties readying for yet another round of talks, there continue to be questions about whether they will have enough solid ground for them to cut a deal by the new deadline.
Potential Economic Impact — While the shutdown has been avoided (FOR NOW), the market may be negatively impacted by continued uncertainty over budget. Stability makes investors, businesses, and federal contractors— it is much simpler—for everyone happier not to be tied up in a longwinded debate over government funding that has its ups and downs on the markets. As December nears, so too might any economic fallout over weeks of budgetary gridlock.
What Happens Next?
The temporary bill moves them closer to a truce in the larger budget fight. Lawmakers now have until December to negotiate final spending decisions for fiscal 2022. More political war ahead especially on betting…
Military and National Defense:Some lawmakers want to cut the defense budget, while others want to increase it.
Social Programs — This also includes Health Care, Education & Social Services and it will be cynical. Since these programs affect millions of Americans, cutting their funding or changing that would be a massive move.
Debt Ceiling Debt ceiling, though not part of this bill directly, is another major issue that could pop up again in the December negotiations. Undermining of the debt limit by another Congress you can tell is insane might never come to pass, but it might lead to a default that could unsettle worldwide finance.
This self-imposed December test will be a major signal to the market regarding whether or not Congress can navigate this complexity and strike a bipartisan agreement.
Challenges Ahead
The current deal, however, merely offers lawmakers extra time — no political cover for anyone. Bipartisan cooperation is needed with a December deadline approaching fast. However, the partisan polarization in Washington may make it difficult for each side to move beyond its position.
Partisan Divide Democrats and Republicans still differ on how to spend money, especially when it comes to defense and social welfare. Compromise in polarized U.S. politics is expected to be tricky and it could open the door to another government shutdown in December if no deal is reached.
Public Confidence The American people are paying close attention to these developments. Voters want their elected representatives to come together, rob the vote of much (but by no means all) of its spoils—a government shutdown—and make the best decisions a deeply divided country can. Failure to compromise threatens to erode public confidence in the institutions of government and affect future election cycles.
Although the passage puts off an immediate shutdown, in nature it is short-term, indefinitely. Next month is a critical time for lawmakers to begin determining what the future of government spending and policy priorities should be. The CR enables the government to function in the short term, but political pressures remain. Or will Congress reach a deal by the next deadline, or is another government shutdown on the way? The jury will be out over the coming months.
