Government Shutdown Showdown 2013: a Primer

What's really going on in the latest fiscal mess that's gripping Washington?

ByABC News
September 20, 2013, 9:45 AM
The Capitol is seen at dusk in Washington in this Jan. 25, 2011, photo.
The Capitol is seen at dusk in Washington in this Jan. 25, 2011, photo.
Saul Loeb/AFP/Getty Images

Sept. 20, 2013— -- Admit it: You don't know a CR from a sequester, and you think a debt ceiling might be something you build in a loft apartment. So, here's what's really going on in the latest fiscal mess that's gripping Washington.


This is as basic as it gets: Will our elected representatives do their jobs? We're talking about just keeping the government lights on, and paying bills we've already racked up. This is another in a round of self-inflicted fiscal crises -- deadlines set by lawmakers and then, possibly, blown past by those same lawmakers' inaction -- and it might be the most consequential clash yet.

More broadly, this is a fight that tests competing visions of government. Voters sent conflicting messages in successive elections, and now we have deeply a divided government. In a split country, both parties believe they have a mandate, which has driven the repeated confrontations. Everyone thinks he's right, and that the other person should come to her senses.

Meanwhile, inside the Republican Party, a new band of conservatives, many associated with the tea party movement, is intent on using this as a moment of leverage. The mission is to drive down government spending, and also find a back-door way to repeal the Obama health care law, just as it's going into effect. Our economy is hanging in the balance.

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The fiscal fight is actually over two different but somewhat related matters, so there are two important deadlines, plus a bonus deadline that's also in the mix.

The first deadline is Sept. 30. That's the date that virtually all funding for federal government operations runs out. Going pass that date without at least a temporary fix -- known as a "continuing resolution," or a CR -- means a government shutdown. That doesn't actually mean the government shuts down (more on that later), but all "non-essential" government services would cease to be provided, and upwards of a million federal workers would be furloughed.

That last happened in late 1995-early 1996, although we came close to it happening again in 2011.

The other deadline is a little softer, but it's expected to come in mid-late October. That's when the federal government runs up against the debt limit.

This is the country maxing out on its credit card. Actually, we reached the $16.7 trillion debt ceiling back in May, but the Treasury Department has been creatively shuffling money around for the past few months. Treasury Secretary Jack Lew has indicated he will run out of such options about a month from now.

The United States is among the few countries where the legislative branch sets a debt limit to accommodate money that's already being spent. Such votes have been slightly uncomfortable formalities in the past, although Barack Obama was among the large number of opposing-party senators to have voted against a debt-ceiling increase.

And although he negotiated with Republicans on a previous debt-ceiling increase, the president has said he refuses to do so this time. He is calling on Congress simply to do the job it has done with little fanfare in the past.

One other relevant deadline: The new state insurance exchanges set up under the Obama health care law start Oct. 1. That has put fresh urgency into efforts to defund or otherwise frustrate the launch of a law that largely goes into effect in 2014.

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Get ready for some legislative ping-pong, with some poker sprinkled in.

The House approved this morning a three-month "continuing resolution" to fund the government through the rest of 2013. But there's a big caveat: The bill explicitly denies funding for the implementation of Obamacare. President Obama has issued a veto threat, and leaders of the Democratic-controlled Senate have indicated they won't go along with the ploy.

The Senate next week will vote on the bill to keep the government open. But that's expected to take out the prohibition on funding for Obamacare. Then the question comes back to the GOP-controlled House: Would they rather shut down the government, or allow the new health care law to proceed?

House Speaker John Boehner actually wanted to choose the latter option already, but he was slapped down by rank-and-file Republicans who are insisting on taking a stand against funding Obamacare. Unless Senate Democrats or the White House caves, Boehner might have to lean on Democratic votes to keep the government open.

Government shutdowns are disruptive and expensive things. Blasting through a debt ceiling is a potential economy-killer of a thing that has never been tested before by a major superpower with the ability to continue borrowing at cheap rates.

If the federal government "shuts down," active-duty military will still be paid and national-security workers and air-traffic controllers will also stay on the job. But those involved in mundane government business -- think national park personnel, people who process government claims and data technicians at places like the Labor Department or Census Bureau -- will effectively shut down for the duration of the standoff.

So you won't be able to go to national parks or monuments, new Social Security and Medicare claims could be delayed, and clinical trials at the National Institutes of Health will stop enrollment. If past is precedent, federal workers will be paid retroactively for the missed days, so taxpayers would wind up paying for services that weren't provided during any period where funding ran out.

If we hit the debt ceiling, the possible consequences are difficult to predict but much more dire. Wall Street would probably freak out if the U.S. government found itself unable to make good on all its commitments. A spike in Treasury bond rates would fuel an increase in mortgage and credit-card rates, and might leave financial and energy markets across the world reeling.

We'd still have money coming in to the federal government, mainly in the form of tax receipts, but the Obama administration would have to make some extraordinarily stark choices. Presumably, we would cover the interest on our debt, or worse economic calamities would follow, and continue defense spending, Social Security, Medicare and the like.

But funding for everything else the federal government does -- in education, transportation, criminal justice, food inspections, air safety -- would be in question until we could get our collective credit card back.

Keep in mind that the last time we saw brinkmanship like this, the United States had its credit rating downgraded by Standard & Poor's amid the mere threat of coming up against the debt ceiling. That makes borrowing itself more expensive, making for a more problematic debt spiral for taxpayers regardless of how this plays out.


The conventional wisdom received from those who survived the last government shutdown, in the Gingrich-Clinton battles of the mid-'90s, is that whoever gets blamed for a government shutdown pays a price. Clinton emerged from those fights stronger than ever, winning reelection in 1996 and then picking up seats for his party in 1998. So for a while since then, government shutdowns have been essentially off the table.

But for a crop of newer members of Congress, some of whom where in high school or college during the Clinton-Gingrich years, the prospect of a shutdown over spending isn't that horrible. They represent constituents who hate the government, generally, and standing up for having Uncle Sam spend less might not be a bad thing.

That's the direction they're being pushed in by outside groups that are threatening primary challengers against anyone seen as enabling the Obama agenda. Shutting down the government over Obamacare, and/or taking a stand on runaway government spending is a fight worth having, in the view of some.

There's even a sliver of members of Congress who insist that hitting the debt ceiling isn't that big a deal because it would force the president to make the kind of hard spending choices that Washington should have made years ago.

There's also a debate on who would take the blame if very bad things happen. The House will pass a spending bill and it will pass a debt ceiling bill; there will just be so many conditions that are part of it that the Senate and the president won't go along.

In the view of House Republicans, it won't be their fault that Obama and his Democratic allies simply refused to negotiate. And for a president who has had little working relationship with Republicans during his time in office, it's another huge distraction from his agenda.