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Government Shutdown Fight May Hinge on Planned Parenthood

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While prospects of a government shutdown on Oct. 1 are waning as House Republican leaders are said to be unveiling on Sept. 8 a “mostly clean” continuing resolution to fund the government, Republicans’ plans to defund Planned Parenthood could spark a reprise of 2013, according to political analyst Andy Friedman of the Washington Update.

In 2013, the government shut down “due to a dispute over defunding the Affordable Care Act,” Friedman told ThinkAdvisor. “Now there is talk among Republicans about defunding Planned Parenthood, a proposal the president [Obama] is almost certain to veto.”

Also, there is disagreement among lawmakers “on the amount of funding for social programs generally,” Friedman says.

There’s also a difference in timing this year as to when the debt limit must be raised. In 2013, “the government ran out of money and had to borrow by mid-October, setting up an incontrovertible deadline that Congress had to address, reopening the government in the process,” Friedman says. “This year we’re told the debt ceiling will not have to increase before November or even December. So, if the government shuts down, what forces Congress to compromise and reopen it in the near term?”

Analyst Joe Lieber of Washington Analysis notes in his Tuesday commentary that House GOP leaders will seek to pass a “mostly clean” CR by the Oct. 1 deadline, but says that his firm “acknowledges that fears have grown inside the Beltway that a showdown over defunding Planned Parenthood has raised the prospects of a shutdown fight.”

Says Lieber: “The House GOP leadership could very well move legislation that defunds Planned Parenthood then blame the Senate for inaction, where there are not enough votes to overcome a certain Democratic filibuster.”

Assuming a CR is enacted, however, Lieber says that two scenarios could play out in December. First, and most likely, is a budget agreement that provides $30 billion in additional funding for defense and non-defense discretionary spending; Second, a long-term CR is passed that funds the government through fiscal 2016.

Lieber adds that any negotiated budget deal would likely include a longer-term debt limit extension that gets Congress through the next election cycle, “though some short-term extension may be necessary if Treasury’s estimate of when we’ll hit the limit (sometime in November or December) is not revised.” House GOP leaders, Lieber says, “are hoping that a long-term highway bill can be added to the budget deal in order to entice more support” for the CR.

The Congressional Budget Office stated Tuesday in its 10-year budget and economic outlook that the 2015 deficit will be $426 billion – $60 billion lower than CBO projected in March. Fiscal 2015 will be the sixth consecutive year in which the deficit has declined as a percentage of gross domestic product (GDP) since it peaked in 2009, the report states.

Over the next 10 years, however, CBO says the budget outlook remains much the same as it described earlier this year: “If current laws generally remain unchanged, within a few years the deficit will begin to rise again relative to GDP, and by 2025, debt held by the public will be higher relative to the size of the economy than it is now.”

The looming fiscal deadlines will spark “intense drama and brinkmanship during the days and weeks leading up to the deadlines, culminating in a series of eleventh-hour compromises that largely maintain the status quo,” predicts Libby Cantrill, an executive vice president at PIMCO. Heightened policy uncertainty, she says, “means a higher chance of policy mistakes, and there is no doubt the Fed will be monitoring developments closely as they contemplate when to raise the policy rate.”