Federal Government Shutdown - Daily Update Oct 4, 2013

7/27/2019 Federal Government Shutdown - Daily Update Oct 4, 2013

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ManattGovernmentAffairsandPublicPolicyPractice

U.S.FederalGovernmentShutdown:DailyUpdate#3

FridayMorning,October4,2013

TheElevatorSpeechOverviewThe government shutdowncontinues asthe stalemate onCapitolHill showsnosignsof

abating. Lawmakers, media, and the public are becoming increasingly focused on theupcomingdebtceilingdeadline.HouseRepublicanscontinuetopasssmallCRsdesignedfor

publicrelations,Democratscontinuetotrytoofferalternativestheyknowwillberuledout

oforder,theSenateandPresidentcontinuetoasktheHousetopassaCleanCRtofundthegovernmentandgetbacktowork.EverybodyexpectsCongresstoremaininsession

andunproductivethroughtheweekend.

U.S.HouseofRepresentatives

On partisan votes, the House of Representatives passed two more targeted continuing

resolutions(CRs)onThursdaythatwouldauthorizesomefundsforcertainpaymentstoNational Guardmembers and reservists aswell as provide funding for veteran benefit

compensation,pensionandeducationassistance.TheHousehasnowpassedatotaloffivetargeted CRs and sent them to the Senate. With the consideration of each bill, House

Democratshaveattemptedtooffera CleanCRastheiralternativeproposal. Aperverseparliamentary game then ensues that is very similar to playing tic-tac-toe, with the

outcome being predetermined every time so long as the order of moves is correctly

followed. Under the Rules of the House, Democrats may only offer one motion duringconsideration of these bills. Each time House Democrats attempt to offer a clean CR

Republicans in turnmake amotion that the amendment isout oforderunderRule16,which says the entire amendmentmust be germane to the underlying bill. Because the

Democratic proposal funds the entire government not just the small portion the

Republicansdesire,arulingbytheChairismadethatitis,indeed,outoforder.DemocratsaskthattheHousevoteontheruling.Republicansthenmovetotablethevoteontheruling

andavoteisheldonthemotiontotable.Toabsolutelynobodyssurprise,therequestto

voteontherulingoftheRepublicanChairmanistabledbyonapartylinevote.Gameover(untiltheydoitagainanhourlater).

In other developments in the House, a group of New Democrats (fiscally-conservative,

centristdemocrats) in the Housepubliclyannounced theirsupport for aCRthatwould

includeaprovisiontorepealtheAffordableCareActsmedicaldevicetax,anACAprovisionwhichhaswideandbipartisanopposition.InalettertoHouseSpeakerJohnBoehner(R-

OH)andHouseMinorityLeaderNancyPelosi(D-CA),thebipartisangroupofsignatoriessuggested offsetting the tax revenueby extending a pensionstabilization provision that

waspartofatransportationauthorizationbillpreviouslypassedbytheSenate.Democratic

leadershipintheHouseandSenatehasexpressedoppositiontotheproposal.

Lawmakers are becoming more vocal about their concern for furloughed workers,

particularlymemberswithahighconcentrationof federalemployeesin theirdistrict.On


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Wednesday, A bipartisan group of 41 members in the House circulated a letter to

colleaguesseekingsupportforabill(introducedSeptember30)thatwouldguaranteethatfurloughedworkers received their pay retroactively. The bill, sponsored byRep. James

Moran(D-VA)has66Democraticcosponsorsand5Republicancosponsors.Ithasnotcome

totheflooryet.

TheHouseisexpectedtobeinsessionthroughSaturdayandconsideringaSundaysessionaswell.

U.S.SenateSenate Democrats remain opposed to the targeted CRs that have passed in the House,

maintainingthattheGOPshouldnotbeabletopickandchoosetheirfavoredportionsofgovernmenttokeepopenwhileleavingotherportionsclosed. SenateDemocratsandthe

President observe that under the GOP approach, they will open National Parks while

keepingtheEnvironmentalProtectionAgencythatenforcestheCleanAirandCleanWater

Actsclosed;theywouldopentheNationalInstitutesofHealthyetkeeptheDepartmentofHealth and HumanServices that provides flu shots closed; theywouldprovideVeteran

benefitpayments,butcontinuetohaltconstructionorrepairofVeterancarefacilities,etc.Accordingly,theSenatehasnottakenupanyofthetargetedCRspassedbytheHouse.

DebtCeiling

Membersonbothsidesoftheaislehavenowturnedgreaterattentiontothedebtceilingas

awaytoforcenegotiationandreachadealthatwouldbothreopenthegovernmentandpreventdefault.ThesemembersincludeSenateMajorityWhipRichardDurbin(D-IL)and

HouseBudgetChairmanPaulRyan(R-WI).ChairmanRyan,whobelievesthecombinationof the debt ceiling and CR is inevitable has been consulting with other Republicans,

includingleadership,tocraftalistofdesiredpolicyconcessionsfornegotiationsoverthe

debt limit increase. Issues thatmay be onthe tableas sweeteners include changes toentitlementprograms,arollbackofsequestrationcuts,andmovementontheKeystoneXL

pipeline.ThediscussionatWednesdaynightsWhiteHousemeetingalsobrieflyconsidered

asimilarcourseofactionbuttheconversationwasineffectual.

In a report released Thursday, the Treasury Department is raising awareness of thepotential impact of default and cautions against the potentially significant economic

damage that could result from the political brinksmanship over the debt ceiling.As the

worldsreservecurrency,reverberationsfromadefaultbytheU.S.federalgovernmentanunprecedented event would be felt around the world with the exact magnitude

unknowable.

Ofprobablythemostsignificanceofalleventsthroughouttheday,SpeakerJohnBoehner

(R-OH)privatelytoldagroupofHouseRepublicanshewillnotallowagovernmentdefaulttooccurandindicatedawillingnesstobringameasurepreventingdefaulttothefloor,even

ifhehadtodoitwithoutsupportfromthemajorityofhiscaucus.Suchanactioncould

threatenhisSpeakership,ashehasalreadyhadtopassthreesignificantmeasuresthisyear


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with only aminority of Republican support: the fiscal cliff deal (the last time the debt

ceiling needed to be raised), the Hurricane Sandy relief bill, and the Violence AgainstWomenAct.SpeakerBoehnersspokesmanrespondedtothereportsacknowledgingthat

theSpeakeriswellawarethatadefaultwouldbedisastrousforoureconomy[butthat]a

cleandebthikecannotpasstheHouse.HerepeatedtheirstancethatPresidentObamaandtheDemocratsmustenterthediscussionpreparedtonegotiate.Theinitialreportsof

SpeakerBoehnersprivatecommentshadaslightcalmingeffectonthemarkets.

MarketReactiontotheShutdownandThreatofDefault

Standard&PoorsRatingsServices(S&P)isestimatingthattheshutdownwillshaveabout0.3%fromthegrowthofrealGDPintheU.S.foreveryweekthestandoffcontinues.S&P

predictsitcoulddiminishfourthquarterGDPbyaround1.2%ifitlastsaslongasthe1996shutdown(21days).TheS&PsDeputyChiefEconomistpredictsthatcombinedwiththe

impending debt ceiling, the shutdown could significantly hurt business and consumer

sentiment,aswellastheeconomywhichisnotasstrongasin96.iOnThursdaywhenthe

stockmarketsclosed,theDowJonesindustrialaverage,theS&P500index,andtheNasdaqComposite Index were all down 136.66 (.90%), 15.21 (.90%), and 40.68 (1.07%)

respectively.MeasuresofinvestoranxietyarealsoattheirhighestpointsinceJune.

CapitolHillGoesonLockdown

CapitolHillwenton lockdownatapproximately2:20PMThursdayafternoonwhenshots

werereportedoutsideoftheHartSenateOfficeBuilding(neartheintersectionof2ndStreet

NEandConstitutionAve).TheShelterinPlaceorderwasliftedshortlyafter3:00PMafterthe suspectwas apprehendedaftera car chase. The incidentbeganwhenawoman ina

vehiclestruckaprotectivebarrier.U.S.CapitolPolicethenfiredshotsinanefforttostopthecarandwereeventuallysuccessfulneartheCapitolcomplex.OneCapitolPoliceofficer

was injured but is in stable condition. The driver was killed in the incident and the

conditionofachildinthecarisunknown.Thewomansmotiveisunknown,however,thereisnoevidencethattheincidentwasterrorist-related.

TodaysAgencySpotlight:DepartmentofTransportation

TheDepartmentofTransportation(DOT)ispartiallyshutdownwithapproximatelyone-

third of its overall workforce furloughed. The furloughs are not distributed across theagency evenly, with approximately 33% of the Federal Aviation Administration (FAA),

more than 50% of the Federal Railroad Administration (FRA), and nearly 95% of the

Federal Transit Administration (FTA) furloughed; some of the FAAs Office of AviationSafetypersonnel,however,willberecalledtoworkincrementallyoveratwo-weekperiod.

ActivitiesthatwillcontinuetooperateattheFAAincludeairtrafficcontrolservices,airportinspections, hazardous materials safety inspections, and on-call accident investigations.

The FRA will continue the continuous inspector presence on railroadproperty as their

absenceisconsideredasafetyhazard.TheFTAwillcontinuelimitedfunctionsfundedfromprioryearappropriations,includingsomeHurricaneSandyrelatedactivities.


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SuspendedactivitiesincludetheNationalHighwayTrafficSafetyAdministrations(NHTSA)

defectsinvestigations,vehiclesafetyactivities,andthereviewofincominginformationonpossibledefects. TheFAAhassuspended facilitysecurityinspections,evaluations,audits

and inspections; air traffic performance analysis; the development of NextGen safety

standards; routine personnel security background investigations; and law enforcementassistancesupport.AttheFRA,suspendedactivitiesincludegrantandfinancialassistance

activitiesaswellastheirintake,processing,andevaluationofgrantapplications.TheFTAwill not execute any grants, contracts, purchase orders or other documents obligating

fundsorreimbursetransitagenciesforongoingoperations.Octoberisnormallyamonthin

whichgrantees request significant reimbursements so the impactwill be felt keenly bysmallagencieswithoutalotofcashonhand.Forongoingprojects,theFTAstaffwillcease

environmental,legal,civilrightsandotherreviewsessentialforadvancingprojectstothepoint of obligation. For more information on specific activities, please see the DOTs

Contingency Staffing Plan:

http://www.dot.gov/sites/dot.dev/files/docs/DOT%202014%20Plan%20for%20Approp

%20Lapse.pdf.

PublicOpinion

Wecontinuetowatchformeaningfulpublicopinionpolling.

RecommendedReading

WashingtonPost:JohnBoehner,betweenarockandahardplaceonshutdownanddebt

limithttp://www.washingtonpost.com/politics/john-boehner-between-a-rock-and-a-hard-place-on-shutdown-and-debt-limit/2013/10/02/32a27f1a-2b9f-11e3-8ade-

a1f23cda135e_story.html?tid=pm_pop CNN:GovernmentShutdown:Whatweknowanddontknow

http://www.cnn.com/2013/10/02/politics/government-shutdown-knowns-

unknowns/index.html?iid=article_sidebarPOLITICO:GovernmentShutdown:Isagrandbargaintheonlywayout?

http://www.politico.com/story/2013/10/government-shutdown-debt-ceiling-grand-

bargain-congress-97757.html?ml=po_rNewYorkTimes:RepublicansSayBoehnerVowstoAvertFederalDefault

http://www.nytimes.com/2013/10/04/us/politics/debt-limit-impasse.html?_r=0TheEconomist:Whydoesthedebtceilingmatter?

http://www.economist.com/blogs/economist-explains/2013/10/economist-explains-0

LosAngelesTimes:Op-edDontwaitonthedebtlimithttp://www.latimes.com/opinion/commentary/la-oe-strain-debt-ceiling-

20131003,0,5729329.story

Formoreinformationorforspecialinquiries,pleasecontactManattsFederalGovernment

AffairsGroup.

JamesBonham,Chair


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FederalGovernmentAffairsandPublicPolicyPractice

[email protected]

Manatt,Phelps&Phillips,LLP

70012thStreet,NW,Suite1100Washington,DC20005-4075

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Federal Government Shutdown - Daily Update Oct 4, 2013

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