Cheat Sheet: Understanding the Budget Standoff and Government Shutdown 

How does a shutdown work?

Congress has a few hours to reach a budget deal to fund the government for the rest of the year or else come Saturday, the federal government will go into a partial shutdown.

But what’s the budget standoff all about and what would a shutdown really entail? Here’s our attempt to explain the basics:

Basics behind the budget standoff's political calculations

The GOP and the Obama administration are currently locked in a standoff over a difference of $7 billion to $30 billion—a miniscule amount of the total $3.5 trillion budget. (OMB Watch, an open government group, has a thorough account [1] of the budget battles that led up to this point.

Sen. Majority Leader Harry Reid said Thursday morning that the budget disagreement isn’t just about the numbers [2]. He said Republicans are holding up an agreement based on ideological disagreements over the powers of the EPA and funding for Planned Parenthood.

House Speaker John Boehner countered that [3], saying, “There’s far more than one provision that’s holding up an agreement.” Boehner defended the many riders—or policy restrictions—included in the GOP’s budget. OMB Watch has listed them [4] [PDF].

Also contributing to some of the tension is the the GOP's 2012 budget proposal, which was put forward by House Budget Committee Chairman Paul Ryan this week. The Washington Post’s Ezra Klein has a simple summary [5] of the proposal, which lowers corporate taxes and taxes on the wealthy, extends the Bush tax cuts permanently, calls for repeal of both the health care law and Dodd-Frank financial reform law, and freezes discretionary spending at 2008 levels.

Political calculations

The negotiations have been a bit complicated for a few reasons. The first is that it’s not always clear what the two sides are using as the baseline [6] for cuts—whether it’s current operating levels or Obama’s proposed budget for 2011 (which never passed). Both parties have at times used the 2011 budget proposal as a baseline, making the cuts sound more impressive. 

Another reason it’s been hard to nail down numbers is that Republicans haven’t always been on the same page.  The Tea Party-supported GOP freshmen, who aren’t at the negotiating table, have stuck to a hard line on the budget. House Speaker John Boehner, who is at the negotiating table, says there’s “no daylight between the tea party and me.”

But it’s clear that in the run-up to the November elections, the GOP pledged $100 billion in cuts, and when the House in February proposed [7] a list of somewhat scaled back spending cuts closer to the Obama administration’s current offer, House leaders got grief from some GOP freshmen [8] and pledged the next day to cut a full $100 billion. (That’s using [9] President Obama’s never-enacted 2011 budget as a baseline, so it translates to about $61 billion in cuts from current levels.)

Boehner, moreover, pledged not to stop at $100 billion [10], according to Time magazine: "We're not going to stop there,” he said at CPAC. “Once we cut the discretionary accounts, then we'll get into the mandatory spending. And then you'll see more cuts.”

But this week, he reportedly told President Obama that he could probably agree to about $40 billion in cuts [11] (using current levels at the baseline). That’s still $7 billion more than the $33 billion that the Obama administration has offered to cut. Democrats have complained that the GOP keeps shifting its goalposts [12] for compromise.

How a shutdown works

At agencies whose budgets are subject to Congressional appropriations, workers are put in two groups: essential or non-essential.

Essential workers keep working—though they won’t get paid until funding is back again. Non-essential workers will be furloughed, so they won’t go to work until the funding issues are resolved, and they won’t get paid for days missed unless Congress specifically says so.

Which federal workers will be affected?

The Office of Personnel Management on Tuesday night posted some guidance [13] on what would happen in the event of a shutdown. Workers find out from their agencies whether they’ll be furloughed until today or, at the latest, Friday.

The Washington Post has a piece on how frustrating this has been [14] for some workers. And the New York Times has noted that the American Federation of Government Employees, the largest union for federal workers, has sued [15] the Office of Management and Budget to get more information on agencies’ contingency plans.

The president and members of Congress, who aren’t subject to furloughs, will still get paid—though a bill to reverse that has passed the Senate but not the House [16].

Lessons from the last shutdown

At this point, most of the predictions about what will happen in a shutdown are based on what happened in previous shutdowns. And most of the information cited on this seems to have been taken from a Congressional Research Service report [17] released in February [PDF].

The report notes that from 1995 to 1996, two shutdowns occurred—one that lasted five days and furloughed 800,000 workers; another that lasted 21 days and furloughed 284,000 workers. That’s a lot of variation, and keep in mind that entirely new agencies [18] have been formed in the 15 years since the last shutdown.

Which government services would be affected?

The New York Times has a handy list laying out how various government services might be affected [19]. Some things that would continue mostly unaffected are military operations, the Federal Reserve, the postal service, and Medicare and Social Security payments. An accompanying story also outlines some potential scenarios [20] in more detail:

The National Zoo would close, but the lions and tigers would get fed; Yellowstone and other national parks would shut down. The Internal Revenue Service could stop issuing refund checks. Customs and Border Patrol agents training officials in Afghanistan might have to come home. And thousands of government-issued BlackBerrys would go silent.

… In any shutdown, the government does not completely cease functioning, of course. Activities that are essential to national security, like military operations, can continue. Air traffic control and other public safety functions are exempt from shutdowns. Federal prisons still operate; law enforcement and criminal investigations can continue.

The Times also has a piece on how state governments may be affected [21] by a federal shutdown. The answer: not too much if it’s a short shutdown, but a long one could present real problems.

Follow on Twitter: @mariancw [22]

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