White House

A Shutdown Just Became Much More Likely

Mick Mulvaney, veteran of the 2013 shutdown, sounds like he's preparing for war.

When budgeting turns scary.

Photographer: Cem OzdellI/Getty Images

The potential for a government shutdown at the end of this month seemed extremely unlikely. But now it’s time to get scared for no other reason than Office of Management and Budget director Mick Mulvaney's brash comments to CNBC's John Harwood:

HARWOOD: What are the chances it happens?

MULVANEY: I think it's very low. And keep in mind, no one entity can shut the government down. It takes three to tango, the House, the Senate and the White House. And if they can't agree, you have a lapse in funding. That's the term that the Congressional Research Service uses for what the media calls a shut-down. It's happened 17 times between 1976 and 1994. Those lapses in funding used to be fairly typical.

HARWOOD: Do you think it's not that big a deal?

MULVANEY: I think it depends. I think the government, if you measure it in terms of the dollars out the door, about 83% of the government stays open in a government shut-down. Social Security checks go out, military still exists. The FBI still chases bad guys. I think the consequences have been blown out of proportion.

To understand why this is so frightening, I'll have to explain the history of government shutdowns. Mulvaney is correct that "lapses in funding" used to be typical, although until 1981 the government just continued operating without any funding. Extended government shutdowns have never been typical. In fact, there have only been two of these episodes longer than, say, a three-day weekend: One in 1995-1996 (which followed on the heels of an earlier 5-day shutdown in fall 1995), and one in 2013. The shorter "lapses" were typically the result of normal bargaining and normal budget brinkmanship which just needed a little prodding from a (relatively) hard deadline to bring all sides to their final positions.

The elongated shutdowns have been different. They were not accidents of failure to reach an agreement on time; they were deliberately planned. Why? In each case, congressional Republicans believed Democratic presidents cared more about keeping the government operating than they did and would therefore give in to demands unrelated to normal bargaining.

In other words, extended government shutdowns – the only ones worth considering -- have happened if and only if one side in budget negotiations wants a shutdown as political leverage for something else.

The only other possibility is massive incompetence. After all, a shutdown is very easy to avoid, even if bargaining is at an impasse. All they have to do is pass a short-term spending bill (a "continuing resolution") to push back the deadline by keeping spending levels set to where they have been up to this point (or to some other agreed-upon numbers). If necessary, the entire remainder of the fiscal year can be handled by a series of short-term spending bills. 

Up to this point, it was safe to assume up that if Republicans aren't ready to pass something by April 28 deadline, they'll simply add more time. 

But Mulvaney's comments do not sound like someone who is confident all sides can strike a deal. They don’t even sound like someone who is concerned about finding a compromise but sincerely wants to get one. Instead, he sounds exactly like the radical Republicans of 2013 who decided first to take the government hostage, and then flailed around trying to figure out a good ransom to ask for.

If you aren’t scared yet, remember this: Mulvaney was one of them.

That misbegotten strategy involved simultaneously shutting down the government in order to gain bargaining leverage -- and trying to convince the public that the shutdown was no big deal. Thus the euphemistic "lapses in funding" rather than shutdown, and the assurance that emergency services remain intact, and the (true, but misleading) reminder that very short shutdowns are not unusual.

In any event, Republicans were spared most of the political damage from the fall 2013 shutdown -- despite initial polls which looked terrible for them -- because the shutdown coincided with the botched rollout of the Obamacare marketplaces, which overtook the shutdown story in the news media as soon as the impasse ended.  

Maybe this is just Mulvaney's failure to update his talking points. But it sounds to me like a White House preparing for war.

If they really intend to fight for something -- over sanctuary cities, or the border wall, or something else -- which would provoke a Democratic filibuster in the Senate, and they intend to insist on shutting down the government rather than accepting a clean short-term funding measure (that is, one that just keeps current policy and funding in place) while they negotiate. They may believe that the lesson of the previous shutdowns is that the president has all the advantages -- which is probably not the case if the White House provokes the disagreement during a time of unified government. 

Then again, Mulvaney could simply think there's a good chance that congressional Republicans are so dysfunctional they won't be able to pass anything at all, and he's pre-spinning against the consequences of that potential debacle.

And on top of all that, it doesn't help calm things down that Mulvaney also, in the same interview, minimizes the effects of a government default, which would happen unless Congress and the president raise the debt limit soon. 

All in all, I still think the amount of incompetence and foolishness it would take for Republicans to shut down the government a few months into a period of unified Republican government makes it relatively unlikely we'll have an extended shutdown, or even a very short one. It's just too easy to pass a short-term extension. But perhaps shutdown alarmist Stan Collender is correct. If there was only a 10 percent chance (or less) before, Mulvaney has just increased my assessment of the chances to maybe 30 percent. And rising. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.