WASHINGTON, Aug 21 (Reuters) – A standoff over spending cuts between hardliners and centrist Republicans in the U.S. House of Representatives has raised the risk of a fourth federal shutdown in a decade.
Members of the House Freedom Caucus are pushing to cut spending to $1.47 trillion in fiscal year 2022, $120 billion less than President Joe Biden and House Speaker Kevin McCarthy agreed to in their May debt ceiling compromise. The group on Monday announced its opposition to any suspension move to keep the government afloat if it fails to meet its demands.
As Republicans seek more spending on defense, veterans benefits and border security, analysts say the tough target would mean cuts of up to 25% in sectors such as agriculture, infrastructure, science, trade, water and energy and health care.
Goldman Sachs analysts said in a Monday research note that the shutdown seemed “more likely than not.”
Centrists, who call themselves “governing” Republicans, say their hard-line colleagues are ignoring the fact that their priorities are being rejected by Democrats who control the Senate and the White House, and that spending will end up as much as McCarthy and Biden agreed to anyway.
A major headache for centrist Republicans from swing districts won by Biden in 2020 and others in the firing line of tougher spending targets.
“The cuts are pretty deep,” said Rep. Don Bacon, a centrist Republican from Nebraska. “They want to turn everything into a root canal.”
Hardliners see the 2024 fiscal year, which begins Oct. 1, as a test of Republicans’ resolve to reduce the federal debt and reform social programs including Medicare and Social Security.
“I don’t blame any individual member and want to make sure the bill is right for them and their district,” said Rep. Ben Kline of the Freedom Caucus, a conservative Republican study group and bipartisan. Problem solving caucus.
“For there to be 218 Republican votes, there must be an understanding that spending should be in line with pre-Covid levels rather than a debt ceiling deal.”
A notable source of frustration is the tough demands for cuts in bills already considered by the 61-member House Appropriations Committee.
“We’re not trying to give money,” said David Joyce, a member of the Appropriations Committee who chairs the 42-member Central Republican Caucus.
With Democrats resisting tougher proposals, McCarthy could lose no more than four Republican votes if he hopes to pass all 12 appropriations bills before the funding deadline on Sept. 30.
“I don’t know how they get out of this jam,” said William Hoagland, a former Senate Republican budget director at the Bipartisan Policy Center, a think tank.
Tricky path
When the House returns from summer recess on Sept. 12, lawmakers have 12 days to finalize their bills and pass a compromise bill with the Senate or risk a partial government shutdown.
McCarthy acknowledged last week that they may have to resort to a stopgap funding bill known as a “continuing resolution,” or CR, to keep federal agencies open.
But that option could be complicated by new House Freedom Caucus demands on Monday for a stopgap measure to cut spending, resume some of former President Donald Trump’s border policies, “weaponize” the Justice Department and eliminate diversity and transgender programs.
The caucus also said it opposes new funding for Ukraine.
Some House Republicans say the appropriations challenges are similar to the disagreements McCarthy has overcome on other major legislation, including the April Republican debt ceiling bill that solidified his negotiating position in negotiations with Biden.
“The more appropriations bills that cross the finish line, the more leverage we need to negotiate a good deal with the Senate,” said Rep. Dusty Johnson, chairman of the Main Street Caucus, whose members describe themselves. “Practical Conservatives”.
Failure would mean another costly government shutdown starting in October, the fourth in a decade.
Risk of shutdown
Members of the House Freedom Caucus say the shutdown is necessary to achieve their goals.
“It’s not something that members of the independent caucus generally want,” said Rep. Scott Perry, who chairs the group of about three dozen conservatives.
“But we understand that very few things happen in Washington that don’t happen without someone or something forcing them,” he told Reuters.
Senate Majority Leader Chuck Schumer, the top Democrat in Congress, said last week that Republicans would be responsible for any new shutdown “if the House decides to go in a partisan direction.”
Controversies over funding and policy have shut down the federal government three times in the past decade: once over health care spending in 2013 and twice over immigration in 2018. The 35-day shutdown that began in December 2018 and lasted through January 2019 cost the economy 0.02% of GDP, according to the nonpartisan Congressional Budget Office.
This time, a slim 222-212 House Republican majority could pay the political price. A shutdown would disrupt the lives of Americans a year before the 2024 election, when Republicans must defend 18 House seats in districts won by Biden in 2020.
McCarthy should seek a CR, which requires bipartisan support to neutralize hardliners, analysts said.
That could jeopardize the free speech of McCarthy, who is under an agreement to allow a lawmaker to move to impeach him.
Will the House Freedom Caucus end McCarthy’s reign on a CR?
“I wouldn’t go that far,” Perry said. “It’s a final option. We want to work with leadership. We want to work with Kevin, and we think we can.”
Report by David Morgan; Editing by Scott Malone, Daniel Wallis and Cynthia Osterman
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