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Trump Shutdown Threat Puts 2019 Policy Improvements at Risk

President Trump’s vow to shut down the government if Congress doesn’t provide his border-wall funding threatens many important policies that lawmakers of both parties have hammered out in recent months — especially if it prompts them to fund the government through continuing resolutions (CRs) rather than regular appropriations bills.

A shutdown would only affect part of the federal government, since policymakers have already enacted five of the 12 annual appropriations bills for this fiscal year. But it would still have harmful real-world impacts that, depending on its duration, would affect basic government services ranging from access to national parks to Agriculture Department service centers that assist farmers across the country. In addition, shutdowns hurt small and large businesses that conduct work for the government or otherwise depend on a functioning government, by disrupting payments and contracting. Shutdowns also are highly inefficient, diverting federal agencies from performing their mission to managing the shutdown and staff furloughs instead, and they can raise costs for government agencies.

Ideally, policymakers would complete work on all seven remaining regular appropriations bills — without funding the President’s controversial $5 billion border-wall request, on which there’s no consensus. At a minimum, they should complete work on the six bills on which policymakers have reached a consensus, then adopt a full-year CR for the seventh: the Homeland Security bill, through which border-wall funding would come. But if the President undercuts that approach by continuing to promise a government shutdown over wall funding, the remaining options for averting a shutdown all have major downsides.

One option under discussion is for policymakers to enact a short-term CR covering all seven bills, which would keep the government open temporarily, likely until early next year. The government has already been operating under two short-term CRs since the October 1 start of fiscal 2019. Extending a CR into the next calendar year would be more problematic, however.

For starters, policymakers’ incentives to reach an agreement on the appropriations bills might not improve next year, so we might face more shutdown threats and more short-term CRs.

A partial-year CR wouldn’t set final agency funding levels for the fiscal year; it simply would keep agencies operating at current levels, irrespective of whether their needs had increased or shrunk. And agencies can’t finalize their operating plans for the full year until policymakers enact full-year appropriations (or a full-year CR). Studies find that short-term CRs result in deferred hiring and training, contracting delays that can raise costs, deferral of maintenance, and other disruptions. Further, a delay in setting final funding levels also would hamper the ability of lawmakers to move forward on next year’s legislative business, including setting funding levels for fiscal year 2020.

A full-year CR would address these uncertainties, but it also would bring its own serious disadvantages. It would generally keep agencies and programs funded at last year’s levels irrespective of changes in need, with some selected exceptions (known as “anomalies”). Until the President’s wall funding demand created a roadblock to completing the seven remaining 2019 funding bills, Congress was working on a bipartisan basis to craft these bills and had almost entirely completed that work, making numerous changes from 2018 funding to better reflect current needs. (Those bills also would allocate the modest funding increase that last year’s budget agreement — which set overall 2018 and 2019 funding ceilings for defense and non-defense appropriated programs — allows for 2019.) Many of these changes would likely disappear, however, under a full-year CR.

Housing assistance offers one telling example. House and Senate negotiators have been finalizing a funding bill for the Departments of Transportation and Housing and Urban Development; the House and Senate versions both boost funding for key federal housing assistance programs, including Housing Choice Vouchers, Section 8 project-based rental assistance, and homeless assistance grants. Failure to include these funding boosts in a full-year CR would eliminate vouchers that an estimated 50,000 to 100,000 low-income households — largely seniors, working families with children, and people with disabilities — are now using to secure decent, affordable housing. As a result, housing affordability problems and even homelessness would likely rise. (This added funding is needed, in part, to offset the inflation-driven rise in rental charges in housing markets.)

Reverting to 2018 funding levels in housing assistance also would disrupt contracts with many private owners who rent housing at affordable rates to low-income households. And the loss of some funding for homeless assistance would deny needed aid to tens of thousands of people who are already homeless. In addition, the House bill includes an innovative demonstration project to test new ways to help families receiving rental assistance move to lower-poverty neighborhoods; powerful recent research shows that doing so materially improves the chances of poor children to succeed, both in childhood and as adults.

Some fraction of these issues and others like them might be addressed by Congress if it makes adjustments to the 2018 funding levels when crafting a full-year CR for 2019, but use of a full-year CR runs a substantial risk that many important increases and policy improvements that are part of the negotiated bills will be lost.

Operating within the reasonable 2019 funding levels of last year’s agreement, lawmakers have worked in bipartisan fashion to complete the 2019 appropriations bills. A retreat to CRs would jeopardize much of this productive effort.

Joel Friedman
Vicepresidente Sénior de Política Fiscal Federal