With just two days to go until September 30, a government shutdown remains highly likely. While tomorrow’s meeting at the White House with the “Big Four” Congressional leaders could yield a surprise, we view the odds of any last-minute breakthrough as low, with both sides entrenching further into their respective positions over the weekend.
As a reminder, House Republicans passed a clean short-term continuing resolution (CR) on September 19 before departing town for the Rosh Hashanah recess. The vote was 216-212, with only Rep. Jared Golden (D-ME) crossing party lines to vote yes, while Reps. Thomas Massie (R-KY) and Victoria Spartz (R-IN) were the only two Republicans to vote no. The CR is clean and runs for seven weeks through November 21-giving leadership and appropriators additional time to work through the FY26 appropriations process.
The House’s successful vote seemingly put Senate Minority Leader Chuck Schumer in an identical position to that which he found himself in March, when he and nine other Senate Democrats voted to fund the government through the remainder of the fiscal year. What has changed, however, is an increasingly restless Democratic base that is fed up with compromise-similar to the Republican posture in 2013-instead clamoring for their leaders to “fight back” against the Trump Administration.
Publicly, Democratic Leadership has pointed to the upcoming December 31 expiration date of enhanced COVID-era ACA healthcare subsidies as their rationale for voting against the CR. Leaders Schumer and Jeffries have both insisted that it is incumbent upon Trump and the Republicans to negotiate with them over an extension of those subsidies as a prerequisite to voting for a CR. Moreover, Jeffries has stated that “any agreement related to protecting the health care of the American people has to be ironclad and in legislation,” throwing some cold water on the notion that a simple handshake agreement to discuss the subsidies would be sufficient for ending the impasse.
Meanwhile, Congressional Republicans have adopted the posture that they are happy to discuss any matter with Congressional Democrats, but only after the CR passes and the government is funded beyond September 30. Indeed, a number of House and Senate Republicans have openly stated that some extension of the ACA subsidies ought to be considered, albeit with modifications to current law. This is not a uniform position within the party, though, as many conservatives have simultaneously called for the subsidies to expire at the end of the year. Still unknown is President Trump’s view on the subsidies, a wildcard that could change the current dynamics should he choose to weigh in on the issue ahead of a shutdown.
Finally, the White House is signaling that they plan to make any shutdown as painful as possible, with Office of Management and Budget Director Russ Vought directing agencies to begin drafting Reduction in Force (RIF) plans for their departments and agencies that would extend beyond standard furloughs, leading potentially to the permanent elimination of an untold number of additional government positions deemed not essential during a shutdown.
Congressional Schedule for the Week. The Senate returns to session on Monday to vote on the nomination of UN Ambassador Michael Waltz to be the U.S. representative at the United Nations General Assembly. This will be followed by a vote on whether to invoke cloture on the motion to proceed to Senator Ron Johnson’s (R-WI) Eliminate Shutdowns Act, which is expected to fail.
On Tuesday, the Senate will hold two separate votes related to the CR, each of which requires 60 votes to pass. The first is on the Democratic alternative to the House-passed bill, which includes a CR through October 30, a permanent extension of the expiring enhanced premium tax credit subsidy, a rollback of the Medicaid spending reductions included in the GOP reconciliation bill earlier this year, and a ban on future rescissions of Congressionally approved appropriations. All told, the cost of the Democratic alternative could reach $1.5 trillion relative to the House-passed CR.
After that vote fails, the Senate will then vote on the House-passed clean CR, which will almost certainly be the last chance to avert a shutdown and is also likely to fail. If so, we expect Leader Thune to refile cloture on the motion to proceed to the House-passed CR, forcing another vote on that measure as soon as Thursday. Using the right to reconsider failed votes, the Majority can force frequent re-votes on the House-passed bill moving forward. In contrast, we do not anticipate that Senate Democrats will have the ability to force a re-vote on their alternative proposal again after Tuesday.
Across the Capitol, the House is not scheduled to officially return until October 7, though it remains unclear if and when the House would be brought back into session for any shutdown-related business. As of this writing, House Republican Leadership is signaling that no floor or committee business will be held during a shutdown. Instead, the House will likely only vote-at most-on a daily quorum call to log Member attendance, while continuing to insist that the Senate pass the CR to November 21 that already cleared the House.
National Defense Authorization Act. The Senate continues to work towards an agreement to advance the National Defense Authorization Act (NDAA), which has been on the Senate floor without any real movement for the last few weeks. Leader Thune and Senate Republicans have cleared the latest version of a Unanimous Consent request that would provide for a second “managers package” of amendments to be included in the bill, along with a list of additional amendments-Republican, Democratic and bipartisan-that would receive votes.
The request now sits with Senate Democrats, who must determine if they want to agree to this latest version of the consent request. If Democrats agree, we do not anticipate that further action on NDAA will occur until a shutdown concludes. If they do not agree, it is more likely that the Senate will then move onto other business, leaving the process for a final “conferenced” NDAA to play out through informal discussions between House and Senate authorizers.
In either scenario, House and Senate Armed Services Committee staff will begin conducting staff-level negotiations in October and Big Four negotiations in November, with the notional goal of filing a final bill in early December. As a reminder, any extraneous policy matters seeking inclusion in the NDAA must first receive approval from the four corners of the relevant authorizing committee(s), as well as sign-off from Leadership and the Administration.
Appropriations. The Senate and House have each passed three FY26 appropriations bills, and the four corners had been in active discussions on a bipartisan basis on the Agriculture, Military Construction-Veterans Affairs, and Legislative Branch appropriations bills for the past several weeks. Prior to the shutdown drama taking root, progress on those three bills had been made-including an agreement on funding levels for each of the three bills-despite continuing lack of agreement on a topline number to cover all 12 annual bills.
Once a shutdown concludes, we anticipate continued bipartisan efforts to finalize those bills, such that they could be included in the next government funding vehicle. Leader Thune may also attempt to bring another minibus package of several bills to the floor in October, to potentially include Defense Appropriations. Of course, continued cooperation between the parties will be necessary for another minibus to move through the Senate, but appropriators remain eager to try.
Nominations. After several weeks of procedural hoops, Senate Republicans changed Senate Rules and confirmed their first en bloc group of 48 nominations before leaving for recess. Leader Thune then began the process of teeing up the next round of en bloc nominations, which includes more than 100 nominees reported from a host of Senate Committees.
Moving nominations en bloc requires substantial floor time, with two separate cloture motions required and up to 30 hours of post-cloture debate for each-a process that spans more than a typical Senate legislative week. We expect that Senate Republicans will look to pass a major nominations package every six weeks or so moving forward, though the majority will also process select individual nominations periodically as circumstances dictate. Cabinet-level nominations will continue to be processed individually, as will Article III judicial nominations (District, Appellate and Supreme Court positions).
OUTLOOK/ANALYSIS. Having lived through multiple government shutdowns, a few analogues come to mind as we forecast how the coming days and weeks might unfold.
The first is the 2013 GOP-initiated shutdown over defunding Obamacare. Then, as now, the party not in control of the White House faced a base that was loath to compromise with the President. Then, as now, the issue at hand was healthcare. Though Republican Leadership did not view the fight to defund Obamacare as winnable in any real sense, showing the base a willingness to fight proved more important than any broader strategic considerations. In the end, Congressional Republicans folded after seventeen days, having extracted no substantive concessions on Obamacare.
The other relevant episode is the January 2018 so-called “Schumer Shutdown,” triggered when Senate Democrats attempted to force President Trump into signing an extension of legal protections for Deferred Action for Childhood Arrivals (DACA) recipients. Similarly, that lapse lasted only three days before Democrats folded, also having secured no meaningful concessions.
The history of shutdowns has been that the party making the demand to add extraneous provisions in exchange for keeping the government open is the party that loses the shutdown-regardless of the political makeup of Washington. This would seem to put Democrats at a disadvantage in this instance, though they will certainly do their best to force some concessions from the GOP.
Beneath the bluster and bravado, however, both parties have privately expressed unease at their respective postures heading into this particular showdown.
While Republicans should be able to retain the upper hand if they remain united behind their November 21 CR, message discipline has been a challenge over the years, to say nothing of the potential for unforced errors. Monday’s White House meeting with the Big Four bipartisan Congressional leaders will be especially telling as it pertains to demonstrating resoluteness on the Republican side of the table.
Conversely, Democratic Leadership knows that they are unlikely to extract anything close to the lofty list of demands they have presented, all while their constituencies in heavy public-sector states bear the increasing brunt of an especially painful shutdown as the days drag on. Moreover, the vote to reopen the government is always much harder than the vote to shut it down, as Democratic Leadership certainly knows in the back of their heads.
Instead, what is true in every shutdown is that both parties will enter the fight and think that they are winning. It is only after a few days-once the court of public opinion weighs in-that one side realizes they are losing and begins to look for an offramp. Time will tell precisely what form that offramp looks like and when it arrives.
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