Federal Government Shutdown Risk Looms

Potential Government Shutdown Would Close USDA Offices Nationwide, Put Payments to Farmers on Hold

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent
The current battle over funding the federal government and raising the debt ceiling remains stalled in a 50-50 Senate that often takes at least 60 votes to advance a bill. If the impasse continues, the federal government could be shut down on Friday. (DTN file photo by Nick Scalise)

WASHINGTON (DTN) -- Congressional action around a continuing resolution to fund the government, the bipartisan infrastructure bill, the budget reconciliation bill and the debt limit appears to be coming into focus as the government's fiscal year ends at midnight Thursday.

All these issues have implications for agriculture. If the government shuts down, USDA offices in Washington and around the country would have to close. Federal payments to farmers due for release in early October would be put on hold until a funding mechanism is passed that would allow those funds to be released. In the past, special provisions were also needed to ensure food-aid recipients continued to receive aid through the Supplemental Nutrition Assistance Program (SNAP).

If the government's ability to issue debt is not increased, it could affect government payments to farmers and roil credit markets. Treasury Secretary Janet Yellen told Congress on Tuesday that the federal government will run out of money to pay its bills on Oct. 18.

If the federal government is forced to shut down, it would be the third time in eight years. The federal government shut down for 16 days in 2013 in the battle over the Affordable Care Act. The government shut down for a record 35 days from December 2018 to January 2019 in a dispute over funding for a wall on the southern border.

Senate Republicans on Monday blocked a House-passed bill that would have funded the government into December and raised the government's borrowing ability. Senate Minority Leader Mitch McConnell, R-Ky., said shortly before Monday's vote that Democrats have known for months that they need to raise the debt ceiling -- and Democrats control the White House, the Senate and the House. McConnell said Democrats had chosen to "sideline Republicans" and "go it alone."

"They have every single tool they need to do their job," McConnell said.

Sen. Chuck Grassley, R-Iowa, said Tuesday he was told the House of Representatives would pass a "clean CR" -- continuing resolution -- to keep the government operating for a shorter period time. That bill would not address the debt ceiling while other negotiations continue.

House Appropriations Committee Chairwoman Rosa DeLauro, D-Conn., said she would prepare a continuing resolution funding the government without a debt limit increase so that it could be passed by Thursday, averting a government shutdown.

Yellen, in her letter to Congress, said uncertainty over the debt affects the U.S. credit and credit for consumers even when Congress eventually acts.

"We know from previous debt limit impasses that waiting until the last minute can cause serious harm to business and consumer confidence, raise borrowing costs for taxpayers, and negatively impact the credit rating of the United States for years to come," Yellen wrote. "Failure to act promptly could also result in substantial disruptions to financial markets, as heightened uncertainty can exacerbate volatility and erode investor confidence."

House Speaker Nancy Pelosi, D-Calif., has told her fellow Democrats that she will bring the bipartisan infrastructure bill up for a floor vote on Thursday even if the budget reconciliation bill with social programs is not ready. Pelosi said the vote is necessary because authorization for transportation spending will end at midnight Thursday.

Whether Pelosi can convince a majority of Democrats to vote for the infrastructure bill is uncertain. If she doesn't have the votes, Pelosi, as in the past, may not allow it to come up.

House Majority Leader Steny Hoyer, D-Md., and 63 Democrats, all of whom voted to suspend the debt limit under former President Donald Trump, sent Senate Minority Leader Mitch McConnell, R-Ky., a letter urging him to work with Democrats to address the debt limit.

But the Republicans' unwillingness to vote for raising the debt means that Democrats will probably have to use budget reconciliation to increase the debt limit with only Democratic votes.

Meanwhile, Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz., who have said they would not vote for a $3.5 trillion budget reconciliation bill, are meeting with President Joe Biden Tuesday to discuss what size of bill they would vote for.

Democrats need all 50 Senate Democrats and Vice President Kamala Harris to vote for the reconciliation bill to pass the Senate, since no Republican is expected to vote for it.

The bipartisan infrastructure bill, officially known as the Infrastructure Investment and Jobs Act, includes provisions to repair roads, bridges and ports and to provide Internet service to sections of rural America that don't have broadband. The budget reconciliation bill as written contains an array of programs that would also increase the baseline of spending available for the next farm bill and tax changes that would affect businesses and some farmers.

DTN Ag Policy Editor Chris Clayton contributed to this article.

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

Follow him on Twitter @hagstromreport

Jerry Hagstrom