Obama Issues Government Shutdown Threat

President Obama warned of stopped Social Security checks and issued a formal veto threat Tuesday to the Republican spending plan currently being debated in the House, setting the stage for a potential government shutdown next month.

Democrats in the last congress did not pass a budget at all, so the government has run on a series of stopgap spending extensions since October. The current one expires March 4.

Republicans, now in control of the House, have worked up a plan to fund the government to the end of the year that reduces spending $61 billion from 2010 levels and $100 billion from what Obama has requested. The House will have a second day of contentious debate on the spending plan as hard-line deficit hawks and pro-spending liberals take turns trying to amend the bill.

Despite all the falderal, final passage is anticipated Thursday, and attention is already shifting to the Senate.

There, the 47-member Republican minority is suggesting that their cuts will look different than the ones made by their friends in the House, but that they will try to match the volume of reductions. That provides a chance for the Senate GOP to start working on a compromise with moderate Democrats to find the 13 votes needed to push through a plan (more if ultra hawks like Sen. Rand Paul fly away).

Knowing the way the Senate operates, Power Play predicts that the final Senate legislation will be halfway between the Obama proposal and the House bill. That’s just how they roll.

Then, the House has to decide whether it can accept the compromise legislation. This would be the first chance for a government shutdown.

Senators are working up a short-term spending measure to provide more time for negotiations, but even that will be controversial among the most conservative members of the House. But there would likely be enough moderate Republicans and Democrats to back a very short-term extension – perhaps three weeks – to finish the negotiations.

It will then be up to a similar coalition of Blue Dog Democrats and most Republicans to put through the Senate plan over Tea Party protests. This is when things will get very dicey for the House leadership. There are many in their caucus who would much rather see the government shut down than yield in their pledge to slash spending.

But, some legislation will emerge from Congress, with cuts likely a little deeper than those passed by the Senate – a compromise of the compromise. Then it’s up to Obama to decide if he will accept.

Remember, because Democrats failed to pass a budget last year, the responsibility falls to Obama for any potential government shutdown. Unlike 1995 when the battle was over President Bill Clinton refusing to sign a Republican-passed budget, Obama will be put in the position of refusing to sign a stop gap spending proposal necessary because his party didn’t act in the previous year. This is not a long-term priority issue. This is an emergency appropriation.

Another major difference from 1995 is that with a Democratic Senate, Obama will have his chance to work his will before the legislation gets to his desk.

Hanging over all of this is the administration’s demand that Congress increase the federal debt limit from the current $14.3 trillion. Speaker John Boehner’s team has enhanced the Republican bargaining position here by detaching the debt limit issue from the budget. The House previously made such increases a part of spending bills, but the GOP is setting the issue aside for consideration.

That gives Republicans more time to pressure Obama for cuts – potentially as late as May.

Sen. Pat Toomey today will defend in a speech the Republican position that not increasing the debt limit does not necessarily mean defaulting on U.S. obligations. In 1995, President Bill Clinton used the default trigger as his reason for shutting down the government.

In Obama’s press conference Tuesday, he warned of an end to Social Security checks and veterans pension payments if Republicans didn’t produce a “responsible” spending plan.

But despite Democratic confidence that another shutdown would be a repeat of 1995 when then-Speaker Newt Gingrich lost his showdown with Bill Clinton, Obama seems unlikely to veto a spending plan and shut down the government rather than sign a measure produced with some bipartisan support and relating to only 15 percent of the budget for half of one year.

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