Threat of Government Shutdown Lingers as Congress Heads for August Recess

If Congress cannot agree on top-line federal spending numbers by October 1, the United States could face a government shutdown—and time to reach an agreement is running out.

Funding for federal agencies dries up on September 30 when the fiscal year reaches its end. With the Senate seeking to raise spending levels in FY 2024 and the House demanding sharp cuts, heated negotiations loom on the horizon.

Despite 64 days remaining between now and the September deadline, Congress has just 18 working days left on the calendar as lawmakers leave Capitol Hill today to begin their annual August Recess. While some of them believe that will be sufficient time to reach an agreement, others are preparing for a shutdown if they don't get what they want.

"We should not fear a government shutdown," Republican Congressman Bob Good of Virginia, a member of the hard-right Freedom Caucus, said during a Tuesday news conference. "Most of what we do up here [on Capitol Hill] is bad anyway. Most of what we do up here hurts the American people."

In a House where Republicans hold their majority by just five seats, coalitions can exert immense influence. The Freedom Caucus, a group of at least 49 conservatives, has done just that, demanding the House institute deep cuts in this year's appropriations bills that fund the government and including provisions that address "culture war" issues like drag shows and critical race theory.

While those issues will likely be met with contempt from liberals in the Democratic-controlled Senate, the House's spending cuts face wider scrutiny, including by some GOP Senators.

The lower chamber aims to cut spending to around the FY 2022 level of $1.47 trillion, a number well below the $1.59 trillion cap President Joe Biden and Speaker Kevin McCarthy agreed to during the spring debt limit negations that resulted in the Fiscal Responsibility Act.

Meanwhile, the Senate wants additional funding on top of the $1.59 trillion cap, seeking $13.7 billion in emergency spending, $5.7 billion of which would go to nondefense programs, with the remaining $8 billion going toward defense. For some Defense Hawks, even this number is not enough as the country looks to boost its competitiveness with China and ensure Ukraine comes out ahead of Russia.

"The Navy's in decline as China's is going up, and GDP on defense is on tap to be an all-time low," Republican Senator Lindsey Graham of South Carolina, who sits on the Appropriations Subcommittee on Defense, told Newsweek. "We took a giant step forward with the $8 billion...but it's still not enough."

On Thursday, the Senate Appropriations Committee unveiled a bill that designates nearly $832 billion in defense spending. In contrast, the House Appropriations Subcommittee on Defense proposed a bill that would spend over $826 billion on defense.

The Biden-McCarthy deal sets the Pentagon's budget at $886 billion, a number reached by combining the two aforementioned spending numbers with funding in other appropriations bills. The House committed to that number in its passage of the annual National Defense Authorization Act on July 14, but the Senate, with its $8 billion in emergency funding, aims to go beyond that level.

During a time of divided government, it's not unusual for the two chambers to be apart when it comes to appropriations levels, Molly Reynolds, a senior fellow in governance studies at the nonpartisan Brookings Institution, told Newsweek. It is unusual, however, for the two parties to reach a deal and for both chambers to quickly go against it.

The House Republican proposal to reduce spending to FY 2022 levels is an unusually deep cut, Reynolds said. While the Senate seeking funds beyond the agreed caps set by Biden and McCarthy is unusual, she said, it's a "little more common" for Congress to seek additional spending. Regardless, both chambers' defiance of the deal is not helpful to the functioning of Congress.

"That presents a real challenge because, if you want the legislative process to work, you need the players to believe that what they agreed to is going to stick," Reynolds said. "That is a little bit less common than just the idea that the two parties are going to be far apart on these numbers."

Despite the unusual nature of the spending deliberations, Reynolds is not convinced that a government shutdown is inevitable. If Congress cannot come to an agreement by September 30, it has the option to pass a "continuing resolution" which would extend current spending levels to a decided-upon date, such as December.

In the past, shutdowns have largely been the result of politicians seeking a specific policy change. The government shutdown of 2018 into 2019 came about when former President Donald Trump did not agree to appropriations levels because they did not include funding for the wall he wanted along the southern border. Similarly, the 2013 shutdown occurred when Republican Senator Ted Cruz of Texas and his allies were seeking to defund parts of the Affordable Care Act. Both failed.

"It really comes down to some actor, or group of actors, trying to accomplish a really strongly held goal," Reynolds said, "and they see holding up funding for the government as the most effective way to make that happen."

For some members of the Republican conference, that issue could become spending cuts. However, while issues like instituting cuts to Obamacare and constructing a southern border wall were widely supported by Republicans in both chambers, views toward FY2024 are more mixed.

Senator Susan Collins of Maine, who serves as the top Republican on the Appropriations Committee, remains optimistic that Congress will be able to pull itself together and avert a shutdown. Working in a bipartisan manner with Committee Chair Patty Murray of Washington, Collins helped pass all 12 annual spending bills, the first time the committee has done so in five years.

"That sets up September to be appropriations month if Leader [Charles] Schumer wants it to be," Collins told Newsweek. "I hope he will start scheduling our bills immediately upon our return, and we can start talking to the House over the August recess."

"I'm not saying that we're going to be able to get all of the bills enacted by October 1," Collins added, "but if Senator Schumer brings the bills to the floor and we do conferences, I see no reason why some of them can't."

Update 07/28/23, 1:24 p.m. ET: This article was updated to clarify language.