The new federal fiscal year begins at 12:01 AM Friday, October 1st.

Much of the federal government is funded through twelve annual appropriations bills.

If an appropriations bill that funds part of the federal government is not enacted before the new fiscal year begins, that part of the government shuts down except for essential employees.

While the House has passed two of the twelve bills, the Senate has passed zero. Most of the federal government will therefore shut down early Friday morning.

It is not unusual for the Congress to fail to enact all 12 appropriations laws before October 1st. It is quite unusual to not have even tried to pass a single one by this time. This is related to the House and Senate majority’s inability (or refusal) to pass a budget resolution back in the spring, and in my view it represents a fundamental failure of governance that is independent of the substantive content of these laws. I would probably dislike many of the 12 appropriations bills that would be passed by this Congress, but I still think America would be better off if they had gotten at least some of their work done on time.

I expect that, between now and Thursday midnight, the House and Senate will pass and the President will sign into law a continuing resolution, commonly referred to by insiders as a CR.

A continuing resolution (CR) is a law that provides temporary funding for those parts of the federal government for which annual appropriations laws have not yet been enacted.

Even more simply, a continuing resolution is a temporary short-term spending truce.

The defining attributes of a CR are:

  • It funds only those parts of government that have not already been funded by an appropriations law. This year that’s all 12 bills – pretty much the whole federal government.
  • It is temporary and usually short-term. CRs typically fund the government only for a few days, weeks, or a couple of months. It is rare but not unheard of to do a full-year CR. Often Congress will pass several short-term CRs in succession, to repeatedly buy themselves just a little more time to get the appropriations bills done.
  • It is a continuation of the previous year’s funding levels (+ or – a small delta) and policies. Congress in effect agrees to a short-term truce in which they merely extend what was done last year for a little while, to buy themselves time to battle out the new funding priorities that they should have gotten done by now.

Since the first attribute is well-known in any given year, policymakers will talk about a CR in terms of duration and funding levels. “We’re going to do a one week CR at last year’s levels,” or “I heard there will be a CR at least year’s level + inflation that will get us into the lame duck session.”

Sometimes the parties will fight about the level and duration of the CR or whether a particular spending change should be included. In my experience the legislative leverage almost always lies with (a) whichever person or party wants the shorter duration CR and (b) whichever person or party wants a “clean” CR, meaning fewer or no policy or funding changes.

Other times there’s a truce in which the party leaders agree not to make a big deal about the terms of the CR. This year there’s a big red vs. blue battle on taxes, so that may suck some of the air out of a potential CR battle. You may therefore see little press coverage of the CR, because no conflict ==> no news.

I expect a CR that will extend past Election Day and expire sometime in November or December. After the election everyone will regroup in Washington, figure out what the election results mean for the balance of power, and then decide whether they want to try to broker appropriations compromises in the lame duck session or extend the CR into the new year when (maybe) a new party takes control of Congress.

I don’t have good intel on what funding level this year’s first CR will provide. The bid/ask spread is usually between last year’s level and last year’s level + an adjustment for inflation. It’s designed to be somewhat tight to encourage Congress to actually get their regular appropriations work done.

While a CR is supposed to be a simple extension of last year’s funding allocations and policies, there are always a few handfuls of anomalies justified by particular conditions. For instance, it doesn’t make sense to continue the Census funding at the 2010 levels into 2011, because we’re not redoing the Census next year. The appropriators and OMB will usually negotiate this list of anomalies, in which everyone agrees that only technical corrections like this one are allowed. Policy changes that one or another party wants are excluded.

The Obama Administration recently submitted a list of proposed changes that go well beyond technical anomalies. From a process standpoint the appropriators should ignore the proposed policy changes and accept only the technical anomalies. The right place for the policy debates is in the regular appropriations process, whenever that should occur. If the Administration’s proposed changes were sufficiently important then they should have pushed on Congress to get their work done sooner.

In 1995 Republicans included a Medicare premium policy change in a Continuing Resolution. The change was generally considered technically necessary and should have been noncontroversial, but it was nevertheless a policy change. President Clinton seized the opportunity to make a political issue out of the Medicare premium “increase.” He vetoed that CR. The government shut down and President Clinton successfully assigned blame for the shutdown to the Republican Congress. While a few Republican Members are thumping their chest that they welcome a government shutdown, there are enough Republican Members and staff in positions of power who remember that shellacking that they won’t allow Republicans to make the same mistake again. A CR will be enacted into law in the next few days.

(photo credit: maistora)