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NEWS | Government Shutdown in the Forecast for Washington

Capitol Hill is cloudy with a chance of Shutdown for the foreseeable future.

As of late Tuesday, House Speaker Kevin McCarthy (R-Calif.) does not have the votes to pass—or even consider—a continuing resolution (CR) to fund the government in the House.

While at the start of the day, there had been plans for a procedural vote on the CR deal brokered between the moderate Main Street and conservative Freedom Caucuses, the vote was quickly pulled off the calendar after a Republican Conference meeting on the issue.

Additionally, a similar procedural vote to allow consideration of a Defense Appropriation bill failed, losing five Republicans. This is concerning, as this Defense vote was viewed by many as a bellwether for Republican leadership’s ability to corral support for the broader CR, given that the Defense bill was an easier vote for conservatives on the substance.

The removal of the vote from the calendar is an admission from the Speaker’s camp that he does not have the support he needs, but it also buys him vital time to modify the bill and whip a few crucial votes. The early word is that Speaker McCarthy has instructed his leads on the CR to redraft the measure to win more conservative support, meaning that he is giving ground to the House Freedom Caucus, who demanded strong policy riders (elements of a funding bill that act to alter Federal policy without going through traditional channels) as a precondition for support.

Speaker McCarthy’s move is liable to weaken his standing in Congress, though it is unlikely to change the outcome of the funding battle. The Senate under Democratic control is all but guaranteed to turn its nose at any Republican-led CR, and instead proceed on an alternative track, likely foisting its own “clean” (modification and policy-rider free) CR back on the lower chamber, daring them to oppose it.

Had the Speaker won today’s vote, he might have been able to seek particular concessions in his negotiations with Senate leaders, but the Freedom Caucus’ rebellion has likely cost them that option. Currently, the consensus in Washington is that we are most likely headed to a shutdown, as the Senate refuses to consider Republican-driven bills, and a vocal minority in the House holds even conservative-led bills hostage with its newfound leverage.

Millions of small businesses do business directly with the federal government and a shutdown would mean they won’t get paid—regardless of what services and goods they’ve already supplied. Furthermore, government shutdowns have historically succeeded in only two things: weakening the U.S. economy and confidence in our elected officials.

“Not only will millions of small-business federal contractors and subcontractors will be impacted by contract delays, stoppages and cancellations, the trickle-down effects cannot be understated: every business in their supply chain, their employees and their families WILL feel the pinch of a government shutdown – they always do,” stated NSBA President and CEO Todd McCracken.

He went on to comment that, “Small-business programs, such as those under the U.S. Small Business Administration (SBA), particularly their lending programs, will begin to experience long delays due to the absence of staff and inevitable backlog of approvals or even forcing the smallest of businesses to spend money they don’t have on accountants to provide the assistance typically provided by the IRS. A small handful of elected officials are manufacturing a crisis out of partisan discord with a focus solely on reelection. This is unfair, unreasonable and unacceptable.”

Stay tuned to NSBA for the latest updates on the potential government shutdown.


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