Budget Deficit

Avoiding a Government Shutdown Means Adding $30 Billion (at Least) to the Debt

The House-passed continuing resolution died Friday in the Senate, but any deal to keep the government operating will likely do similar damage to the deficit.

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Caro / Sven Hoffmann/Newscom

Keeping the government open will come with a hefty price tag, and lawmakers seem poised to put it all on the nation's credit card.

With a possible shutdown of the federal government looming unless lawmakers agree to a new spending plan before midnight on Friday, the House on Thursday passed a continuing resolution (CR) extending current spending through February 19. Tied up with the CR to keep the government open are bills to extend funding for the Children's Health Insurance Program (CHIP) for six years and a deal to address the status of so-called "Dreamers," illegal immigrants who came to the United States as children, which is itself tied up with Trump's desire to ramp-up security along the U.S.-Mexico border.

Because the CR requires 60 votes to pass the Senate, Republicans are unable to pass it without Democratic votes. Those votes are, for now, not forthcoming. What happens in the next 10 hours, before the shutdown happens, is still anyone's guess—about the only thing that is clear is that House-passed CR is dead in the Senate.

And for anyone worried about the status of the federal debt, that's good news.

Though it was largely lost behind the other issues being discussed in advance of the possible shutdown, the CR passed by the House on Thursday would have added another $30 billion to the national debt. It would have ignored spending caps set by Congress in 2011 and would have disregarded cuts implemented as part of the 2013 sequester.

Tax cuts included in the CR would further add to the national debt. As the Committee for a Responsible Federal Budget points out, the bill would have included a two-year delay of the so-called "Cadillac tax" on high-cost health insurance plans, which is set to go into effect in 2020, a one-year suspension of the health insurer tax, which was suspended last year, went into effect for 2018, and would be suspended again for 2019, and a two-year delay of the medical device tax, which came back into effect in 2018 but no tax has been due yet.

"We need our leaders to reach a budget deal that sets achievable discretionary caps and finances any near-term spending increases with permanent spending cuts or new revenue," said Maya MacGuineas, president of the CFRB, in a statement about the House-passed CR. "The ultimate goal should be to reduce ballooning deficits – this bill increases them."

It could get worse. Rep. Justin Amash (R-Mich.) tweeted Thursday before the House vote that the CR was a prelude to further increases in those spending caps.

Coming as it does in the immediate aftermath of the passage of a major tax cut that will reduce government revenues by about $1.5 trillion over the next 10 years, the idea that Congress is trying to increase spending seems like the height of fiscal insanity. Every dollar spent today must be collected in taxes someday later. Cutting taxes is great, but it's also easy. Cutting spending, it seems, is near impossible for Congress to even consider—indeed, they are far more interested in finding ways to get around existing limits on spending than they are in reducing spending at all.

It appears that the House-passed CR is dead. Whatever comes next could quite possibly be worse.