The Daily Signal - Government Averted a Shutdown. Here's What Happens Next

Episode Date: October 3, 2023

Congress has averted a government shutdown—for now.  The continuing resolution passed Saturday keeps government agencies funded at current levels until Nov. 17. The bill passed 335-91 in the House and 88-9 in the Senate. But it’s a short-term fix, and lawmakers remain on a tight deadline to finish passing 12 annual appropriations bills. Republicans continue to demand federal spending cuts and money to secure America’s southern border, and Democrats are demanding more aid for Ukraine.  “I think what’s likely here is, you’re going to get a little bit of both, not enough to make either side happy,” budget expert Richard Stern says.  Stern, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, joins “The Daily Signal Podcast” to explain what to expect in Congress as spending fights continue over the next six weeks, and how a possible change in House leadership might affect negotiations. (The Daily Signal is the news outlet of The Heritage Foundation.) Enjoy the show! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Tuesday, October 3rd. I'm Virginia Allen. Over the weekend, Congress averted a government shutdown by passing something called a continuing resolution, or also known as a CR. This continuing resolution bill keeps the government agencies funded at their current level until November 17th. The bill passed 335 to 91 in the House and 88 to 9 in the Senate. President Joe Biden signed it on Saturday night, so it's a short-term fix. But what happens in 45 days? And where are Republicans and Democrats in as far as it relates to the standoff? What are their priorities?

What are they both asking for? The Heritage Foundation Director of the Grover M. Herman Center for the federal budget, Richard Stern, is joining us on the show today to answer these questions. So stay tuned for our conversation after this. So what is going on with you? Ukraine. What is this deal with the border? How do you feel about school choice? These are the questions that come up to conservatives sitting at parties, at dinner, at family reunions. What do you say when these questions come up? I'm Mark Geine, the host of the podcast for you. Heritage

Explains brought to you by all of your friends here at the Heritage Foundation. Through the creative use of stories, the knowledge of our super passionate experts, we bring you the most important issues of the day and break them down in a way that is understandable. So check out Heritage Explains wherever you get your podcasts. We are joined today by Heritage Foundation's Richard Stern. Richard, thanks for being back in studio with us today. Thanks again. It was a pleasure.

Well, we went into the weekend thinking that the government was likely about to shut down in the midst of this spending fight. We knew that Congress had very little time to reach an agreement or settle on a continuing resolution, but Congress did succeed in passing this short-term funding bill to keep the government funded until November 17th. What exactly changed over the weekend? How was the government shutdown averted? It's a great question. So, you know, a little bit of this is kind of the magic of how Congress works, or I should say, doesn't work. So, you know, part of this is there's always a lot of messaging going on on both sides of the aisle about what do we think the government should actually

be funded at? What is the role of government? You know, this kind of have two conversations going on at once, right? So one is that, the full year funding bills, what are the limitation provisions, can abortions be funded or not, all of the stuff? The other conversation is we're about the run back into the can again. The can we've been kicking down the road for 10, 20. How don't we get into how many years we've kicked it down the road? And so the can's back up again. So, you know, part of what happened here was there wasn't a lot of conversation about anybody being willing to come together to kick it down the road a few more days. And everyone kind of looked at each other and said, do we really want to shut down the government?

Do we really want to go through the harangue of Biden putting barricades in front of the Washington Monument? And everyone kind of looked and was like, no, let's not do that. So, you know, conservatives put up kind of their firm position on what they wanted to see, which was a real spending cut. There was another group of conservatives that kind of wanted more than that. And so I would say kind of let the perfect beat the enemy of the good. And so that forced the issue to be like, all right, fine. We'll just kick the can down the road for another 45 days. and we'll set up a Thanksgiving fight.

Okay. Thanksgiving fight. Yes, that is coming down the road and quickly, 45 days, especially in Washington, D.C. That time moves fast. Now, among the 90 House Republicans that voted against this continuing resolution, this spending bill, and there was also one Democrat who voted against it, do we know why they specifically opposed it? I don't know why the Democrat voted against it, but the 91 Republicans wanted more. They wanted to see real spending cuts. They wanted to say HR2, the border security package that had been including Republican bills, signed into law, the debt commission that was going to be done things like that.

You know, I'm with them, right? Spending is out of control, and we say that all the time. But, you know, mortgages are out of price right now. You know, the average mortgage on a median home is $300,000 more in interest costs of the lifetime on the mortgage because of federal spending, let alone inflation. Prices are up 17 percent since Biden took office. groceries alone up more than 20 percent, right? So I'm with them. We need to secure the border, but we need the cut spending.

We need to tie the hands of regulators. These things are essential for the American public. So now Congress has 45 days to do just that. How likely is it that they are going to do just that? They have 12 appropriations bills that they are looking at. They've set themselves up, like we said, to have until November 17th to get movement on these. What's likely going to happen in the next 45 days? Well, as the old adage goes, predictions are hard, especially about the future.

But, you know, I'm actually very optimistic, right? So as you pointed out there, for the first time in well over a decade, conservatives have actually sat down and put together appropriations bills that it cuts spending, that have these provisions that tie the hands of regulators, that they've meshed with the board security legislation, et cetera. We've now had, as you said, four of those bills come through the House. Conservatives have worked together on them. They're working on the other ones of them. And so I think this presents a unified conservative vision of actually making good in these promises of actually cutting spending, of actually tying the hands of regulators. So it's a little bit of anybody's guess. And in fact, you know, the most traditional thing that happens is another CR that would go to like December 12th.

So maybe we'll back on the show if that happens. Yeah. It won't be a Thanksgiving fight. Then it would be a Christmas fight. Exactly. And we do this every year. But for the first time really in over a decade, I'm actually optimistic. We're going to get real spending cuts whenever this shakes out.

Okay, among the 12 appropriations bills, are there any that you're looking at and it looks like are going to be pretty easy that there will be agreement on and that likely will pass pretty soon here in the coming weeks? So the four that have gotten done are the ones that there was the most agreement on. All of them have had a lot of fights. They've been a little bit of a dumpster fire in terms of the politics on it. But they've gotten done. And actually, a lot of those four bills, they've had provisions at different points in time. People looked and said, you know what? This is not going to happen. There's no chance it's going to get done.

And you know what? They've gotten it done. So what I would say is, you know, the House leadership is, I think, very carefully going from the lowest-taining fruit to the highest-dating fruit. So we're a third off of the way up the tree. We'll see where the rest of it goes. But I'm still encouraged that there's room for negotiation and putting these bills together. Well, speaking of negotiation, the two kind of major elements that you see Republicans and Democrats fighting over is money related to Ukraine for Democrats and for Republicans is border security. So you have Republicans digging in their heels saying we're not moving forward with spending

bills that don't have money for border security. You have Democrats digging in their heels saying we want more money for Ukraine. How much funding do they specifically want? What really are Republicans and Democrats asking for here? So, you know, the numbers are a little fuzzy at the moment, right? And we've heard anywhere from $24 billion to maybe even $60 billion for Ukraine. And, you know, part of this also on both sides of this is a little bit of an understanding that it's like this is the number of the train, it's leaving the station. So even if you only want a little bit, maybe you should

ask for a little bit more. This is how these negotiations go. But, you know, I would say this, though, right? So we're looking at kind of a handful of money, relatively speaking, for securing the border. And this is a core function of the government. This is a vital thing for America. If you think about the human trafficking, the drug trafficking, the weapons trafficking, the terrorists, frankly, that cross the southern border, and the Biden administration just lets them right on through. So this is absurd. Now, think of the Ukraine funding on the other side of this. A lot of the money we've sent the Ukraine has gone to, and I'm not kidding about this, pension funds for civil servants not related to the military in Ukraine.

So we are doing essentially civilian union pension bailouts in Ukraine more, frankly, in some cases, than we've been doing of anything you could actually rightly call military support. In fact, even more of the money who sent to Ukraine has gone for economic development that as best as we can tell, and I really mean as best as we have information on, has gone the corrupt government officials to line the pockets of their businesses. So, you know, I think part of what we're looking at here is that the left is asking for an enormous amount of money for a war that there is no supervision over, there's no oversight over, where there are serious and damning reports that have come out about where this money goes, the ability to have oversight, the corruption involved in it, for war, that there is no plan to end,

that the Biden administration has made no attempt to actually articulate what the end looks like, what victory looks like. They've been asleep at the switch, bankrolling what has turned into the loss of tens of thousands of lives. I think this is a tragic thing that's going on. So, you know, I think you hit the nail on the head. This is what the debate is. The left and the right are both asking for these things.

But I think there is no comparison in terms of the appropriateness of these two different asks. Securing the border is a must, and the Ukraine funding, the way the left is asking for it with no guard rolls, this is just absurd. It's just reckless. And it's plain with lives, not just American lives, frankly, but with Ukrainian lives. Richard, I want to ask you for a moment to be a realist and explain. My least favorite thing is. I know, I know. I love being optimistic as well. But we do have to look at the current situation. And with Republicans and Democrats kind of in this real gridlock of both saying this is what we want,

We're not backing down. What's the likely outcome? Will Democrats get the money that they're demanding for Ukraine? Will Republicans get the money that they're demanding for border security? So it's a good question. I think it is likely you're going to get a little bit of both, right? Now, there's always a possibility that neither of it happens. But I think what's likely here is you're going to get a little bit of both, not enough to

make either side happy. I think the hope from conservative sides is that kind of the most important border stuff gets funded and that the Ukraine money at least kind of is targeted more to actual military aid and maybe with a little more oversight related to it. So being a realist here, taking my idealistic hat off, you know, I think that's probably the most likely outcome. Okay. All right, let's talk a little bit about the situation, specifically in the House, some drama in the House, House Republican Representative Matt Gates of Florida. He was not happy about Speaker McCarthy calling for a vote on the continuing resolution. And he says that he's going to introduce a motion

to vacate the chair, and I believe it's just five Republicans, and if all Democrats vote against McCarthy, that would oust him as Speaker. What would that mean for spending negotiations if House Speaker Kevin McCarthy is removed from his position? So, interestingly enough, I don't know that it actually affects the negotiations that much, other than it delays them. So, and in fact, if that happens, we might be more likely to get the Christmas fight as opposed to a meaningful Thanksgiving fight. But fundamentally, right, the spending negotiations are about where everyone is in Congress. And I think that's pretty well known, and you have a lot of different fractious camps across the left and the right. So, you know, in an odd sense, I don't know that those

negotiations tee off that much on who is actually in leadership. I think it has to relate to kind of the lay of the ground that's already there. This leadership squabble is something that's years old in the making. McCarty's been around, but he's been in leadership for many years. and a lot of the opposition to him is kind of lawn standing, lawn seated, you know, and Matt Gates, of course, is Matt's Gates, right? And as much as you can kind of model things out and make guesses about things, you never really can predict the actions of one person, right? So we'll see what happens with that. All right, I'm going to allow you to put your optimist hat back on here for a second. And let's say Congress, they call you up and they say, what are the cuts we should make?

and they are all on board for fiscal responsibility. Richard, what are the cuts that you would recommend that are strategic, that are wise, that Congress should be making as they debate the new budget? Well, if they actually called me with that, I would faint. But it's fortunate because we have the annual blueprint we put up every year. And so, you know, we could direct them to that while I'm, you know, trying to get back off the floor again. But, you know, I'd say the way that the think of that, and we have 229 different policy memos online in the blueprint that kind of walk through everything. we would do. But, you know, I would say this, right? In the last six, seven years, we have seen

this astronomical plus up of, at the discretionary level in these approbes bills, agency funding for like a little more staff and a little bit more of this and a little bit more of that little new grant program. So there's no kind of easy fix. But what I would say is all of these different groups on the non-defense side, these are regulators, these are grants that subsidize one industry over another industry. I would get rid of almost all of these. The grants that subsidize industries, none of that should exist. All of that is money we steal from the American people to give to a favored industry over everybody else. It's absolutely a violation of our rights. Those should not be done at all. On the regulatory side, there's a handful of regulations that

really are there to defend your rights to life, liberty and property that are really there to make the government a fulfillment of defending your natural God-given rights. But there's so much regulatory apparatus that exists beyond that. It is, again, there to favor this industry. over that one to favor this kind of area over that area. All of this you could cut. And so what I would say to them is, where you feel comfortable, go through, cut the growth rates on these programs, cut the random excess staffers. Frankly, go back to the text we had of bills in 2016, 2017, back before the massive

plus up in all of these bureaucratic apparatuses and all these new grant programs. I would tell them to do that, frankly. To go back, look at more of the core functions we use. to have. And are any members of Congress actually advocating for that? A lot are the Freedom Caucuses, R.C does. R.C., by the way, puts out an annual budget as well. They mirror a lot of the stuff that we put in there. They talk glowingly about that. You know, I think at the end of the day, the kind of the real crux what comes to this. People think of government money as free stuff. They think of the Fed is having a magic money tree, and it just produces this money, and then when the government

has programs, it's doing a favor for you. It's coming out of your own expense. It's coming out of inflation taxes at the grocery store and out the pump. It comes out of the taxes that are taking out of your paycheck. But, and I'll say this, that's not even really most of where the burden comes from. If you look at satellite photos of North and South Korea, which is seeing South Korea as a vibrant, wealthy, technologically advanced society where people live long healthy lives, conformed families. And in North Korea at night, there's nothing.

Oh, wait, there is a little bit of light, mostly the palace for the emperor, right? But here's really what that is. At some level, the difference between them is the regulatory apparatus. It's the heavy hand of the state, having pushed the North Korean population to remain in the poverty they had prior to the industrialization in South Korea. That industrialization in South Korea was because of the free system, because of the free market, because they believed in people to build, to dream, to innovate, and they added South Korea to the growing global economy. When we do these things, when we regulate, we tax, we print money, we levy inflation taxes, most of that destruction is there's a South Korea out there in a parallel world. There's what the U.S. could have been.

We could have been twice as wealth as well as we are as a country easily today, if not more than that, if we had not built on the regulatory and tax structures we've had over the last several decades. And so the hard part of this is, I know that people's lives are cut short, that their happiness is cut short, that we have missed out on enormous amounts of opportunity precisely because we didn't continue to have the faith to believe in the American people, to work together, to build and dream a brighter and newer future. I can't point to that alternate world, tragically, but I know, and I know from history, that's what we lost out on. And so my encouragement to people listening, my encouragement of the members of Congress is have that faith again, get the government out of the way, and have the faith that if you do that and you come back in a generation or two,

the American people will have built wonders that no one would have thought possible. Is there a world where we could have that, where we could turn it around? I mean, you say a generation or two, how long, practically speaking, would it take? And right now, in this next 45-day period, what is at stake? What are the actions that could be taken in order to set us on? on that positive trajectory. So honestly, you look at like the Tax Cuts and Jobs Act that got passed.

You had an immediate economic high. Unemployment went the 50-year lows. And that's just the beginning, frankly, of the dividends that that tax bill will pay for generations to come. So if we cut spending, if we cut right of the regulators, right? If we got rid of these grant programs that strangle some businesses at the expense of others, you'd see immediate positive economic growth. And then that high growth rate would be sustained for years to come.

You know, and in a generation, you might have half again the wealth per capita of the U.S. and two generations. You'd be looking at more than doubling the economy from where we would have been if we hadn't done those things. So it starts of cutting spending. It starts of cutting the growth rate of spending. It starts of tying the hands of the regulators, getting the government out of the business of micromanaging the economy. And they could make a down payment on that tomorrow or 45 days on the appropriations bills. Heritage Foundation's Richard Stern. Richard, I know that we're going to be talking with you quite a bit more over the next

45 days. So thanks for being here with us and breaking this down. Thank you so much again. And with that, that's going to do it for today's episode. If you want to hear more from Richard Stern, be sure to check out his work at heritage.org. You can also find some of his writings at the Daily Signal website, daily signal.com. But thank you all so much for being with us today for the Daily Signal podcast. If you've never had a chance, make sure that you check out our evening show right here in this podcast feed, where we bring you the top news of the day.

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