Don't Mess With Taxes

UPDATE, Thursday, Nov. 16, 2023: My initial post's pessimism was unwarranted! Uncle Sam is going to make it through the holidays with all his offices open. The two-pronged continuing resolution (CR) measure approved by the House and Senate and signed into law late today by President Joe Biden provides funding for Veterans Affairs, Agriculture, Transportation, Housing and Urban Development, and energy and water programs through Jan. 19, 2024. All other federal departments will have money to operate through Feb. 2, 2024. Even better for the federal agencies, including the Internal Revenue Service, the current spending levels in the CR remain at current levels, meaning no spending cuts.

It's been a long time since I worked on Capitol Hill, but some things never change. Like political fights over how to fund the federal government that sometimes aren't resolved.

In those cases, Uncle Sam shuts down most of his offices.

September in November: We faced this possibility in September. Back then, I didn't write much about the consequences and inconveniences when federal operations are halted. I was optimistic that a majority of lawmakers would find a way to deal with the issues.

I was partly correct. Capitol Hill agreed to a short-term money deal. But that's about to expire.

If no resolution is reached by Friday, Nov. 17, we'll face another federal government shutdown. Some have been very brief, and had no noticeable effect, as they technically only lasted hours. However, 10 funding shutdowns have resulted in federal employees being furloughed and offices closed.

Today, my shutdown outlook is more pessimistic.

The main reason for my now dourer perspective is the change in House leadership. Former Speaker Kevin McCarthy was ousted by his Republican colleagues primarily because of the deal he cut with President Joe Biden to raise the nation’s debt ceiling and avoid U.S. default.

New Speaker Mike Johnson understands how he got his job, so he's hewing to the line drawn by the group of far-right House Republicans that engineered his predecessor's exit.

This small, but powerful House GOP bloc wants budget cuts in exchange for continued funding. That's not popular with Democrats who control the Senate or the White House. So …

Funding shout outs: That's why, with less than a week until many government services are put on involuntary hold, this weekend's Saturday Shout Outs go to the items below discussing what's happening now and what we might face when Nov. 17 rolls into Nov. 18.

Johnson leans into conservative demands with two-tiered plan to avert shutdown warns a Politico article published this afternoon. "It already seems unlikely the spending plan could pass the House, with the new speaker saying they would need Democrats to support it," write the political website's reporters Olivia Beavers, Jordain Carney, Caitlin Emma, and Sarah Ferris.

House GOP proposes two-step plan to fund government, raising shutdown risk notes a Washington Post article on the same topic. But the problem, write reporters Jacob Bogage and Jeff Stein, is that while the two-tiered proposal was originally favored by the far-right House Freedom Caucus, key members of that group have more recently been skeptical of the plan because it lacks spending cuts. 

U.S. government once again begins preparing for possible shutdown looks at what might happen if no deal is reached. Washington Post reporters Tony Romm and Marianna Sotomayor remind us that with only days before federal funding is set to expire, U.S. agencies and programs prepare for major interruptions to their public services. 

As Government Shutdown Deadline Nears, Here Are The Likely Outcomes offers another look at the potential upcoming inconveniences and, in some cases, hardships ahead. While another continuing resolution could disrupt some aspects of government, such as travel and hiring practices, a shutdown has a far greater economic impact, writes Forbes senior contributor Simon Moore.

US House Republicans plan shutdown-averting measure amid credit warning notes how the Moody's credit agency decision to lower its outlook on the government's credit ratings to negative might affect Congressional action. Reuters reporter David Morgan also tells us what we already know: a prolonged partisan fight over a stopgap measure could prevent Congress from averting a shutdown.

Another government shutdown looms: Would it impact Social Security, VA benefits? asks The Hill. The good news, writes reported Addy Bink, is that services deemed essential would remain intact.

Just what is essential and which workers are need to ensure they continue is detailed in the official closure contingency plans filed by each U.S. department and agency. The plans spell out how many employees would get furloughed; which employees are essential and would work without pay; how long it would take to wind down operations in the hours before a shutdown; and which activities would come to a halt.

The Internal Revenue Service's plan says that of its 89,944 employees as of Sept. 19, only 30, 063 will be working if no funding deal is reached. They will be paid using Inflation Reduction Act money, Special Compliance funding, and user fees.

That's not good news for all of us waiting for the IRS to eliminate the persistent backlog that started during the COVID-19 pandemic. But at least we're past the Oct. 16 extension deadline, so the IRS has been able to work on some of those millions of late-filed returns.

You also might find these items of interest:

• IRS reverses plan to stay open if government shuts down (Sept. 23, 2023)
• Tax and financial lessons from the government shutdown (Dec. 23, 2018)
• 22 35 days and counting into the longest U.S. government shutdown ever finally is over (Jan. 25, 2019)

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