Washington flirts with a financial crisis. Nobody has a plan to stop it

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Everyone knows that everything will happen, but nobody seems to have a plan – at least for the moment – to avoid disasters.

"It's one of those caricature moments overhead," a US GOP congressional assistant told CNN. "We all look knowingly around us, like" Man, we're about to be crushed by that, "but no one really knows how to get out of it."

The fight for disaster relief

The latest signs of Congressional malfunctioning came this week as Republicans and Democrats continued to negotiate for months on disaster relief for states recently hit by hurricanes, floods and fires. forest, a subject that can easily win a bipartisan consensus. instead, repeatedly fell apart on irrelevant issues.

"If we can not do that, what the hell can we do on something much bigger?" The chair of the Senate Credit Committee, Richard Shelby, asked after a phone call with White House chief of staff Mick Mulvaney. "I hope this is not an overview of upcoming events."

The Alabama Republican told Mulvaney that his inability to pass the aid bill was not an encouraging sign for tougher negotiations.

"It's the longest memory I've known for a long time but I do not see anything important that is not solved," Shelby added. "But I said:" It's small – very important, but small – compared to what we'll face if we do not get direction. "

The US government has moved from one fiscal and fiscal crisis to another for almost 10 years. But as demonstrated last winter's record-breaking, the joker is now Trump, whose unpredictable trading style has sometimes left Congress vacillating. The president has clashed with Democrats for months to include Puerto Rico's funding in the Disaster Bill, and his administration has further stretched the talks by trying to include the $ 4.5 billion dollars demanded by Trump for the security of the border, an action firmly opposed by the Democrats.

Shelby pointed to the $ 100 billion automatic cuts in spending that will be triggered in October if Congress does not reach an agreement to increase budget ceilings on discretionary spending, that is, almost everything except outside social security and health insurance.

Congress has reached a two-year agreement to raise the ceiling in 2017. If lawmakers do not approve a further increase, the budget will have to return to 2011 levels.

Deadlines can lead to negotiations

Legislators – and especially the main creditors in both houses – have already moved out of impossible negotiations, usually pulling the last rabbits out of their hats at the last moment. And, despite the winter shutdown, the 2018 budget process was the most successful of the decades, with more than 75% of the government funded through a regular process by the end of the fiscal year.

Unlike the disaster relief package, negotiations on spending and debt ceilings are accompanied by tight deadlines and heavy consequences for non-compliance. For Republicans, this would mean dark cuts in defense programs, a top priority for the GOP. Democrats should accept equally painful cuts to national programs, which have long been their top priority in the talks.

Why does Washington make Wallick so nervous?

The deadlines, said several assistants and lawmakers who spoke to CNN about this story, have a way of clarifying the urgency for the negotiators of all parties, and a US debt default is generally seen as something something that members of both parties would rather avoid.

But Shelby is concerned that his colleagues – and the White House – are not paying enough attention to the dangers ahead.

A problem: Trump may not realize how bad a budget crisis and a payment default would be.

Shelby, who raised the issue at Republicans' regular political luncheon this week, said he and his collaborators were working on a document with the Congressional Budget Office and the Office of Management and Budget, which clearly outlined the issues. effects. He told CNN once it was over, he intended to report it directly to Trump to highlight the issues.

"I told our caucus yesterday that it would be draconian, they probably did not think much about it because they think we'll take care of it," Shelby told CNN earlier this week. .

But he acknowledged that time works against everyone.

"The month of June is approaching and wow, we have mountains to climb," he said.

The three-legged stool

The discussions are in the wake of Trump's tax reform, which has increased the deficit. The president – who proclaimed a long time ago "the king of debt" – has nevertheless promised to increase defense spending, and White House officials have actively sought ways to reduce the debt burden. to increase the military budget without the Congress, attracting the objections of the Democrats.

In recent months, the White House has had the idea of allowing automatic budget cuts to take effect in the name of budget cuts. White House officials spoke openly about this idea at the GOP senior leadership meeting earlier this year, two people familiar with the conversation told CNN. They discussed other ways to raise funds to offset cuts in the defense sector. No one was deemed plausible by the staff present, officials said.

Mulvaney also explained in his conversations with congressional Republicans that he opposed the removal of national spending ceilings, according to several senators and aides of the geopolitical party – even though Democrats who control the House have made it clear that he was a non-partisan.

Congress leaders tried to start the discussion. Senate Majority Leader Mitch McConnell publicly announced last month the establishment of a two-party staff working group to formulate a two-year budget agreement. He expressed optimism about the possibility of reaching an agreement. This idea was evoked following a previously unpublished meeting between Trump, McConnell and Republican House Leader Kevin McCarthy – an idea reflecting widespread unease at the GOP conference about imminent cuts to automatic defense, told CNN two sources close to the meeting. . The staff group, which includes the chief policy officers of Capitol Hill's four key executives, has met twice, but progress has yet to be determined.

The Democrats, burned by the closure, have called for negotiations to remain on the hill.

"I think the only way to get a budget is the one we've had over the last two years, if the president stays out of it," Schumer told CNN. "I think if you talk to my Republican colleagues and they tell you what they tell us, they will tell you the same thing."

But Shelby, who has clashed with Mulvaney in previous negotiations and has a close and effective working relationship with his Democratic counterpart, Senator Patrick Leahy, has made it clear that the White House must remain involved. Shelby's efforts to inform and keep Trump informed are seen as a key reason for the president to finally agree to end the fight for the closure of the database.

"We have a three-legged stool," says Shelby. "Democrat House, President of the Republican White House, Republican Senate, We must have all who hold the stool high."

Lawmakers have until September to keep the government open and avoid a repeat of the collapse of last winter. This partial closure left about 800,000 unpaid federal employees during the holidays, as well as an unknown number of government contractors who have not received any salary arrears. The shutdown, which originated in a quarrel over the financing of a border wall, came to an end after personnel problems with air traffic controllers resulted in delays in flights to New York and around the main ones. airports, creating a political backtrack for the president.

Extraordinary measures are only a temporary solution

There seems to be less debate around the debt issue. Since the First World War, Congress has attempted to limit federal borrowing and has regularly raised the borrowing limit as the US government debt increased. The debt limit was suspended in 2015, after the Republicans danced with the default in a fight with the Obama administration.

The limits came into effect in March, but the US government was able to use "extraordinary measures" to continue paying its bills. These measures should be exhausted early in the fall.

Treasury Secretary Steven Mnuchin called on lawmakers to increase the maximum amount of debt as soon as possible, but until now, they have not wanted to give up pressure on pressing issues such as Immigration, although the greatest Democrats also indicated that they did not want to take the risk. The solvency of the United States.

"America is not going to pay its debts and what it owes, so I think we should not use this as a political problem," said House Minority Leader Steny Hoyer on Wednesday. . "But, and it's a big but, we must avoid a crisis of closing the government, as was the case under Republican leadership at the last Congress, which blew up to this Congress." therefore, I urge that we do both at once. " constructively and bipartite ".

When asked if this meant that he wanted to manage the debt ceiling alongside the credit legislation, Hoyer said he was open to any approach that would reach an agreement.

Representative Tom Cole, a Republican from Oklahoma, said that Shelby 's warning should serve as an alarm bell to both chambers.

"Senator Shelby is telling everyone in this House what he needs to know, we need to get out of the party game and focus on the governance of the country: to move approvals bills, to respect the ceiling of the debt, "he said.

"Both parties seem to think that they can turn these things into something, and I do not think you can do it," Cole said. "Whenever you do, you end up in a government stop."

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