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Tag: federal spending

  • Get the Facts: How often do government shutdowns occur?

    Funding gaps and government shutdowns haven’t always been a regular topic of conversation when Congress debates federal spending. The federal government shut down just after midnight Wednesday, making it the 21st funding gap and 11th shutdown since 1977, according to an analysis by the Get the Facts Data Team.A funding gap is a period of time during which funding for a project or activity is not enacted into law. This can be through a regular appropriations act or a continuing resolution. Funding gaps didn’t start occurring until the Congressional Budget Act of 1974 was passed, which established deadlines for passing federal budgets.Funding gaps and government shutdowns are two separate events. A funding gap occurs when there’s a lapse in funding, but a shutdown happens as a result of a funding gap when agencies begin closing and employees are furloughed.Prior to 1980, many government agencies continued to operate during a funding gap until Attorney General Benjamin Civiletti issued stricter interpretations, believing agencies “had no legal means to operate during a funding gap,” according to the House of Representatives.The shutdowns that occurred in the 1980s were partial or for only a few days, according to Jacob Smith, an assistant professor of political science at Fordham University in New York. The real era of shutdowns began in the 1990s.The process itself is very different now, too. Congress is supposed to pass 12 appropriations bills every year before the start of the fiscal year in October. The last time any of those appropriations bills were passed was in 2019.Instead, continuing resolutions are passed in lieu of the traditional process. When Congress fails to pass regular appropriations acts by the start of a fiscal year, a continuing resolution, or CR, may be used temporarily.The last time a continuing resolution was not needed was fiscal year 1997, when 13 out of 13 appropriations bills needed were enacted before the beginning of the next year.Congress is also pushing up against the deadline frequently — and not just in recent years. Smith believes the race to the deadline has been recent when compared to history, but has been going on for quite a while.“It’s become common that they’re really up against the clock,” Smith said. The Get the Facts Data Team identified continuing resolutions passed at the start of the fiscal year on Oct. 1 for the past ten years, not including the start of fiscal year 2025. These were enacted when regular appropriations bills were not passed by the deadline. The analysis did not include any of the other continuing resolutions passed in a given fiscal year. From fiscal year 1998 to 2025, an average of 4.8 were passed annually.The data team found that half were passed less than 12 hours before the deadline. Four of those instances were from fiscal years 2021 to 2024.The analysis compared the time of the last action by Congress, usually a vote or a motion to reconsider. The time the president signed the resolution into law was not incorporated in the analysis. When continuing resolutions and regular appropriations aren’t used to appropriate funding, Congress also passes omnibus or consolidated appropriations bills. These have played a larger role in recent decades as standalone regular appropriations bills aren’t passed.PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPiFmdW5jdGlvbigpeyJ1c2Ugc3RyaWN0Ijt3aW5kb3cuYWRkRXZlbnRMaXN0ZW5lcigibWVzc2FnZSIsKGZ1bmN0aW9uKGUpe2lmKHZvaWQgMCE9PWUuZGF0YVsiZGF0YXdyYXBwZXItaGVpZ2h0Il0pe3ZhciB0PWRvY3VtZW50LnF1ZXJ5U2VsZWN0b3JBbGwoImlmcmFtZSIpO2Zvcih2YXIgYSBpbiBlLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdKWZvcih2YXIgcj0wO3I8dC5sZW5ndGg7cisrKXtpZih0W3JdLmNvbnRlbnRXaW5kb3c9PT1lLnNvdXJjZSl0W3JdLnN0eWxlLmhlaWdodD1lLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdW2FdKyJweCJ9fX0pKX0oKTs8L3NjcmlwdD4=

    Funding gaps and government shutdowns haven’t always been a regular topic of conversation when Congress debates federal spending.

    The federal government shut down just after midnight Wednesday, making it the 21st funding gap and 11th shutdown since 1977, according to an analysis by the Get the Facts Data Team.

    A funding gap is a period of time during which funding for a project or activity is not enacted into law. This can be through a regular appropriations act or a continuing resolution.

    Funding gaps didn’t start occurring until the Congressional Budget Act of 1974 was passed, which established deadlines for passing federal budgets.

    Funding gaps and government shutdowns are two separate events. A funding gap occurs when there’s a lapse in funding, but a shutdown happens as a result of a funding gap when agencies begin closing and employees are furloughed.

    Prior to 1980, many government agencies continued to operate during a funding gap until Attorney General Benjamin Civiletti issued stricter interpretations, believing agencies “had no legal means to operate during a funding gap,” according to the House of Representatives.

    The shutdowns that occurred in the 1980s were partial or for only a few days, according to Jacob Smith, an assistant professor of political science at Fordham University in New York. The real era of shutdowns began in the 1990s.

    The process itself is very different now, too. Congress is supposed to pass 12 appropriations bills every year before the start of the fiscal year in October. The last time any of those appropriations bills were passed was in 2019.

    Instead, continuing resolutions are passed in lieu of the traditional process. When Congress fails to pass regular appropriations acts by the start of a fiscal year, a continuing resolution, or CR, may be used temporarily.

    The last time a continuing resolution was not needed was fiscal year 1997, when 13 out of 13 appropriations bills needed were enacted before the beginning of the next year.

    Congress is also pushing up against the deadline frequently — and not just in recent years. Smith believes the race to the deadline has been recent when compared to history, but has been going on for quite a while.

    “It’s become common that they’re really up against the clock,” Smith said.

    The Get the Facts Data Team identified continuing resolutions passed at the start of the fiscal year on Oct. 1 for the past ten years, not including the start of fiscal year 2025. These were enacted when regular appropriations bills were not passed by the deadline.

    The analysis did not include any of the other continuing resolutions passed in a given fiscal year. From fiscal year 1998 to 2025, an average of 4.8 were passed annually.

    The data team found that half were passed less than 12 hours before the deadline. Four of those instances were from fiscal years 2021 to 2024.

    The analysis compared the time of the last action by Congress, usually a vote or a motion to reconsider. The time the president signed the resolution into law was not incorporated in the analysis.

    When continuing resolutions and regular appropriations aren’t used to appropriate funding, Congress also passes omnibus or consolidated appropriations bills. These have played a larger role in recent decades as standalone regular appropriations bills aren’t passed.

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  • Get the Facts: How often do government shutdowns occur?

    Funding gaps and government shutdowns haven’t always been a regular topic of conversation when Congress debates federal spending. The federal government shut down just after midnight Wednesday, making it the 21st funding gap and 11th shutdown since 1977, according to an analysis by the Get the Facts Data Team.A funding gap is a period of time during which funding for a project or activity is not enacted into law. This can be through a regular appropriations act or a continuing resolution. Funding gaps didn’t start occurring until the Congressional Budget Act of 1974 was passed, which established deadlines for passing federal budgets.Funding gaps and government shutdowns are two separate events. A funding gap occurs when there’s a lapse in funding, but a shutdown happens as a result of a funding gap when agencies begin closing and employees are furloughed.Prior to 1980, many government agencies continued to operate during a funding gap until Attorney General Benjamin Civiletti issued stricter interpretations, believing agencies “had no legal means to operate during a funding gap,” according to the House of Representatives.The shutdowns that occurred in the 1980s were partial or for only a few days, according to Jacob Smith, an assistant professor of political science at Fordham University in New York. The real era of shutdowns began in the 1990s.The process itself is very different now, too. Congress is supposed to pass 12 appropriations bills every year before the start of the fiscal year in October. The last time any of those appropriations bills were passed was in 2019.Instead, continuing resolutions are passed in lieu of the traditional process. When Congress fails to pass regular appropriations acts by the start of a fiscal year, a continuing resolution, or CR, may be used temporarily.The last time a continuing resolution was not needed was fiscal year 1997, when 13 out of 13 appropriations bills needed were enacted before the beginning of the next year.Congress is also pushing up against the deadline frequently — and not just in recent years. Smith believes the race to the deadline has been recent when compared to history, but has been going on for quite a while.“It’s become common that they’re really up against the clock,” Smith said. The Get the Facts Data Team identified continuing resolutions passed at the start of the fiscal year on Oct. 1 for the past ten years, not including the start of fiscal year 2025. These were enacted when regular appropriations bills were not passed by the deadline. The analysis did not include any of the other continuing resolutions passed in a given fiscal year. From fiscal year 1998 to 2025, an average of 4.8 were passed annually.The data team found that half were passed less than 12 hours before the deadline. Four of those instances were from fiscal years 2021 to 2024.The analysis compared the time of the last action by Congress, usually a vote or a motion to reconsider. The time the president signed the resolution into law was not incorporated in the analysis. When continuing resolutions and regular appropriations aren’t used to appropriate funding, Congress also passes omnibus or consolidated appropriations bills. These have played a larger role in recent decades as standalone regular appropriations bills aren’t passed.PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPiFmdW5jdGlvbigpeyJ1c2Ugc3RyaWN0Ijt3aW5kb3cuYWRkRXZlbnRMaXN0ZW5lcigibWVzc2FnZSIsKGZ1bmN0aW9uKGUpe2lmKHZvaWQgMCE9PWUuZGF0YVsiZGF0YXdyYXBwZXItaGVpZ2h0Il0pe3ZhciB0PWRvY3VtZW50LnF1ZXJ5U2VsZWN0b3JBbGwoImlmcmFtZSIpO2Zvcih2YXIgYSBpbiBlLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdKWZvcih2YXIgcj0wO3I8dC5sZW5ndGg7cisrKXtpZih0W3JdLmNvbnRlbnRXaW5kb3c9PT1lLnNvdXJjZSl0W3JdLnN0eWxlLmhlaWdodD1lLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdW2FdKyJweCJ9fX0pKX0oKTs8L3NjcmlwdD4=

    Funding gaps and government shutdowns haven’t always been a regular topic of conversation when Congress debates federal spending.

    The federal government shut down just after midnight Wednesday, making it the 21st funding gap and 11th shutdown since 1977, according to an analysis by the Get the Facts Data Team.

    A funding gap is a period of time during which funding for a project or activity is not enacted into law. This can be through a regular appropriations act or a continuing resolution.

    Funding gaps didn’t start occurring until the Congressional Budget Act of 1974 was passed, which established deadlines for passing federal budgets.

    Funding gaps and government shutdowns are two separate events. A funding gap occurs when there’s a lapse in funding, but a shutdown happens as a result of a funding gap when agencies begin closing and employees are furloughed.

    Prior to 1980, many government agencies continued to operate during a funding gap until Attorney General Benjamin Civiletti issued stricter interpretations, believing agencies “had no legal means to operate during a funding gap,” according to the House of Representatives.

    The shutdowns that occurred in the 1980s were partial or for only a few days, according to Jacob Smith, an assistant professor of political science at Fordham University in New York. The real era of shutdowns began in the 1990s.

    The process itself is very different now, too. Congress is supposed to pass 12 appropriations bills every year before the start of the fiscal year in October. The last time any of those appropriations bills were passed was in 2019.

    Instead, continuing resolutions are passed in lieu of the traditional process. When Congress fails to pass regular appropriations acts by the start of a fiscal year, a continuing resolution, or CR, may be used temporarily.

    The last time a continuing resolution was not needed was fiscal year 1997, when 13 out of 13 appropriations bills needed were enacted before the beginning of the next year.

    Congress is also pushing up against the deadline frequently — and not just in recent years. Smith believes the race to the deadline has been recent when compared to history, but has been going on for quite a while.

    “It’s become common that they’re really up against the clock,” Smith said.

    The Get the Facts Data Team identified continuing resolutions passed at the start of the fiscal year on Oct. 1 for the past ten years, not including the start of fiscal year 2025. These were enacted when regular appropriations bills were not passed by the deadline.

    The analysis did not include any of the other continuing resolutions passed in a given fiscal year. From fiscal year 1998 to 2025, an average of 4.8 were passed annually.

    The data team found that half were passed less than 12 hours before the deadline. Four of those instances were from fiscal years 2021 to 2024.

    The analysis compared the time of the last action by Congress, usually a vote or a motion to reconsider. The time the president signed the resolution into law was not incorporated in the analysis.

    When continuing resolutions and regular appropriations aren’t used to appropriate funding, Congress also passes omnibus or consolidated appropriations bills. These have played a larger role in recent decades as standalone regular appropriations bills aren’t passed.

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  • Medicare Holds, But the Rest of Healthcare Wobbles: Shutdown Threatens Trials, Telehealth and Safety Nets

    Black Book Research today released an independent assessment showing that while Medicare and Medicaid continue unaffected, the shutdown is forcing sweeping furloughs and program suspensions at the FDA, CDC, NIH, CMS, and SAMHSA, creating systemic risks to patient safety, public health, and medical innovation.

    “The nation’s healthcare system isn’t shutting down overnight,” said Doug Brown, founder of Black Book Research. “But important functions that support research, oversight, and public health are being slowed or suspended. If the shutdown continues, the effects will become more visible and increasingly difficult to reverse.”

    Key Agency Impacts

    Department of Health and Human Services (HHS): Tens of thousands of staff furloughed, with only life-saving or urgent public health functions continuing. Grants, policy development, and regulatory reviews pause indefinitely.

    Centers for Medicare & Medicaid Services (CMS): Medicare and Medicaid claims continue to be paid as mandatory programs. However, audits, program integrity reviews, and innovation pilots including accountable care and bundled payment models stall, leaving oversight gaps.

    Food and Drug Administration (FDA): User-fee funded drug and device application reviews continue, but most food safety inspections, routine facility checks, and non-user-fee programs are halted. Risks include supply chain vulnerabilities and delayed enforcement actions.

    Centers for Disease Control and Prevention (CDC): Emergency outbreak response and essential disease surveillance persist, but broad public health programs, communications, and prevention initiatives are curtailed. The agency’s long-term preparedness mission is substantially weakened.

    National Institutes of Health (NIH): Patients already in clinical trials continue receiving care. However, most grant reviews, new trial starts, and research support staff are furloughed. The U.S. biomedical research pipeline stalls until funding resumes.

    Substance Abuse and Mental Health Services Administration (SAMHSA): Community program grants and state block funding are frozen, threatening the continuity of local substance use and mental health initiatives.

    Indian Health Service (IHS): Direct patient care is protected as essential, but supply chains, contracting, and administrative functions are disrupted.

    Veterans Health Administration (VA): Protected by advance appropriations, VA hospitals and clinics remain operational. Research and long-term policy projects, however, may slow due to staff furloughs.

    Cross-Cutting Risks

    Research & Innovation: With NIH and FDA research pipelines paused, thousands of grant reviews and trial starts are delayed. Innovation suffers immediate setbacks.

    Regulation & Oversight: FDA and CMS furloughs weaken safety inspections, compliance audits, and contractor oversight. Food and medical device monitoring is drastically reduced.

    Public Health: CDC’s ability to track and mitigate health threats outside of emergency outbreaks is severely hampered. Preventive health campaigns and state support programs stall.

    Vulnerable Populations: Programs such as WIC (Women, Infants, and Children) may run out of funds, threatening nutrition access for low-income families. Mental health and substance abuse treatment programs lose stability as grants freeze.

    Provider Operations: Claims payments continue, but cash-flow delays from administrative slowdowns could disproportionately harm smaller hospitals and safety-net providers.

    Duration Matters

    According to Black Book’s analysis, the severity of impact escalates with the shutdown’s length:

    First 2-3 weeks: Entitlement funding cushions core services, but backlogs and administrative slowdowns begin.

    One month or more: Research, grants, and inspections stall significantly. Telehealth waivers and hospital-at-home programs expire without congressional renewal, pulling patients back into traditional settings.

    Multi-month: Structural harm occurs – loss of innovation momentum, worsening health disparities, and rising long-term costs from deferred care and weakened oversight.

    Black Book warns that while core entitlements remain funded, the broader healthcare scaffolding is fragile. A protracted shutdown risks long-term harm to research, regulation, and safety nets, weakening U.S. preparedness for future crises.

    About Black Book Research

    Black Book Research is the healthcare industry’s leading source for unbiased, crowdsourced client experience data, benchmarking, and market intelligence. Since 2011, Black Book has surveyed more than 3.5 million healthcare professionals to provide independent evaluations across 36 key performance indicators for over 5,000 health IT and services vendors. Gratis industry research reports can be downloaded at www.blackbookmarketresearch.com.

    Contact Information

    Press Office
    research@blackbookmarketresearch.com
    8008637590

    Source: Black Book Research

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  • Trump Administration Ends National Blue Ribbon Schools Program

    This article was originally published in Chalkbeat.

    The Trump administration won’t be handing out any blue ribbons to schools this year.

    As President Donald Trump seeks to scale back the federal role in education in key respects, Education Department officials told state education agencies on Aug. 29 that they were ending the longstanding National Blue Ribbon Schools program, which honors high-performing schools and schools that have successfully narrowed academic gaps between student groups.

    Madi Biedermann, a spokesperson for the department, said in the letter that the move was “in the spirit of Returning Education to the States” — a common refrain from Education Secretary Linda McMahon as the Trump administration has slashed staff at the department and sought to reduce federal spending on education.


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    “State leaders are best positioned to recognize excellence in local schools based on educational achievements that align with their communities’ priorities for academic accomplishment and improvement,” Biedermann wrote. “Awards conceived by those closest to the communities and families served by local schools will do more to encourage meaningful reforms than a one-size-fits-all standard established by a distant bureaucracy in Washington, D.C.”

    The decision appears to have been made abruptly: States had already nominated schools for the award. In fact, the deadline for states to sign off on their picks was just one week prior to the cancellation letter. In some cases states had informed schools that they had won, pending the official federal announcement.

    The Alabama Daily News first reported the cancellation.

    The Blue Ribbon program’s goal is to highlight standout public and private schools and share best practices across the country. Winning the award typically brings positive attention and news coverage to schools, and is a badge of honor that can help attract new students, recruit teachers, and boost private fundraising.

    Biedermann said the department is still encouraging states to recognize the schools they nominated for the 2025 competition. But she added that states can now get creative and tailor their own recognition programs to celebrate exemplary schools in certain subjects, or focus on new areas, such as success in preparing students for the workforce and apprenticeships.

    Raven Hill, a spokesperson for the Maryland Department of Education, said the state is exploring next steps, but the pride that comes from national recognition won’t be easy to replace.

    “The schools that receive the Blue Ribbon recognition are our crown jewels,” she said. “It doesn’t matter how long ago a school was recognized, they carry that pride. We can revive our state program, but it would be difficult to replicate the prestige.”

    Terrel H. Bell, President Ronald Reagan’s first education secretary, created the Blue Ribbon program in 1982. Bell famously commissioned the study that became “A Nation At Risk,” which raised alarms about the quality of American education and spurred various reforms. Reagan also wanted to eliminate the Education Department at the time.

    There have been other attempts to get rid of the program, including in 1992 when Congress defunded the program, leading to the abrupt cancellation of the competition. Letters and phone calls poured into Congress, Education Week reported at the time, and funding was eventually restored.

    Chalkbeat is a nonprofit news site covering educational change in public schools. This story was originally published by Chalkbeat. Sign up for their newsletters at ckbe.at/newsletters

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  • Two Big Signs That ICE Has Way Too Much Money

    ICE-branded vehicles parked at the U.S. Capitol on August 13.
    Photo: Andrew Leyden/Getty Images

    ICE is now flush with taxpayer cash thanks to the roughly $75 billion in additional funding the agency received from President Trump and the GOP’s new megabill, making Immigration and Customs Enforcement the most well-funded federal law enforcement agency in the country. Now, it is trying to use that money on some brand-new rides.

    The Washington Post reports that the Trump administration wants to spend millions on new ICE SUVs with custom gold-detailed auto wraps as a way to increase its visibility during Trump’s D.C. takeover and to help with the agency’s massive recruitment drive:

    Government contracting documents made public this week show the agency proposed paying four companies more than $2.4 million: $2.25 million for 25 Chevrolet Tahoes from Hendrick Motorsports in North Carolina and about $174,000 for custom wrapping of Tahoes, Ford Expeditions and other vehicles by three companies, including two in the Washington region. ICE selected the companies without an open bidding process and was required to submit the documents to justify the lack of a full and open competition.

    In the documents pertaining to the three vehicle-wrapping companies, the agency describes the need for the wraps as urgent and “essential for officers to provide support and a law enforcement presence in DC.” The agency also mentions “making the District of Columbia one of the safest cities in the world.”

    They also want to buy some Ford Mustang GTs, Raptors, and GMC Yukon AT4s as part of a nearly $700,000 expenditure to support recruiting:

    ICE wrote in the documents that the Mustangs were “an immediate request by the White House, on Thursday August 7, 2025.” The Mustangs — which are set to cost $121,450 — will aid in recruitment “by serving as a bold, high-performance symbol of innovation, strength and modern federal service,” the documents say.

    DHS and ICE have already literally rolled out a few decal-wrapped ICEmobiles in D.C. and used footage of them on the streets in recruitment marketing on social media. The vehicles are emblazoned with gold ICE logos and the phrase Defend the homeland. The custom detailing also includes the words integrity, courage, and endurance on the rear bumper.

    Spending millions on flashy vehicles is also sort of off-brand for ICE, since in its actual operations, the agency has become notorious for hiding its identity. Almost every time you see footage of ICE doing anything these days, it’s guys wearing full face masks and ad hoc tactical uniforms traveling around in unmarked vehicles and refusing to identify themselves.

    In this sense, featuring the new ICEmobiles in a recruiting pitch is false advertising if recruits will never actually drive or ride in them. It would be more honest to slap terrifying, anonymous, and unaccountable on the bumpers.

    The ICE vehicles’ color scheme and detailing also hold more than a passing resemblance to Trump’s crappy private jet:

    Photo: Jane Barlow/PA Images via Getty Images

    And speaking of planes, ICE wants to spend way, way more to start its own airline, NBC News reports:

    Homeland Security Secretary Kristi Noem is pushing for Immigration and Customs Enforcement to use an influx of funds to buy, own and operate its own fleet of airplanes to deport immigrants, two sources familiar with the discussions told NBC News. Former officials said that ICE owning and maintaining its own planes would be costly but could make it easier for the agency to potentially double the number of people it deports each month.

    ICE uses charter planes to deport immigrants and has done so for years. The agency has typically chartered eight to 14 planes at a time for deportation flights, according to Jason Houser, who served as ICE chief of staff from 2022 to 2023. He said that allowed the Biden administration to deport roughly 15,000 immigrants per month on charter flights.

    Setting up ICE Air would cost billions:

    It can cost $80 million to $400 million to buy a commercial airliner, according to aviation experts at the Pilot Institute, a company that trains pilots. Purchasing 30 passenger jets at that price range could cost $2.4 billion to $12 billion, but it’s unclear if ICE could lower the price per plane by buying a large number of them … Charter companies are also responsible for maintaining the planes and making sure they comply with Federal Aviation Administration rules. If Noem creates the first ICE air fleet, the agency would then be responsible for staffing the planes with pilots, medics and security, as well as maintaining them and ensuring they comply with aviation regulations.

    It’s not clear whether this would save ICE money in the near or long term. NBC reports that according to one tracker, the agency chartered more than 1,000 charter flights through the end of July, and those flights typically cost about $25,000 per hour. And while the Trump administration would undoubtedly love to deport 30,000 people a month, it’s not at all clear that it will be able to do so, or for how long.

    But even if ICE having its own airline ended up being a huge waste of taxpayer money, it’s hard to imagine Trump caring about that. He loves planes and symbolic branding opportunities almost as much as he loves the idea of turning deportation into America’s new pastime. And he’s already moving forward with the ill-advised idea of converting a jumbo jet Qatar didn’t want into the new Air Force One (which could cost $1 billion), while also trying to reopen Alcatraz (a potential waste of $2 billion). Plus, this week, he and Noem started having workers paint the southern border wall black so it would be hotter to the touch (during the day):

    Trump is now planning ride-alongs with his federal forces on patrol in D.C. Could a new ICE-branded Beast towing migrants in a gold cage be far behind?

    Chas Danner

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  • Closing the $688 billion tax gap won't help solve the US debt problem

    Closing the $688 billion tax gap won't help solve the US debt problem

    The IRS is promising its focus on increased tax compliance will help with the nation’s debt problem.

    “Achieving our goals will result not only in a fairer tax system,” IRS commissioner Danny Werfel testified before Congress in October, “but also in benefits for taxpayers and the nation because detecting and stopping noncompliance in these areas would result in significant additional revenues and reduce the deficit.”

    Not so fast, says one expert.

    Even if the Internal Revenue Service achieves a 100% collectible rate, up from the current 86.3% net compliance rate, and closes the estimated $688 billion tax gap, that won’t be enough to meaningfully shrink the chasm between how much the US spends versus how much revenue it takes in.

    “You’re running a $1.7 trillion dollar deficit,” Scott Hodge, president emeritus and senior policy adviser at the Tax Foundation, told Yahoo Finance. “Even perfect tax compliance — an impossible goal — would fall short of eliminating the deficit.”

    The IRS estimated that the national tax gap was $688 billion in 2021, up 14.4% from $601 billion in 2020 and nearly double from $345 billion in 2001. It attributed the tax gap increase to a growing US economy.

    For instance, 2021’s estimated tax gap accounted for 2.6% of overall gross domestic product, or GDP, which was $23 trillion in the same period. This ratio has largely stayed consistent since 2014 — oscillating between 2.3% and 2.6% — demonstrating that both elements grow correspondingly.

    “While $688 billion sounds like a big number and is touted as a big increase from prior years, it is hardly different as a share of the economy than the tax gap figures from prior years,” Hodge wrote.

    Tax collections were also relatively stable when compared to GDP. Between 2015 and 2021, the share of IRS revenue collection has ranged between 16.4% to 18.3% of GDP, while gross revenue continued to climb at an average rate of 3.2%. Revenue collected reached $4.1 trillion in 2021, but the highest GDP share ratio was 18.3% in 2016 when the IRS collected $3.3 trillion in revenue.

    Yet the agency’s revenue has not kept pace with federal spending. Federal spending was $7.65 trillion in 2021, $6.5 trillion in 2022, and $6.13 trillion in 2023.

    The federal government’s share of spending compared to GDP has clocked in between 20% to 30% between 2015 and 2021, government data shows. This is much higher than the tax collection-to-GDP ratio of 16.4% to 18.3% in that same period.

    So even if the IRS collects 100% of estimated revenue and closes the tax gap by hundreds of billions of dollars, the government still can’t meet its growing deficit.

    “While it would be unrealistic to expect revenues to match the level of spending during the pandemic years of 2020 and 2021, 100 percent tax compliance would have fallen well short of matching federal outlays even in pre-pandemic years,” Hodge wrote.

    The federal government's share of spending compared to GDP has clocked in 20%-30% between 2015 and 2021. This is much higher than the tax collection-to-GDP ratio of 16.4% to 18.3% in that same period. (AP Photo/Alex Brandon)

    The federal government’s share of spending compared to GDP has clocked in 20%-30% between 2015 and 2021. This is much higher than the tax collection-to-GDP ratio of 16.4% to 18.3% in that same period. (AP Photo/Alex Brandon) (ASSOCIATED PRESS)

    ‘We have to be realistic’ about the tax deficit

    In 2021, the US net compliance rate was 86.3% — after accounting for late payments and IRS auditing efforts — compared with the agency’s estimated total liability. This ratio is higher than the voluntary tax compliance rate of 84.9% — the share of US taxpayers who voluntarily pay on time without any enforcement efforts, the IRS Tax Gap Projection research reported.

    “Relative to the rest of the world, Americans are very compliant for what is essentially a voluntary tax system,” Hodge said. “We have to be realistic about how much this is going to go to solving the deficit problem.”

    The three components contributing to the $688 billion shortfall in 2021 were non-filings of $77 billion, underreporting of $542 billion, and underpayment of $68 billion, the IRS website shows.

    And there are three approaches to promote more compliance, according to Caroline Bruckner, tax professor at the American University Kogod School of Business and managing director of the Kogod Tax Policy Center.

    “To some degree, the IRS engages in all three,” Bruckner wrote to Yahoo Finance. “However, my latest research suggests we don’t do nearly enough tax education. People don’t know what’s due when or how to file their taxes properly.”

    The three components contributing to the $688 billion shortfall in 2021 were non-filings of $77 billion, underreporting of $542 billion, and underpayment of $68 billion, says the IRS. The three components contributing to the $688 billion shortfall in 2021 were non-filings of $77 billion, underreporting of $542 billion, and underpayment of $68 billion, says the IRS.

    The three components contributing to the $688 billion shortfall in 2021 were non-filings of $77 billion, underreporting of $542 billion, and underpayment of $68 billion, says the IRS. (Getty Images) (courtneyk via Getty Images)

    The agency has also announced plans to step up enforcement efforts and reduce the tax gap by focusing on wealthy individuals with income above $1 million and more than $250,000 in recognized tax debt. It is working on auditing 1,600 taxpayers who owe hundreds of millions of dollars in unpaid taxes, according to an IRS announcement.

    “In all of our compliance work, our goal is to increase our efforts on those posing the greatest risk to our nation’s tax system,” Werfel said last month, “whether that is the wealthy looking to dodge paying their fair share or promoters aggressively peddling abusive schemes.”

    Still, Hodge warned that there is a “delicate balance” between attempting to increase compliance and overburdening responsible taxpayers as well as relying on its deficit reduction argument.

    “We have to really be realistic that the IRS can only do so much,” Hodge said, “especially when the deficit is so large.”

    Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).

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  • What the DeSantis and Newsom Debate Really Revealed

    What the DeSantis and Newsom Debate Really Revealed

    The best way to understand last week’s unusual debate between Governors Gavin Newsom of California and Ron DeSantis of Florida is to think of them less as representatives of different political parties than as ambassadors from different countries.

    Thursday night’s debate on Fox News probably won’t much change the arc of either man’s career. DeSantis is still losing altitude in the 2024 GOP presidential race, and Newsom still faces years of auditioning before Democratic leaders and voters for a possible 2028 presidential-nomination run.

    What the debate did reveal was how wide a chasm has opened between red and blue states. The governors spent the session wrangling over the relative merits of two utterly divergent models for organizing government and society. It was something like watching an argument over whether the liberal government in France or the conservative government in England produces better outcomes for its people.

    “The way the debate will be heard is the nationals of each country cheering their guy on,” Michael Podhorzer, a progressive political strategist and a former political director for the AFL-CIO, told me.

    The sharp disagreements between the governors pointed toward a future of widening separation between red and blue blocs whose differences are growing so profound that Podhorzer has argued the sections should be understood as fundamentally different nations.

    As Podhorzer and other analysts have noted, this accelerating separation marks a fundamental reversal from the generally centralizing trends in American life through the late 20th century. Beginning with the New Deal investments under Franklin D. Roosevelt (such as agricultural price supports, the Tennessee Valley Authority, and Social Security), and continuing with massive expenditures on defense, infrastructure, and the social safety net after World War II (including Medicare, Medicaid, and federal aid for K–12 and higher education), federal spending for decades tended to narrow the income gaps between the southern states at the core of red America and the rest of the country.

    After World War II, in a dynamic that legal scholars call the rights revolution, the federal government nationalized more civil rights and liberties and limited the ability of states to constrain those rights. Through Supreme Court and congressional actions that unfolded over more than half a century, Washington struck down state-sponsored segregation and racial barriers to voting across the South, and invalidated a procession of state restrictions on abortion, contraception, interracial marriage, and same-sex relationships, among other things.

    But both big unifying trends reshaping the economy and the rules of social life have stalled and are moving in the opposite direction. Podhorzer has calculated that the convergence in per capita income between the South and other regions plateaued in 1980 and then started widening again around 2008. And, as I’ve written, the axis of Republican-controlled state governments, the GOP-appointed majority on the Supreme Court, and Republican senators wielding the filibuster are actively reversing the rights revolution that raised the floor of personal freedoms guaranteed in all 50 states.

    On issues including voting, LGBTQ rights, classroom censorship, book bans, public protest, and, most prominent, access to abortion, red states are imposing restrictions that are universally rejected in blue states. As Newsom argued in an interview with me a few hours before he went onstage, “This assault on our rights and the weaponization of grievance” is designed to “bring us back to … the pre-1960s world” in which people’s rights depended on their zip code. Under DeSantis, Florida has been a leader in that process, creating policies, such as limits on classroom discussion of sexual orientation and gender identity, widely emulated across other red states.

    Thursday night’s debate revolved around the differences between Florida and California, though the Fox moderator Sean Hannity hardly presented an accurate picture of the comparison. Both states have their successes and failures. But Hannity focused his questions entirely on measures that favor Florida (such as unemployment rate, violent-crime rate, and homelessness numbers) while ignoring all the contrasts that favor California (which has a much higher median income, far fewer residents without health insurance, and, according to the CDC, much lower rates of teen birth, infant mortality, and death from firearms, as well as a longer life expectancy). Hannity essentially joined in a tag team with DeSantis to frame the debate in terms familiar to his Fox audience that blue states are a chaotic hellhole of crime and “woke” liberalism; when Newsom pushed back against that characterization, or challenged DeSantis’s approach, Hannity often cut him off or steered the conversation in a different direction.

    The narrow focus on California and Florida made sense in a debate between their two governors. But those comparisons can obscure the bigger story, which is the expanding divergence between all the states in the red and blue sections.

    Podhorzer has documented that gap in an array of revealing measures. He divides the nation between states in which Republicans or Democrats usually hold unified control of the governorship and state legislature, and those in which control of state government is usually divided or frequently changes hands. That classification system yields 27 red states, 17 blue states (plus the District of Columbia), and six purple states. By these definitions, the red states account for just under half the population and the blue states just below two-fifths, while the blue states contribute slightly more of the nation’s GDP.

    Podhorzer’s data show that on many key measures, blue states as a group are producing far better outcomes than the red states.

    In new results provided exclusively to The Atlantic, Podhorzer calculates that the economic output per capita and the median family income are both now 27 percent higher in the blue section than in the red, while the share of children in poverty is 27 percent higher in the red states. The share of people without health insurance is more than 80 percent higher in the red states than in the blue, as are the rates of teen pregnancy and maternal death in childbirth. The homicide rate across the red states is more than one-third higher than in the blue, and the rate of death from firearms is nearly double in the red. Average life expectancy at birth is now about two and a half years higher in the blue states. On most of these measures, the purple states fall between red and blue.

    (Podhorzer also groups the states by their voting behavior in federal elections, which results in 24 red-leaning states, 18 blue ones, and eight purple states. But the comparisons between the two big sections don’t change much under that definition.)

    On most of these measures, Podhorzer calculates, the gap between the red and blue states has widened over the past 15 years. He attributes the expansion mostly to the kind of policy differences that DeSantis and Newsom debated. The difference in health outcomes, for instance, is rooted in disparities such as the continuing refusal of 10 red states, including Florida, to expand Medicaid eligibility under the Affordable Care Act (which every blue state has done). As other economic analysts have noted, with their higher concentrations of college graduates, blue states—and the large blue metropolitan areas of red states—are benefiting the most from the nation’s transition into an information-age economy.

    As DeSantis and Hannity did in the debate, defenders of the red-state approach point to other measures. Housing costs are typically much lower in red states than in blue, as are taxes. Those are probably the central reasons many of the blue states, despite their stronger results on many important yardsticks, are stagnant or shrinking in population, while several of the red states, especially those across the Sun Belt, have been adding middle-income families. Lower housing costs are also one reason homelessness is less of a problem in red states than in blue metros, especially along the West Coast.

    But the relative superiority of either model is probably less important to the nation’s future than the widening separation, and growing antagonism, between them that was displayed so vividly in the debate.

    Most experts I spoke with agree that there is now no single difference between the red and blue sections as great as the gulf during most of the 20th century between the states with and without Jim Crow racial segregation, much less the 19th-century distance between the slave and free states.

    But the number of issues dividing the states is reaching a historic peak, many of those same experts agree. Although civil rights and racial equity have made up the most important dividing line between the states for most of U.S. history, “the way in which these issues line up today—on everything from abortion to library books to the question of how much power states ought to have over their local governments … I think there’s not been since the founding such a far-reaching debate,” Donald Kettl, a former dean of the University of Maryland’s School of Public Policy, told me.

    To Kettl, the new wave of restrictive social legislation spreading across red states challenges the traditional idea that local variation benefits the country by allowing states to function as the fabled “laboratories of democracy.” “It strikes me as being incredibly dangerous,” Kettl said. “The good old arguments about the laboratories of democracy is that individual states would try different ideas, find out what works, and throw out the ones that didn’t work. We are not talking about that at all. We are talking about an effort to push a particular agenda and to push it as far as possible.”

    David Cole, the ACLU’s national legal director, likewise sees the erosion of a national floor of civil rights and liberties as the most ominous element of the widening red-blue separation. “We are supposed to be one nation, committed to a common set of fundamental rights,” Cole told me in an email. “But we have increasingly become two nations, with substantial rights protections for some, and robust repression for others. Federalism was designed to allow for some play in the joints, some variations among states—but not on the fundamental constitutional rights to which we are all entitled as human beings and U.S. residents.”

    It’s not clear that in the near term anything will close the space between red and blue states. Neither party has many realistic chances to win power in states that now prefer the other side. And particularly in red states, the dominance of the conservative media ecosystem makes it difficult for Democrats even to present their arguments, as the debate demonstrated.

    In the interview a few hours before he went onstage, Newsom told me that the principal reason he accepted the debate was not so much to rebut DeSantis as to reach Fox viewers. “I want to make the case in their filter bubble,” he told me. “We’ve got to get into their platforms.” Though the forum allowed Newsom to assert some positive facts about President Joe Biden’s record rarely heard on the network, any progress in reaching Fox viewers was likely blunted by Hannity’s framing of every issue as proof of the superiority of red over blue. After the debate, Newsom’s aides said they believed he had achieved his mission of evangelizing to Fox’s audience. But in the end, the evening may have validated Barack Obama’s lament during his presidency that it was virtually impossible for Democrats to communicate with red-state voters except through the negative filter that conservative media build around them.

    Podhorzer is among those skeptical that anything will reverse this process of separation in the foreseeable future. He views the late-20th-century trend toward convergence as the anomaly; “the default position” through most of American history has been for the states we now consider the red bloc to pursue very different visions of moral order, economic progress, and the role of government than those we now label as blue. To Podhorzer, the disagreements on display at the DeSantis-Newsom debate were just the modern manifestation of the deep divisions between the free and slave states, or the Union and the Confederacy.

    In the 2024 presidential race, Biden and the leading Republican candidates have each endorsed new national laws that would reverse our separation by imposing the dominant laws in one section on the other. Biden and other Democrats are backing federal bills to restore a national floor of abortion, LGBTQ, and voting rights in every state; Republicans in turn want to impose red-state restrictions on all those issues in blue states.

    Podhorzer believes that the differences between the states have hardened to the point where setting common national rules on these issues in either direction has become extremely risky. “Any compromise on any of these big issues,” he told me, “means half the country will see a loss in some aspect of what they like about the way they live.” From his perspective, courting that backlash might be worth the effort to restore core civil rights, such as access to abortion, nationally. But he warns that no one should underestimate the potential for fierce red-state resistance to such an effort, extending even to violence.

    It won’t be easy for either side to pass legislation nationalizing the social- and civil-liberties regime in their section; at the least, it would require them to not only hold unified control of the White House and Congress but also end the Senate filibuster, which remains an uncertain proposition. The more likely trajectory is for red and blue states to continue careening away from each other along the pathways that Newsom and DeSantis so passionately defended last week. “Without some major disruption, this cycle” of separation “hasn’t played itself out fully,” Podhorzer told me, in a view echoed by the other experts I spoke with. “There are hurricane-force winds in that direction.” Thursday’s gusty debate between these two ambitious governors only hinted at how hard those gales may blow in the years ahead.

    Ronald Brownstein

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  • Kevin McCarthy Finally Defies the Right

    Kevin McCarthy Finally Defies the Right

    The speaker made a last-minute reversal to avert a government shutdown. It could cost him his job.

    Anna Moneymaker / Getty

    Updated at 9:02 p.m. ET on September 30, 2023

    For weeks, Speaker Kevin McCarthy seemed to face an impossible choice as he haggled over spending bills with his party’s most hard-line members: He could keep the government open, or he could keep his job. At every turn, McCarthy’s behavior suggested that he favored the latter option. He continued accepting the demands of far-right Republicans to deepen spending cuts and dig in against the Democrats, making a shutdown at tonight’s midnight deadline all but a certainty.

    With just hours to go, however, the speaker abruptly changed course, defying his conservative tormentors and partnering with Democrats to avert a shutdown. The House this afternoon overwhelmingly approved a temporary extension of federal funding. The Senate passed the bill in the evening, putting off a shutdown for at least 45 days and buying both parties more time to negotiate spending for the next fiscal year.

    The question now is whether McCarthy’s pivot will end his nine-month tenure as speaker. By folding—for now—on the shutdown fight, he is effectively daring Representative Matt Gaetz of Florida and other hard-line Republicans to make good on their threats to depose him. “If somebody wants to remove [me] because I want to be the adult in the room, go ahead and try,” McCarthy told reporters before the vote. “But I think this country is too important.”

    The stopgap bill includes disaster-relief money sought by both parties, but McCarthy refused to add $6 billion in Ukraine aid that the Biden administration and a bipartisan majority of senators wanted. The Senate had been on the verge of passing its own extension that included the Ukraine money, but after the House vote it was expected to accept McCarthy’s proposal instead. Whether House Republicans agree to include Ukraine assistance in the next major spending bill is unclear, but Democrats and Senate Minority Leader Mitch McConnell are likely to make an aggressive push for it.

    McCarthy’s surprising about-face set off a wild few hours in the Capitol. Democrats were caught off guard and stalled for time to read the new bill, unsure if Republicans were trying to sneak conservative policy priorities into the legislation without anyone noticing. (In the end, only a single Democrat voted against it.) Representative Jamaal Bowman of New York, a second-term Democrat, caused the evacuation of an entire House office building when he pulled a fire alarm just before the vote, in what Republicans said was a deliberate—and possibly criminal—effort to delay the proceedings. (Bowman’s chief of staff said that the representative “did not realize he would trigger a building alarm as he was rushing to make an urgent vote. The Congressman regrets any confusion.”)

    On the right, the criticism of McCarthy was predictable and immediate. “Should he remain Speaker of the House?” one of his Republican opponents, Representative Andy Biggs of Arizona, tweeted after the vote, seemingly rhetorically. Yet to more moderate Republicans, the speaker’s decision was a long time coming. McCarthy’s months-long kowtowing to the right had frustrated more pragmatic and politically vulnerable House Republicans, a few of whom threatened to join Democratic efforts to avert, or end, a shutdown. But many Republicans are even more furious at Gaetz and his allies. “Why live in fear of these guys? If they want to have the fight, have the fight,” former Representative Charlie Dent of Pennsylvania, a moderate who served in the House with McCarthy for 12 years, told me. “I don’t understand why you would appease people who are doing nothing but trying to hurt and humiliate you.”

    This morning, the speaker finally came to the same conclusion. His move to relent on a shutdown only kicks the stalemate over federal spending to another day. Now it’s up to House Republicans to decide if McCarthy gets to stick around to resolve it.

    Russell Berman

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  • The Obama Legacy Shaping Biden’s Most Important Decision

    The Obama Legacy Shaping Biden’s Most Important Decision

    President Joe Biden has already made the most important domestic-policy decision he’ll likely face this year. Biden and his top advisers have repeatedly indicated that they will reject demands from the new GOP majority in the House of Representatives to link increasing the debt ceiling with cutting federal spending. Instead, Biden is insisting that Congress pass a clean debt-ceiling increase, with no conditions attached.

    Biden’s refusal to negotiate with Republicans now is rooted in the Obama administration’s experiences in 2011–15 of trying to navigate increases in the debt ceiling through the same political configuration present today: a Democratic Senate and a Republican House. While Biden says he won’t negotiate a budget deal tied to a debt-ceiling increase, then-President Obama did just that in 2011. Those negotiations not only failed but proved so disruptive to financial markets, and so personally scarring, that Obama and his team emerged from the ordeal determined never to repeat it. And when House Republicans came back in 2013 asking for more concessions in exchange for raising the debt ceiling again, Obama declined to negotiate with them; eventually the GOP raised the debt ceiling without conditions.

    To understand the choices Obama made about debt-ceiling negotiations, and how they are shaping Biden’s approach today, I spoke with multiple officials from the Obama era: several Cabinet secretaries, as well as top aides from the White House, executive-branch departments, and Capitol Hill. Most chose to speak without attribution to candidly discuss Obama’s deliberations. What’s clear from these conversations is that almost none of the conditions that led Obama to negotiate in 2011 are present today. This helps explain why Biden is rejecting Republican demands, but also why the risk of a cataclysmic default is even greater now than it was then.

    When Congress raises the debt ceiling it does not authorize any new spending; it permits the Treasury to pay the debts the U.S. has incurred from earlier fiscal-policy decisions. A failure to raise the debt ceiling would lead to the federal government defaulting, something that has never happened, and which could crater the stock market, spike interest rates, and disrupt payments to the millions of Americans who rely on federal checks.

    In some ways, Biden’s staunch refusal to link fiscal negotiations to a debt-ceiling increase is out of character for a politician who spent nearly four decades in the Senate and has prided himself on his ability to reach agreements across party lines. Even now, administration officials make clear that Biden is not precluding negotiations with House Republicans over fiscal policy. What Biden is saying is that he won’t allow Republicans to link fiscal negotiations to the threat of not raising the debt ceiling. That resolve flows directly from the   Obama administration’s experiences.

    The dynamics that prompted Obama to negotiate with Republicans in 2011 had started coalescing before the GOP won control of the House in the 2010 midterm election. After taking office in 2009, Obama’s first major legislative victory was the passage of a roughly $800 billion stimulus plan to help the economy recover from the 2008 financial collapse. Obama devoted the rest of 2009 to steering the landmark Affordable Care Act through Congress.

    After Congress approved those expensive initiatives, Obama faced pressure from not only congressional Republicans but also a core of centrist Senate Democrats (including Senate Budget Committee Chair Kent Conrad of North Dakota) to develop some plan for reducing the federal deficit. Under prodding from Conrad, in February 2010 Obama appointed the bipartisan Simpson-Bowles commission to recommend a deficit-reduction plan. Throughout that year, “there was an awful lot of ‘grand bargain, let’s have a historic compromise’ in the air” in Washington, Jason Furman, the then– deputy director of the White House National Economic Council, told me.

    Before the House changed hands in December 2010, Obama agreed with congressional Republicans on a major package to extend the tax cuts that had been passed under George W. Bush and to also temporarily reduce payroll taxes. Then, in April 2011, the Obama administration and Representative John Boehner, the new Republican House speaker, settled on a plan to fund the federal government through the remainder of the fiscal year.

    So when Boehner and other Republicans put forward their demands to tie any debt-ceiling increase to cuts in federal spending, the Obama administration did not initially view the prospect of negotiations with horror, multiple former officials told me. Obama shared the belief that a “grand bargain” to control the long-term debt was a worthwhile goal. Furman said the former president considered it an “exciting opportunity.”

    Jack Lew, who served as Obama’s director of the Office of Management of Budget (OMB) during the 2011 confrontation and as Treasury secretary in 2013, told me about another factor that contributed to the Obama administration’s willingness to engage: Negotiations that previous presidents Ronald Reagan and Bill Clinton had had with Congress about the debt ceiling had not proved that disruptive. Debt-ceiling negotiations “up until 2011 had a different character than after 2011,” said Lew, who served as House Democratic aide in the 1980s and in the OMB for Clinton in the 1990s.

    Armed with these convictions, the Obama team didn’t blanch, even when the new speaker went to New York in May 2011 to lay down what became known as the “Boehner Rule”: Republicans would demand one dollar in spending cuts for each dollar increase in the debt limit that they authorized. The two sides launched fiscal negotiations in talks led by Biden for the administration and Representative Eric Cantor for the House GOP.

    As these negotiations unfolded, Boehner framed the talks as the Republicans and Obama equally benefiting from the stipulations. But the White House, including Biden, never saw things that way. The White House didn’t view the debt-ceiling increase primarily as a bargaining chip—they viewed it as the eventual legislative vehicle for moving through Congress whatever agreement the fiscal negotiation produced.

    Even with that difference, the talks were serious and, for a while, productive. Biden praised Cantor and Cantor reciprocated. But in late June, the effort collapsed when it hit a familiar rock: The Republicans involved refused to consider raising taxes and Democrats would not agree to spending cuts unless they did.

    Over the next few weeks, the speaker and the president, joined by only a few aides, then met for a series of secret negotiations to pursue a “grand bargain” on the deficit. The two men came close to an agreement. But their negotiations ultimately foundered when Obama and Boehner could not agree on the balance between tax increases and spending cuts. Like the Biden-Cantor talks earlier, the Obama-Boehner talks crashed in late July.

    Only days before August 2, when the nation would face an unprecedented default, Obama, Biden and the congressional leaders in both parties gathered in the White House for a frantic final weekend of negotiations. The two sides were trying to avoid calamity in an environment of “pure acrimony,” Furman told me. “I think if you look at the photographs that [the White House photographer] Pete Souza took over the course of that weekend, you can look at our faces and you don’t need to hear any words,” Lew said. “If you ask President Obama about the two or three most gut-wrenching moments as president I have no doubt this would be on the list.”

    Pete Souza / The White House

    Even though the “grand bargain” evaporated, the two sides (with Biden and Mitch McConnell at the center of the negotiations) reached a complex deal over that weekend. In the first stage, Obama got an $900 billion increase in the debt ceiling coupled with $900 billion in spending cuts. The deal linked up to another $1.5 trillion increase in debt to the creation of a congressional “super committee” that would be guaranteed a floor vote on a plan to cut the deficit an equivalent amount. If the committee deadlocked, automatic spending cuts in defense and non-defense discretionary spending—what became known as sequestration—would be triggered. Though default was averted, months of these talks had led to a nearly universal recoil among the Obama team. There was no single meeting or moment when the president and his top advisers said, “Never again.” Instead, participants told me that that conclusion emerged organically. “I think the team around Obama really had a bad taste in their mouth after the 2011 episode and they really wanted to change the terms and dynamics of the debate, and that’s why they all embraced the idea that we can’t do this anymore,” Mark Patterson, the chief of staff at the time for Treasury Secretary Tim Geithner, told me.

    The White House frustration deepened in November 2011. The deficit reduction “super committee” was created in July but deadlocked on the same issue that had stymied previous bipartisan negotiation: the unwillingness of enough Republicans to accept tax increases that Democrats considered sufficient to justify big cuts in programs like Medicare and Medicaid. That stalemate triggered the severe sequestration reductions in discretionary spending—a squeeze that left Democrats fuming over the domestic cuts and Republicans incensed about the defense reductions.

    All of that was the backdrop when House Republicans returned in 2013 with a new set of demands for raising the debt ceiling, which included unraveling Obama’s greatest legislative achievement, the Affordable Care Act. This time Obama declined to talk with Republicans. “In 2013, it was a very fresh memory that we got closer than anyone had ever come to defaulting,” Lew, who had by then become Treasury secretary, told me. From Obama on down, he said, there was a very strong sense that “we can’t ever be in [that] position again.”

    House Republicans eventually conceded, passing an increase in the debt ceiling without any conditions in October 2013 and again the following year. In October 2015, Boehner, as his final act after announcing his intent to resign from Congress and vacate the speakership, engineered another extension that raised the debt ceiling through the remainder of Obama’s presidency while also loosening the sequestration cuts on both defense and domestic spending. Those three votes represented a sweeping victory for Obama’s new no-conditions approach to the debt ceiling.

    Though Biden was among the most enthusiastic proponents of negotiations during Obama’s first term, no former officials recall him dissenting from the general rejection of that approach in Obama’s second. Notably, then–Senate Democratic Leader Harry Reid (who died in 2021) took no chances: As the 2013 debt-ceiling fight approached, he personally told Obama to sideline Biden from any talks, because he considered the vice president too willing to make concessions to his frequent negotiating partner, McConnell.

    On every front, most experts consider the environment even less hospitable today than it was during Obama’s presidency for the kind of budget deal that House Republicans are now demanding in order to raise the debt ceiling. Although Obama’s team and many congressional Democrats genuinely believed that a big long-term deficit-reduction plan was both good politics and good economics, Biden, as well as most congressional Democrats today, are much more skeptical of that proposition. And though Republicans could at least formulate specific spending-cut demands back then, they are far less likely to reach consensus today on a meaningful deficit-reduction plan. That’s largely because more of them have come to recognize that their political base, centered on older white voters, is just fine with government spending targeted toward them—particularly Social Security, Medicare, and even Medicaid and the ACA, which Republicans in the Obama era considered the bull’s-eye for their deficit-reduction plans. Moreover, House Speaker Kevin McCarthy has less control over his fractious conference than Boehner did, and McCarthy is even less willing than his predecessor to cross his most conservative membersBut though these factors argue against a big deficit deal, especially one linked to a debt-ceiling increase, Biden must find some way to authorize more debt. He’s already facing calls from Democratic Senator Joe Manchin of West Virginia to establish another special deficit-reduction committee.

    For now, the White House, while indicating that Biden is open to talking with Republicans about the budget on other tracks, is digging in against linking anything to the debt ceiling. A former Obama official familiar with the Biden team’s strategy told me the White House believes that approach “is a matter of principle.”

    Biden and his team have taken from the Obama years the lesson that if they don’t negotiate against the debt limit, a sufficient number of Republicans will eventually back down because the economic consequences of default would be so catastrophic. Biden may expect, for instance, that enough House Republicans will join House Democrats in advancing a “discharge petition” that would allow an increase to pass the House without support from the GOP leadership. Biden may be right in that calculation. But Obama’s no-negotiating posture on the debt ceiling worked mostly because enough congressional Republicans back then were unwilling to plunge over the cliff into default. The White House and financial markets around the world are certain to face many white-knuckled moments before they learn whether that is still true today.

    Ronald Brownstein

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  • A World Without Chuck Grassley in the Senate?

    A World Without Chuck Grassley in the Senate?

    The long-serving Senator Chuck Grassley is, for lack of a comparison closer to home, Iowa’s Queen Elizabeth II. This is partly a matter of sheer longevity. At 89, the senator is older than John Deere’s first self-propelled combine, which appeared in 1947. He was 26 when Buddy Holly, Ritchie Valens, and the Big Bopper died in a plane crash in 1959. The year Kevin Costner filmed Field of Dreams in Dyersville, 1988, Grassley was 55.

    Age aside, Grassley is simply a part of Iowa’s political furniture—many voters in the state have never known a time without him. When I was born, in 1993, he’d been the state’s senior senator for 12 years; he has held elected office—first in the state House, then in the U.S. House and Senate—since my father was 4 years old. For many Iowans, the day when Grassley would not be their senator has been scarcely imaginable.

    Until now, maybe. Every six years, Iowa Democrats have inched closer to unseating the seven-term Republican senator. This time, they seem closer than ever: A recent poll showed Grassley leading 64-year-old Mike Franken only narrowly, suggesting that this will be Grassley’s toughest reelection fight in four decades.

    Twelve years ago, he defeated Roxanne Conlin by 31 points. In 2016, he beat Patty Judge by 24. This year’s race against Franken didn’t seem particularly newsworthy until earlier this month, when Selzer & Company, Iowa’s most respected polling firm, released results from a survey showing that Grassley was leading Franken by a mere three percentage points. “It says to me that Franken is running a competent campaign and has a shot to defeat the seemingly invincible Chuck Grassley—previously perceived to be invincible,” J. Ann Selzer, the president of Selzer & Company, told the Des Moines Register.

    The poll is only a snapshot in time, and it could certainly prove wrong. But it’s reasonable to assume, given other polling since then, that Franken is closer to unseating Grassley than any challenger before him. The most obvious reason for this is that Iowans may finally be noticing how old their senator is—a veritable crinoid in the creek bed of Iowa politics. Although Grassley seems healthy—he runs several miles each morning and kicks off campaign events by doing push-ups onstage—more than 60 percent of the Selzer poll’s respondents said his age was a real concern. “There are a lot of voters between 75 and 85 who think, I wouldn’t want to be in the United States Senate right now. I wouldn’t want to have that life; why does he?” Jeff Link, an Iowa Democratic strategist, told me.

    For the first time in the history of this particular poll, more Iowan respondents disapprove of Grassley’s job performance than approve of it. Pair that dissatisfaction with the fact that Franken is a strong candidate. A retired Navy vice admiral from deep-red northwest Iowa, the Democrat could provide a nonthreatening alternative for the independents and Republicans who are reluctant to give Grassley another term. Franken “is energetic, very smart—almost loquacious—but he knows what he’s talking about,” David Oman, a state Republican strategist and a former co-chair of the Iowa GOP, told me. Despite that positive assessment, the recent emergence of an assault allegation from a former campaign manager might cool Democrats’ enthusiasm. (Franken has denied the allegation, and police have closed the case, calling it “unfounded.”)

    Undergirding all of these factors is the plain reality that Iowa, like the rest of the country, is becoming more partisan and more polarized. For 30 years, Iowans sent both Grassley and a Democrat, Tom Harkin, who retired in 2014, to the Senate at every chance, no matter which party was in the White House or who was occupying the governor’s mansion. The consensus among Iowans was that such a balance was ideal. But the days of winning big by being part of that balance are over.

    Grassley has changed, too. Back then, he was viewed as a kind of farmers-first independent, interested chiefly in restraining federal spending, whistleblower protections, and promoting free trade. Democrats liked him—and often voted for him. In 1991, Grassley was one of just two Republicans to vote against the Gulf War. “That made him seem above partisanship,” David Yepsen, a former reporter for the Des Moines Register, told me. Grassley’s image, among Iowans, was of a man who operated above the partisan fray.

    That gloss began to wear off in 2009. At first, Grassley seemed a willing negotiating partner on President Barack Obama’s plans for health-care reform; he worked for months on a bipartisan bill. But he hadn’t bargained for how unpopular the Affordable Care Act would be with his party’s base. During a tour of central Iowa that summer, Grassley was mobbed by Republicans and Tea Partiers who rejected the plan. He buckled under the pressure, abandoned the talks, and ultimately voted against the final bill. “He’d never been treated that way by his own party. It changed him,” Yepsen said. “It made him mindful that there’s a new kind of conservative out there, a new generation coming on—the populists.” And he responded accordingly.

    In the ensuing years, Grassley came to recognize that there were fewer and fewer points to be earned by working across the aisle. In 2016, as the chair of the Judiciary Committee, he was party to the Senate’s refusal to give Obama’s Supreme Court nominee Merrick Garland a hearing, and along with Republican leadership, he held open more than 100 seats on the federal bench during the final months of the Obama administration for Donald Trump to fill. “You can’t underestimate Democrats in Iowa watching his leadership in the Judiciary Committee putting all these conservatives on the Court, and seeing them now do their thing on the Dobbs decision,” Yepsen said. “Conservatives love it. But it makes him much more of a partisan.”

    Whether Grassley would support the candidacy of Donald Trump was initially an open question. The womanizing, scandal-plagued Republican presidential nominee seemed, after all, to be the Iowa senator’s bizarro opposite. Yet Grassley, like most others in the GOP, fell in line. He has stuck by Trump through vulgar comments and allegations. In 2019, Grassley—an actual author of the 1989 Whistleblower Protection Act—defended Trump’s firing of the whistleblower and impeachment witness Alexander Vindman. Lately, Grassley has broken from his party only a handful of times, including to gently push back on some of Trump’s “America First” protectionist trade policies and to support the 2021 bipartisan infrastructure bill. The senator seems altogether untroubled by Trump’s effort to discredit the 2020 election, and continues to appear alongside him at rallies.

    “The way that [Grassley] didn’t stand up for much of anything is emblematic of the Republican Party in the years of Trump,” Bill Kristol, the editor at large of The Bulwark, told me. “People you thought would be independent just ended up going along.”

    Nowadays, the way Iowans view Grassley simply reflects their politics, not some old-timey desire for balance and comity. Democrats see him as an utter disappointment—a caricature of the man they may once have disagreed with but at least respected. Some Republicans are pleased with the careful line he’s walked, embracing Trump while hanging on to moderates. For other Republicans, Grassley is not nearly MAGA enough. This year, for the first time in his Senate career, Grassley faced a primary challenger. Jim Carlin, a state senator who has criticized Grassley for voting to certify the results of the 2020 election, earned 26 percent of the primary vote.

    Given this transformation in how Iowans regard Grassley, defeat at the hands of a Democrat is more plausible than it’s ever been. More plausible, but still not likely. The Selzer poll may have given Franken a jolt of momentum, including a burst of Hail Mary fundraising, but the state is reddening and the gap in party registration is wide and growing: The Iowa GOP has roughly 88,000 more registered voters this year than the Iowa Democratic Party, according to the Iowa secretary of state’s office. In 2020, that advantage was only about 20,000. This gap, combined with the historical precedent of higher Republican turnout in off-year elections, seems likely to add up to a Grassley victory. The numbers are “hugely problematic,” Jeff Link, the Democratic strategist, said—even for a three-star admiral.

    A world without Chuck Grassley in power is one in which most Iowans have never actually lived. That may be why “Faith in adversity” has recently become the unofficial motto of the state’s Democrats. This year, they even decided to put it on a sign. Orange placards dapple grassy lawns throughout Iowa, each bearing a message of hopeful conviction—We believe Michael Franken will defeat Chuck Grassley, the signs say—as though they can speak such a mammoth upset into existence.

    Elaine Godfrey

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