Shutdown: Toward The Brink

For the past few months there have been a few news articles about an impending US F. Gov. shutdown.  Below is a snippet of an article which gives a good description of this year's Federal Budget impasse in Congress.

At some point, the People ought to decide what the US F. Gov. should be doing – and emphatically and repeatedly tell the various members of Congress!

Shutdown: Toward The Brink (Or Why This Time Might Be Different)

Wednesday, Sep 27, 2023 - 07:20 PM

Authored by James Rickards via DailyReckoning.com,

Should market participants be concerned about the possible government shutdown at midnight on Sept. 30?

It’s too soon to answer that question definitively, but it’s not too soon for investors to take some defensive action.

If it does happen, it’ll be different from those that have gone before.  Let’s break it all down…

While most of us keep our books and records on a Dec. 31 fiscal year, the U.S. government is different.  The U.S. fiscal year runs from Oct. 1 until midnight on Sept. 30.

The fiscal year is dated by the calendar year in which the last day falls.

So the fiscal year beginning on Oct. 1, 2023, is called “Fiscal Year 2024” by the Government Accounting Office (GAO) and the Office of Management and Budget (OMB).  Leave it to the government to make things difficult and hard to follow, but that’s how they do it.

That means fiscal year 2023 ends at midnight on Sept. 30, 2023.  We’re up against the clock and that’s why you’re hearing so much about a government shutdown right now.

It’s the job of Congress to pass appropriations bills to keep the government open.  Under so-called regular order, each major department has its own appropriations bill.  So there should be separate bills for Defense, the State Department, the Department of Education and so on.

Each bill should be voted on separately and each bill should pass before Sept. 30 to keep that department and the government as a whole running in the new fiscal year.

But in the real world, the “regular order” process never happens.  Typically, the House and Senate and the two parties in each body can’t agree on anything by Sept. 30.

Instead, they pass a continuing resolution (CR) that basically says “everybody can keep spending the same amount of money on the same programs as they did last year and we’ll get back to you on what the new fiscal year appropriations will be.”

A CR can last for various amounts of time from, say, 30 days to six months.  Sometimes the CR purposely pushes the deadline past the calendar year-end so Congress does not have to make difficult decisions prior to Election Day in November or the holiday season.

Passing a CR is basically a matter of kicking the deadline into the high grass.

Eventually Congress agrees on spending, but they don’t do it department by department as in regular order.  Instead, they sweep the entire $1.6 trillion budget into a single bill called an “Omnibus Bill” that forces members to vote the entire package up or down.

This is a way to force items that many members don’t like (such as abortion spending) into the same bill with things they do like (such as military spending).  If you want the goodies, you have to vote for things you may oppose.

[snip]

https://www.zerohedge.com/political/shutdown-toward-brink-or-why-time-might-be-different

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