It's official: The government won't shut down. Yet.
President Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid agreed on a compromise budget for the rest of this fiscal year late Friday that will cut a total of $38.5 billion but will not cut funds for Planned Parenthood.
But we aren’t necessarily through with shutdown scares this year, and Friday's deal may make them more likely. It absolves the brinksmanship that led to it, rewarding Republican leaders for saying no until the last minute with more spending cuts than Democrats said they were willing to approve. It has fueled a nasty back-and-forth between the parties that encourages mistrust. These factors, combined with the fact that the speaker will have to convince his Tea Party wing to swallow the deal by promising bigger fights in the future, could make this sort of behavior more probable later, when the stakes are higher.
How much higher? The Treasury Department announced this week that it will hit the legal debt limit in May, rendering it unable to pay for vast portions of the federal government — not just the slice that was threatened in the late negotiations — up to and possibly including service on the debt the government already has. That is, the first default in American history. Republicans are eager to use this opportunity to restructure government outlays, refusing to raise the limit unless they extract large concessions on spending. Ominously, some GOP lawmakers even insist that ultimately declining to raise the debt limit wouldn't be a disaster.
But it would be. Just the hint of default could decimate world financial markets, since the absolute reliability of American Treasuries is a fundamental principle in global finance. Even if the GOP compromises by raising the debt limit a relatively small amount, setting up yet another round of brinkmanship, that could invite economy-killing uncertainty.
So, we are still left with one party that won't touch entitlements and will raise taxes, one that won't raise taxes but will cut entitlements along with far too much else, and some in Washington believing that the best chance of any of this happening soon is based on a threat of economic annihilation that Republicans may be more eager to press.
The government is still open. But our problems aren't ended — just deferred, and not for long.