The Jan. 1 fiscal cliff deal set up a second round of handwringing over the budget, as we're scheduled to hit both the debt-ceiling and the sequester around March 1. But as it turns out, there's actually a third leg to the next cliff debate: the expiration of the government's general operating budget, which is scheduled to happen just a few weeks later, on March 27. That's another potential leverage point for Republicans, as the failure to pass another so-called "continuing resolution" would shut down the government.
Congress will have to pass another short-term budget before late March because it's been unable to pass a full budget through the regular process. In fact, the continuing resolution was the very first budget fight that Republicans used to extract spending cuts in the last Congress, threatening to shut down the government until a last-minute deal was struck in April 2011. That summer, the Budget Control Act settled the short-term budget question by imposing new spending cuts through across-the-board caps that cut discretionary spending by more than $1 trillion over a decade.
Since then, Congress has abided by those caps without much of a fuss, most recently passing another continuing resolution in October 2012. But during the last round of fiscal cliff negotiations, both President Obama and House Speaker John Boehner proposed reopening the caps set under the 2011 Budget Control Act in search of more spending cuts: Obama proposed as much as $250 billion and Boehner proposed $300 billion in cuts. When those negotiations fell apart, those sweeping cuts got benched and just $12 billion in discretionary cuts made it into the final legislation, as a means of offsetting the sequester.
Congressional Republicans now say that the year-to-year, discretionary budget must be part of the next fiscal deal's spending cuts, not just entitlements. "The pinch points will be the sequester, debt ceiling and the CR—all three coming up in the next three months," Rep. Tom Price (R-Ga.) told me. "The CR—it's one of the areas where there is indeed an absolute deadline. Washington and Congress respond to crises and deadlines, and we need to address the spending side of the equation."
And some have already threatened a government shutdown in late March unless this question—along with the other parts of the cliff—is resolved. "Over the next few months, we will reach deadlines related to the debt ceiling, the sequester and the continuing appropriations resolution that has funded federal operations since October," Sen. John Cornyn (R-Texas) wrote in an op-ed for the Houston Chronicle last week. "It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain."
Many have interpreted Cornyn's comments to mean that Republicans would be willing to broach the debt-ceiling and shut down the government in order to meet our financial obligations. But his op-ed also suggests that the Republicans could have another opportunity to threaten a shutdown and extract spending cuts if a deal over the sequester and the debt-ceiling doesn't deal with the discretionary budget for 2013.
"The Republicans have at least two different ways to shut the government down," says former White House economic adviser Jared Bernstein, referring to the debt-ceiling and the next continuing resolution for the budget. "CRs have become pretty pro forma, but we have had big fights up there about keeping the lights on, so I won't assume that any of this will go smoothly."