The One (Only) Thing to Watch For Wednesday: An Obama-Induced Government Shutdown? |

This week the world is introduced to an historic arrival: another speech on the economy by President Obama.  Yes, on Wednesday, the president will deliver his umpteenth iteration of a speech the White House concedes he’s been giving for eight years now.  There promises to be little novel to the speech, outside of one potential – and significant – bit of news: whether the president will threaten a government shutdown later this year.

The New York Times reports the president plans to use his remarks to “set his terms” for upcoming debates over the federal budget. This translates to the president previewing what he may demand in exchange for his signature on bills to keep open the government, which will run out of funding in October. At issue is whether the president will again threaten a government shutdown unless Congress provides him higher taxes on small businesses to replace the deficit reduction produced by the automatic spending cuts – sequestration – that are currently in place.

You see, last month, through a series of Statements of Administration Policy, the president announced that he would not sign ANY spending bills this year unless sequestration spending cuts are eliminated – and replaced with his plan for higher, job-destroying taxes.  The result of refusing to sign into law any spending bills, of course, would mean an unavoidable government shutdown.  This was a stunning announcement for a president who has decried manufactured crises in Washington.  It was particularly galling after the president had stated publicly as well as told congressional leaders privately that the issues of funding the government and addressing sequestration should be dealt with separately.

When the president raised this specter of vetoing all spending bills, Speaker Boehner sent him an urgent letter seeking assurance that he was not willing to put the country through the turmoil of a government shutdown in his pursuit of higher taxes. On June 6th, the Speaker wrote:

“In an Oval Office meeting with the bipartisan congressional leadership on March 1 of this year, I asked the group for agreement that we should address the issues of funding the government and replacing sequestration with a broader deficit reduction package separately.  You indicated you agreed with me on this point, concurring that there is no reason to inject shutdown politics into the already difficult task of finding a plan to tame our deficits.  I emerged from the meeting that day encouraged that, despite our ongoing differences on issues of entitlement spending and tax rates, we were able to identify a shared commitment to keeping the government running while addressing the issue of sequestration separately. 

“I was surprised and disappointed, then, to read the two Statements of Administration Policy released this week stating flatly that you will not sign any appropriations bills to keep the government funded and operating unless Congress agrees to your demands on a broader budget deal.  These statements run counter to the bipartisan agreement that was forged at the White House meeting on March 1, and appear to signal a jarring shift in your administration’s position on a matter that is of critical importance to our nation’s fiscal and economic stability.” 

Indeed, not only had the president pledged in the Oval Office to separate the issues of funding for the government and sequestration replacement, he has said the same publicly.  It was the president who, on March 1st of this year, said, “There’s no reason why we should have another crisis by shutting the government down in addition to these arbitrary spending cuts.”

In response to the Speaker’s letter, the White House seemed on the defensive over the president’s threat, but refused to fully retract it.  So now our eyes and ears turn to what the president might say this week.  Will he make more credibility-straining predictions about the doom sequestration has in store?  Is there any spending he’s actually willing to cut? But most importantly: does he still believe the government should be shut down unless he can have another helping of higher taxes? 

To be sure, sequestration – a budget-cutting device of the president’s own creation – is crude. It’s the wrong way to wipe out our deficit. That’s why the House twice passed legislation to replace it with smarter cuts.  But it remains in place because the president refuses to do anything meaningful to tackle our spending problem and long-term structural challenges.  It’s hard to be optimistic that will change this week, but perhaps we have something wondrous in store.  We’ll have to tune in.