WASHINGTON — Late Thursday, the House of Representatives narrowly passed a bill to fund the government through September, which the Senate is expected to pass within days. The bill, which passed 219 to 206, averts a major political confrontation — but just barely.
The compromise, negotiated by senior Republican and Democratic legislators and supported by President Barack Obama, incited a mutiny on both sides, and lawmakers defected en masse. The rebellion included Sen. Elizabeth Warren, D-Mass., and Rep. Nancy Pelosi, D-Calif., the leader of the Democrats in the House. Her opposition to the bill, called “the Cromnibus,” put her at odds with Obama and Sen. Harry Reid, D-Nev., the senior Democrat in the upper chamber. Meanwhile, the Republican leadership in the House, despite a comfortable majority in the House and a bill that extracts major concessions from Democrats, was barely able to persuade enough of their members to support the bill.
Conservative Republicans are opposed because they say the bill isn’t sufficiently aggressive: they want a law that will cancel the reprieve from deportation Obama granted millions of undocumented immigrants, gut the president’s signature health-care law, and further cut government spending. Democrats are upset for many reasons, but largely because of language that would allow banks to make risky investments with money insured by the government.
Let’s take a look back at how we got here.
A disagreement about strategy
Following Republicans’ victory in the midterm elections last month, conservatives began an internal debate about how to use their newfound power. Some, notably Sen. Ted Cruz, R-Texas, argued that Republicans should maneuver aggressively to undo some of the major policies of the Obama era, the health care law in particular. Others urged the party to demonstrate its willingness to compromise and its ability to govern without drama and conflict. They argued that after several years of pitched battles over the deficit, the Affordable Care Act and the debt ceiling, voters would reward the party if it avoided partisan brinksmanship.
This debate about strategy among Republicans intensified after Obama announced his executive action on deportations, which many conservatives said flatly ignored the will of voters as expressed in the midterm elections.
Rep. John Boehner, R-Ohio, the speaker of the House, worked out a plan to resolve the dispute — at least temporarily. Rep. Ted Yoho, R-Fla., one of the most conservative members of the chamber, would introduce a symbolic bill against the executive action. Then the House would pass compromise legislation to keep the government open until September, postponing a real debate over immigration until February and ending the year quietly.
But Yoho’s bill was not enough to satisfy many Republicans newly emboldened by their victory at the polls. Although Republicans control the House, they didn’t have enough votes to pass the Cromnibus by themselves.
A misunderstanding over banking law
Boehner was hoping for help from a few Democrats to move the bill through. But despite the fact that the bill was written by Republicans and Democrats together and had the support of the White House, that almost didn’t happen.
The bill’s Democratic opponents say their colleagues who negotiated with Republicans on behalf of their party made a major blunder. Sen. Barbara Mikulski, D-Md., the senior negotiator for the Democrats, didn’t realize how unpopular a provision allowing banks to make certain kinds of investments with money insured by the government would be with other Democrats.
Here’s how it works: When you take your money to the bank, the bank is supposed to give it back to you when you ask for it. In the meantime, though, the bank can do what it likes with the money — buy stocks, bonds, barrels of oil and more. The reason you can always get your money back is that a government agency called the Federal Deposit Insurance Corp. will make you whole if something goes wrong and the bank loses your savings.
After the financial crisis, the Dodd-Frank law put restrictions on what banks can do with federally insured deposits. Especially risky activities, such as speculative trading of commodities and the sometimes arcane contracts known as derivatives, were banned. The new spending bill ends that ban for a few derivatives, not all, but supporters of Dodd-Frank say the restriction is crucial to preventing another financial catastrophe.
“This was the epicenter of the crisis. This is what brought AIG down, what brought Lehman Brothers down,” one former Treasury official told The Washington Post.
“This isn’t about compromise. This is about reckless behavior. It is about a giveaway to the largest financial institutions in the country,” Warren said.
Jamie Dimon, the chief executive of JPMorgan, called lawmakers himself to urge them to support relaxing the ban. The banks argue that by forcing financial institutions to create new legal entities to separate trading from deposits, the rule made banking unnecessarily complicated.
A compromise that satisfied no one
The result of all of the haggling was a compromise with something to aggravate just about everyone. The Club for Growth and Heritage Action, two conservative organizations, opposed the bill. The groups complained that the overall level of spending in the bill was too high — in addition to the legislation’s support for the Affordable Care Act and the reprieve from deportation.
“I think that it would be hard to totally stop the president’s unlawful amnesty action, but I think we could try a little bit harder to fix it,” said Rep. Bill Flores, R-Texas, who will soon lead the conservative Republican Study Committee.
Yet conservatives won a long list of concessions from liberals — besides the repeal of the banking rule.
In this hodgepodge is a provision that increases tenfold the amount of money that wealthy donors are permitted to give to the political parties. Another allows pension funds to reduce benefits for retired construction workers and truckers. Working truckers will be allowed to work 82 hours a week instead of 70, which experts on highway safety say is dangerous.
The measure includes language counteracting legal weed in Washington, D.C. Another section allows federal money dedicated to nutrition for women and infants to be used to buy white potatoes, which have little nutritional value. School lunches will include more salt and fewer whole grains. Funding for Pell grants is reduced. So was the budget for the IRS. And so on.
“It’s a budget that does not reflect the needs of the working families of this country,” said Sen. Bernie Sanders, I-Vt.
A calculation at the White House
All the same, President Obama decided to support the bill. He and Vice President Joe Biden personally called Democratic representatives to urge them to vote for the bill, which Pelosi said amounted to “blackmail.”
It’s possible that the White House was worried about what Republicans will demand once they’re fully in control of Congress. By getting a deal now, the administration might avoid making even greater sacrifices to Republicans next year.
After all, the bill wasn’t a complete rout for Democrats. Despite Congress’ opposition to marijuana in the capital, another provision gives a free pass to weed businesses in Colorado, Washington and other states where the sale of the plant is regulated for recreational or medical purposes. The Consumer Financial Protection Bureau comes out without a scratch. So does the Affordable Care Act.
If that was how the White House saw it, then Obama evidently agreed with the most confrontational Republicans, the ones who refused to support the bill, that Democrats got a comparatively good deal.
Pelosi, however, saw things differently. Boehner needed to pass the bill, she argued, and he was depending on Democrats to do so. As a result, Democrats could have demanded that Republicans remove the portions of the bill that Democrats don’t like.
“This increases our leverage to get two offensive provisions of the bill removed: the bank bailout and big money for campaigns provision,” Pelosi said. She didn’t come right out and say it, but her statement implied that shutting down the government again would have been politically damaging to Republicans. In other words, Pelosi apparently agrees with Boehner that Democrats had a strong hand: Republicans need to change how voters see their party.
Two parties. Two assessments of the political calculus. Four points of view. One ugly mess.
A hard road ahead
Two years ago, Congress was staring down what many affectionately remember as “a fiscal cliff.” What the legislature has created this year is more akin to a fiscal black diamond. Although no single massive deadline is approaching, lawmakers will have to negotiate several more budgetary twists and turns over the next several months.
Most immediately, the bill that passed the House Thursday only funds the Department of Homeland Security until February. Republicans insisted on this limitation with the hope of forcing Obama to negotiate on immigration policy.
The New York Times has put together a useful calendar:
The government’s borrowing limit is reinstated on March 16, although the government might not actually hit the ceiling until August.
On March 28, unless lawmakers act, physician reimbursements from Medicare drop off a cliff. On May 31, the highway trust fund runs out of money. In June, the Export-Import Bank, which helps finance overseas purchases of American exports, might shut in the face of conservative opposition to its mission. Then on Sept. 30, the entire Children’s Health Insurance Program faces its expiration. A few days later, across-the-board spending cuts loom once again.
It’s possible that lawmakers will use each of these deadlines as an opportunity to force their colleagues to agree to unpleasant special favors, as has occurred this week.