The Final Showdown? Why the Coming Budget Crisis May Be the Worst

With little time and less consensus, Congress may actually plunge into shutdown mode this time

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Larry Downing / Reuters

Speaker of the House John Boehner listens to U.S. President Barack Obama during a meeting with bipartisan congressional leaders in the Cabinet Room at the White House on Sept. 3, 2013

Over the past three years, America has been brought again and again to the brink of fiscal disaster by a dysfunctional Congress, only to have negotiators talk the sides down. This time, America’s luck may run out.

Congress returns this week to its long-running civil war over the budget. By Sept. 30, lawmakers must pass a stopgap bill to keep the government funded. And around Oct. 15, Congress faces a deadline to lift the limit on U.S. government borrowing. With just two weeks until a partial government shutdown, and a month until the U.S. loses the ability to pay its bills, Democrats and Republicans seem further apart than ever, and this time their leaders may be powerless to prevent catastrophe.

House Republicans made the first move on Wednesday morning, when Republican leaders yielded to the demands of their backbenchers by announcing they would vote Friday on a temporary funding bill that would defund President Obama’s health care law.

(MORE: Government Shutdown Looms, As House GOP Leaders Face Rebellion)

It’s not much of a plan. The White House and Senate Democrats have said repeatedly they won’t negotiate over Obama’s signature legislative accomplishment. Since the measure cannot get through the Democrat-controlled Senate, the decision will force the two chambers to volley proposals back and forth as time ticks away. “We’re going to have a fight,” predicts Steny Hoyer, the No. 2 House Democrat, who said the band of Republicans who shut down government in 1995 were “not nearly as radical” as factions in the current House GOP conference.

Those Republicans have taken Congress to the edge of a shutdown before. Since winning control of the House in 2010, Republicans have voted to stymie some or all of Obamacare more than 40 times. But they are desperate to finally do it before the bill’s insurance exchanges kick in on Oct. 1. Some 60 members signed on to a resolution, crafted by Georgia Representative Tom Graves, that would fund the government for the next fiscal year while delaying and defunding health reform until 2015.

The same cohort blocked a proposal by House majority leader Eric Cantor that would have provided temporary funding to government agencies but allowed the Democrat-controlled Senate to strip out an attached provision to defund Obamacare. When the Tea Partyers derided the gimmick, House Republican leaders were forced to cancel a scheduled vote on the plan, the latest in a series of rebukes to party leadership.

On Tuesday, members began getting word that House Speaker John Boehner would grant a vote on a bill that defunds Obamacare in a stopgap measure that funds the government at levels prescribed by sequestration, the across-the-board budget cuts that came into effect in fiscal year 2013. The move would be a victory for the Tea Party faction whose single-minded goal is cutting spending, no matter the political costs. “Our job is to reflect the people who sent us here. That means passing a good conservative bill out of the House,” said Congressman Mick Mulvaney, a South Carolina Republican. “We’ll worry about the Senate after the Senate actually does something.”

There is little question what the Senate will do. “We are not going to have them hold the [continuing resolution] or the debt ceiling hostage to Obamacare,” Senate Majority Leader Harry Reid told reporters on Tuesday, as he and other Democratic leaders have said for months. A group of Republican Senators, including potential presidential candidates Ted Cruz and Marco Rubio, has also been pushing the proposal to gut Obamacare. But even many conservatives say the goal is not only a fantasy but also kamikaze politics. “I want to defund Obamacare. I just don’t want to cut off Social Security checks and stop paying the military,” says GOP Senator Lindsey Graham. “But it’s up to the House. They’ve got to get 218 votes.”

Why would House Republicans pass a symbolic measure so late in the game? Democratic aides believe it may be the only thing that can get through at the moment. The defund provision buys Boehner breathing room with conservatives, passes the buck to firebrand Senators who have irked GOP leaders by touting an unachievable goal, and, perhaps, forces the Senate to share the blame in the event of a shutdown. House Democrats say they have barely spoken to their GOP counterparts as they wait for Boehner’s team to determine how to muddle forward.

(MORE: Treasury Secretary to Congress: U.S. to Hit Debt Ceiling in October)

Which is why it is hard to puzzle out an endgame. House Republicans frame the gambit as an opening offer that sets up a game of ping-pong proposals. “Assuming we don’t meet success there, I think we’re gravitating toward a Plan B, which is to connect a delay of Obamacare to the debt ceiling,” says Republican Congressman John Fleming of Louisiana. Like many House Republicans, Fleming believes GOP leaders have greater leverage if they dig in on the debt limit, despite the Treasury Department warnings that the economic consequences of default would be catastrophic. And like several dozen other conservatives, Fleming is willing to risk default if Obama won’t acquiesce to GOP demands.

And as House Republicans demand a heftier ransom than ever, Democrats seem less apt to cave than in the past. “Compromise does not mean doing it their way,” Hoyer said. Democrats are pushing to unwind sequestration cuts as part of the so-called continuing resolution that keeps Congress running in the absence of a functional appropriations process.

One way for Congress to compromise would be to pass a clean, temporary funding bill at currently prescribed levels that buys negotiators more time to work out a long-term plan. But Hoyer said he would vote against that. “I cannot remember a time,” Obama said this week, “when one faction of one party promises economic chaos if it can’t get 100% of what it wants.” House Republicans have been doing so for three years now. This may finally be the moment when a last-ditch compromise fails to materialize.

This story has been updated to reflect Republicans’ announcement of Friday’s vote.