Democrats, GOP Try To Be Pennywise, Political Congressional leaders have until the weekend to find middle ground on spending bills and avoid the blowback of a government shutdown. However, the new House GOP majority includes many freshmen, who could defy their own leaders to force deeper cuts in federal spending.
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Democrats, GOP Try To Be Pennywise And Political

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Democrats, GOP Try To Be Pennywise And Political

Democrats, GOP Try To Be Pennywise And Political

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STEVE INSKEEP, host:

Congress faces a deadline as members return to Washington this week. Lawmakers need to pass a stopgap spending bill by this weekend to prevent large parts of the federal government from shutting down. Republicans and Democrats seem close to a deal that would keep the government's doors open and the lights on for at least a couple more weeks, which would just leave the question of what to do for the rest of the fiscal year. NPR's Scott Horsley reports.

SCOTT HORSLEY: Lawmakers have plenty of reason to work quickly this week and pass at least a temporary spending bill. As White House spokesman Jay Carney says, nobody wins if the government closes its doors.

Mr. JAY CARNEY (Press Secretary, White House): All of us agree that a government shutdown would be bad for the economy. It would create a great deal of uncertainty and potential instability and might have a negative impact on the economy.

HORSLEY: A forecast by Goldman Sachs estimates a one-week government shutdown would drain $8 billon from the U.S. economy. While many essential government workers would stay on the job, economist Nigel Gault of IHS Global Insight says hundreds of thousands would be temporarily idled.

Mr. NIGEL GAULT (Chief U.S. Economist, HIS Global Insight): They don't get paid. So that's a hit right there, if people are living from paycheck to paycheck.

HORSLEY: Only some of those losses would be permanent, though. If foreign tourists can't get visas, for example, some might decide to skip their U.S. vacations altogether, costing business for airlines and hotels. But most economic activity put on hold during a government shutdown would eventually be made up. If past experience is any guide, even those furloughed federal employees would likely get retroactive pay once the government reopens.

Mr. GAULT: Of course, at that point, they're getting paid for having done nothing. So you've lost the output these people would've produced had they been working. I mean, it's simply wasteful to have the federal government shut down.

HORSLEY: Lawmakers seem poised to OK a temporary spending bill that would head off a shutdown, at least for a couple of weeks. The bill would reduce government spending by about four billion dollars, but those would be relatively easy cuts, eliminating earmarks and programs President Obama already targeted for phase out next year.

The bigger question is what happens when the two weeks are up. Republicans insist on deeper spending cuts, while Democrats argue that could derail the still fragile economic recovery. The same Goldman Sachs forecast warns if the government were to cut spending as much as House Republicans voted to this month, the nation's economic growth rate could shrink by as much as two percentage points.

Political analyst Sarah Binder of the Brookings Institution thinks both parties are fairly dug in.

Ms. SARAH BINDER (Senior Fellow, Governance Studies, Brookings Institution): My sense is both sides think they have the upper hand, which is why they're in this sort of stalemate. That's why I think it's really the White House who has to come in and force a solution here.

HORSLEY: The Obama Administration has been working with congressional leaders to broker a compromise, but the White House doesn't want to be seen as wading too deeply into the legislative swamp. Spokesman Carney was deliberately vague about the administration's role in the budget talks.

Mr. CARNEY: I don't want to give you a play by play on our meetings. This is a process, obviously, that needs to take place on Capitol Hill. The focus here is on results.

HORSLEY: The results, at least in the short run, appears to be the government will stay open. White House economic advisor Austan Goolsbee says while contingency plans have been drawn up for a shutdown, he doesn't believe they'll be needed.

Mr. AUSTAN GOOLSBEE (Chairman, White House Council of Economic Advisors): You've seen the top leadership in both houses of Congress, on both sides of the aisle, say they're going to do everything necessary to prevent a shutdown of the government. My read is that there's not a lot of fear in the private sector because people think they're going to get a deal done.

HORSLEY: The question mark for the economy is whether that newfound spirit of compromise on Capitol Hill lasts longer than two weeks.

Scott Horsley, NPR news, Washington.

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