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By Nick Wakeman

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Nick Wakeman

Get ready for one ugly September

Congress will be back in session in a couple weeks and boy what a September it’s going to be.

While most contractors and their customers will hunker down and try to make the most of the last month of fiscal 2017, Congress and the president will try to figure out how to get fiscal 2018 started without an embarrassing debacle.

There are some serious issues hanging over their heads and that’s even before they can tackle the stuff they love to talk about -- tax reform, an infrastructure bill and perhaps another bite at ObamaCare.

But as I’ve heard experts say, Congress doesn’t have to do any of those things. But it does have to do one thing -- pass a budget.

You would think that with the same party holding the White House and a majority in both houses of Congress that a budget would be a no brainer.

But as the failure of the repeal and replace ObamaCare effort showed, the Republicans might have a numerical majority but they lack a philosophical one.

When Congress returns, they’ll have a little more than three weeks to hammer out an appropriations bill for fiscal 2017. That’s not going to happen so we’ll likely get a continuing resolution in place until December. The question, though, is will there be extra provisions attached to the CR? And what will happen to the sequestration caps?

President Trump's only real legislative victory so far has been the confirmation of Supreme Court Justice Neil Gorsuch. Trump will be hungry -- make that starving -- for some sort of win.

Can the CR give him that? Probably not.

He’ll likely need a complete budget to be passed for any of his top priorities to move forward such as a border wall, infrastructure and increased defense spending.

A second major issue looms: the debt ceiling that will likely run out by mid-October. In recent years when the debt ceiling has needed to be raised, the GOP has pushed to add other items like tax cuts or other fiscal policy changes before they support an increase.

There has been serious debate this year that the debt ceiling should be raised “clean” with no extra provisions.

Treasury Secretary Steve Mnuchin and Office of Management and Budget Director Mick Mulvaney seem to have reached an agreement on this. But the question is will the president and enough Republicans support the notion?

Or will they have to rely on Democrats to vote for the debt ceiling to get it passed?

Will they also need Democrats to get the CR passed?

Will the president sign a debt ceiling increase or a CR that isn’t supported by his conservative base?

These questions are starting to raise fears that we might be headed toward a government shutdown.

The Professional Services Council, is concerned enough that it is telling its members as well as government agencies that they need to prepare even though they think a shutdown is a remote possibility.

A complicating factor this year is that Sept. 30 falls on a Saturday so there could be what PSC CEO David Berteau called a “soft shutdown.” The government is technically shutdown over the weekend when offices are generally closed but a CR passes Sunday night and the government opens as normal on Monday.

The exact date of when the government hits the debt ceiling is fuzzier than when a CR is needed, and there are manipulations that the Treasury Department can do that will allow the government to continue paying its bills.

It is hard to predict how any of this will play out. We likely won’t have a shutdown but we’ll come close. One thing is for sure, it’s not going to be pretty.

Posted by Nick Wakeman on Aug 18, 2017 at 11:52 AM

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