To the Brink

How did the federal government come within an hour of shutting down?

In hindsight, the near-shutdown of the federal government in early April should have come as no surprise-an outcome as predictable as death, taxes and petty partisan disputes. The handwriting was on the wall shortly after last fall's elections, when Republicans took back the House on a vow to drastically cut government spending and reduce the federal deficit. A failure to win control of the Senate, however, limited the GOP's legislative options, leaving members-particularly fire-breathing, Tea Party-backed freshmen eager to slash federal spending-with limited capacity to implement their fiscal plans.

The one surefire weapon Republicans had in their arsenal was the threat of a shutdown of federal operations if Congress could not agree to a fiscal 2011 budget. Still, early on House Republican leaders, particularly those who were around for the messy political fallout from shutdowns in late 1995 and early 1996, dismissed the so-called nuclear option as unlikely. "I don't think America is looking for a shutdown situation," Rep. Eric Cantor, R-Va., who was in line to become House majority leader, said just before the elections. "It sends the wrong signal that there aren't adults in charge in Washington."

But that's very nearly what occurred. In spite of all the talk that a shutdown was in no one's interest, Congress and the White House never-theless went to the brink, battling to the bitter end over budgets cuts and unrelated policy provisions, and avoiding a shutdown literally at the 11th hour. How did it get to that point? And what was that first week in April like for those who lived and breathed the threat of the first shutdown of government in 15 years-namely the roughly 2 million employees of the federal government?

Preamble

It's not like Congress, before and after the elections, didn't have ample time and opportunity to pass a budget for fiscal 2011, which started on Oct. 1 last year. But lawmakers couldn't agree on a budget by the time the fiscal year started, and passed a continuing resolution in September to keep agencies open.

That was followed by three more CRs in December and two in March, which included about $10 billion in cuts pushed by House Republicans. With each new stopgap measure, the threat of a shutdown was temporarily averted, but the hard work of passing a budget was kicked down the road. When the calendar turned to April, the day of reckoning finally arrived.

The sixth continuing resolution was set to expire at 11:59 p.m. on Friday, April 8. By that point, both sides had dug in their heels, declaring another short-term spending bill was not acceptable. In a closed-door meeting with freshman Republicans, House Speaker John Boehner, R-Ohio, urged his colleagues to "keep up the rhetoric" in the fight. "The more you keep on them, the more leverage I've got," Boehner told members.

Congress would have to agree to a budget for the final six months of the fiscal year or the government would cease much of its operations. The deadline loomed large as federal employees arrived in their offices on April 4 to begin their work week.

Monday, April 4 11 a.m.

The National Treasury Employees Union and National Federation of Federal Employees urge government workers, their family members and friends to contact their elected representatives the following day to voice their opposition to a shutdown and to the deep spending cuts proposed by House Republicans. A shutdown, the labor leaders declare, will delay tax refunds for millions of Americans, close national parks and jeopardize food safety standards.

The unions also take aim at the Obama administration, which up to this point has refused to release its contingency plans for a shutdown. These documents, which will remain a closely guarded secret throughout much of the week, indicate how many, and which type of employees, would come to work during a shutdown and who would be furloughed.

"Federal employees are being held hostage because these plans are not being made available," says NFFE National President William R. Dougan. Administration officials remain quiet, privately saying the plans have not been finalized. Even with five days to reach a deal, anxiety and uncertainty have crept in. "I'm so frustrated," one federal worker writes on GovExec.com. "Are we closing down or not? I'm not looking forward to a close down, but hate the uncertainty."

Behind the scenes, preparations for a shutdown quietly begin. Office of Management and Budget Deputy Director Jeffrey Zients issues a memo to agency deputy secretaries and chiefs of staff, instructing them to begin preparing for a potential shutdown. "Given the realities of the calendar, good management requires that we continue contingency planning for an orderly shutdown should the negotiations not be completed by the end of the current CR," he writes.

Tuesday, April 5 10:15 a.m.

Sensing that negotiations are stalling, President Obama holds a meeting at the White House with Boehner, House Appropriations Chairman Hal Rogers, R-Ky.; Senate Majority Leader Harry Reid, D-Nev.; and Senate Appropriations Chairman Daniel Inouye, D-Hawaii. The hour-long sit-down bears no fruit. The two sides appear to be at an impasse. Senate Democrats and the White House say they're willing to accept $33 billion in cuts from current spending limits. Hard-liners in the House Republican caucus hold out for nothing less than the $61 billion in reductions they passed in February. That bill is a non-starter for Democrats, not only because of the big-ticket spending cuts but also due to controversial policy riders, including ones that would defund the administration's health care reform law, block funds for the regulation of greenhouse gas emissions and eliminate federal funding for Planned Parenthood and the Corporation for Public Broadcasting.

Boehner, meanwhile, refuses to disclose his target number. Instead, he offers a one-week spending bill for civilian agencies, which includes $12 billion in cuts, and funding for the rest of the fiscal year for the Defense Department.

The plan is rejected immediately by Obama. "That is not the way to run a budget," he says during an unscheduled White House press briefing.

With both sides refusing to blink, labor unions again call for contingency plans to be released, this time in a letter to Obama. The White House continues to keep a close hold on the plans. Frustration among federal workers begins to boil over. "It's time to have the military [deploy] around the Capitol building and lock Congress in until they can do their job," writes a Navy employee. "Shut down their food source from within and give them one small pizza per person per day."

Late in the evening, more sobering news arrives. The Office of Personnel Management issues guidance on the rules surrounding furloughs, benefits and compensation during a shutdown. The primer is a welcome piece of specific information about how a closure of federal operations would unfold, but it's also a stark reminder that a train is rapidly coming down the tracks. And there appears to be no way to stop it.

Wednesday, April 6

The threat of a shutdown, previously a Beltway-oriented discussion, now goes national. News outlets begin covering the potential shutdown in real time. Countdown clocks appear on websites everywhere. The administration begins leaking post-apocalyptic details about the effects of a shutdown in which housing loan guarantees cease, small business loans dry up and patent processes are suspended.

10:45 a.m.

Rep. Jim Moran, D-Va., whose Northern Virginia district is home to tens of thousands of federal workers and contractors, addresses the elephant in the room for the federal workforce. It's unlikely, he speculates, that those employees furloughed in a shutdown will receive back pay for time lost when the government opens again. "Federal employees need to understand this is not 1995, when we closed down and they did not go to work and they were fully reimbursed," he says.

"I may face bankruptcy because these jerks can't play nice together," one employee writes. Another complains that "federal workers are left holding the bag. Unfortunately, it appears the bag will be empty. There are some federal workers who . . . live paycheck to paycheck and will be harmed greatly by this." The administration estimates that 800,000 feds could be furloughed, roughly the same as during the 1996 shutdown. The truth is, though, no one really knows how many employees could be affected. The government is structured very differently than it was 15 years ago, and agencies have wide discretion to determine which employees are essential to the protection of life and property, and thus can't be furloughed.

The figures also don't take into account the hundreds of thousands of federal contractors who could see their operations come to a halt in the absence of funding. "This will be a very serious problem when payments don't come when they are expected," says John Cooney, an OMB official during the Reagan administration and now an attorney at Venable LLP.

Negotiations with lawmakers go well into the evening. But a nighttime summit at the White House offers little hope. And now the deadline is a mere 48 hours away.

Thursday, April 7

Finally, the information valve is turned on. Agencies begin disclosing elements of their contingency plans to employees. Most workers will be asked to return to work on Monday to begin "orderly shutdown activities" for up to four hours. Employees on travel are informed that they should return to their home offices as soon as it's practical if a shutdown occurs.

OMB says furloughed employees may be required to turn in their work-issued BlackBerrys or laptops. Military personnel will continue to serve but nobody will be paid until an appropriations bill is passed. "The confusion and anxiety in our ranks is so thick, you can slice it with a knife," writes a Defense Contract Management Agency employee. "If it happens, the American people will feel the impact of a shutdown both immediately and for weeks after it's over."

3:00 p.m.

The worst news to date: OMB issues a memo informing agencies to begin notifying federal employees immediately if they will be furloughed. "We know that the current uncertainty and threat of a shutdown is a tremendous burden on federal employees," writes OMB Director Jacob J. Lew. The words are cold comfort for feds, some of whom voice their frustrations at an evening town hall meeting in Arlington, Va., hosted by Moran. "People aren't prepared for this," a U.S. Coast Guard employee says. "No one is explaining any of this stuff." A State Department employee vents, "There's an overriding atmosphere that federal workers are lazy. Do they understand that we work hard?"

Budget negotiators on Capitol Hill and in the White House go to bed without a deal.

Friday, April 8

Time's up: Agencies begin releasing their contingency plans. The news is not pretty. In the event of a shutdown, more than 16,000 Environmental Protection Agency employees will be furloughed, along with 46,000 Homeland Security Department workers and up to 55,000 Interior Department staffers. All across the government, agencies begin notifying unlucky workers in staff meetings, emails and conference calls. This immediately creates uncomfortable situations at federal offices across the country, in which certain employees are told they are essential to operations, while those in adjoining cubicles are informed they'll be furloughed.

"I have a strong feeling of solidarity with my co-workers and wish I could be furloughed with them," writes one Navy civilian employee. "It doesn't seem right for me to still be working while they are suffering." The news is particularly devastating for families in which both breadwinners work for the government.

"We've spent our savings in the past year to be with our son, who has had nine surgeries in eight months," one despondent employee writes. "My concern is I can't afford to be out of work. . . . I'm just really upset and don't know what to do."

One bit of optimistic news. Four Democratic senators, Mark Warner and Jim Webb of Virginia, and Benjamin Cardin and Barbara Mikulski of Maryland, introduce legislation that would ensure that all federal workers receive retroactive pay for the duration of a government shutdown.

1:39 p.m.

Salt in the wounds: The Libertarian Party sends out a release calling for the permanent shutdown of most of the government, including the Education Department and the Internal Revenue Service. "Just think how a permanent government shutdown would allow so many Americans to regain the blessings of liberty," says Wes Benedict, the party's executive director.

1:59 p.m.

The American Federation of Government Employees announces it will file a lawsuit against the administration's shutdown plans, arguing that requiring certain federal employees to work during a funding lapse with no certainty that they'll be paid for their efforts violates constitutional provisions against involuntary servitude. "There's no guarantee that Congress will keep the administration's promise to pay those employees once the shutdown is over," says AFGE President John Gage.

Meanwhile, budget negotiators appear to be close on a number-somewhere in the neighborhood of $36 billion in cuts. But Republicans are insistent on including the Planned Parenthood rider, an absolute non-starter with Democrats. Federal workers are dumbstruck. After weeks of debate about the need to cut spending, could they really be furloughed because of a side issue? Small contingents of employees stage protests at various locations in Washington to voice their concerns about the effects of widespread furloughs and disruptions in agency operations.

Still, as employees depart for the day, there is no deal. Now there's nothing left to do but wait for the clock to strike midnight. As the evening unfolds, rumors of a deal begin to circulate. But time is running very short, and it begins to look unlikely that all sides can agree on a package, push it through both the House and Senate, and get it to the president's desk in time.

10:46 P.M.

Reid spokesman Jon Summers sends out a Twitter message: "We have an agreement.

Details/statement coming soon." The deal cuts $39 billion from current spending-the additional cuts coming as a trade-off for dropping the Planned Parenthood rider. Obama says the deal will allow "hundreds of thousands of Americans to show up at work and take home their paychecks on time, including our brave men and women in uniform." The Senate scrambles to pass a seventh short-term continuing resolution ending on April 15-enough time to pass the larger measure. But the House misses the midnight deadline. Nonetheless, Lew directs agencies to stay open in expectation of a deal. Millions of federal workers breathe easily for the first time in a week.

Postscript

On Monday, the first day back at work, the president reaches out directly to federal employees. "I know the past few weeks have been a time of uncertainty and concern for you and your families, but your patience and professionalism throughout this period have affirmed my confidence in you, and everyone who works in our government," Obama writes. "You do your jobs without complaint or much recognition. But it is men and women like you who help make America all it is, by responding to the needs of our people and keeping our country safe and secure."

As the memo reaches the in-boxes of millions of workers, the conversation in Washington has already turned to the fight over raising the debt limit and cuts in the fiscal 2012 budget. And to the threat of yet another shutdown showdown in September.