coronavirus stimulus

Why the Deal to Avoid a Government Shutdown May Be Bad News

Pelosi and Mnuchin swear off end-of-fiscal-year brinkmanship. Photo: Stefani Reynolds/Mandel Ngan/Getty Images

Typically it’s a sign of constructive bipartisanship when the powers that be agree to avoid risking a government shutdown when a fiscal year ends. After all, shutdowns disrupt government services and often lead to federal employee furloughs. From that point of view, this report from Bloomberg is good news indeed:

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to work to avoid a government shutdown right before the election, and not let the stalemate over virus-relief legislation hold up a vital stopgap bill.


Their informal agreement was made in a Tuesday phone call, according to people familiar with the discussion …


Republicans and Democrats in Congress, seeking to avert any politically damaging government shutdown just before the Nov. 3 election, had been planning a bill to extend funding at least until mid-November. There was a risk, however, that either side would try to leverage the need to pass such a stopgap to achieve their goals for an economic stimulus.

The bad news, of course, is that without the pressure point of a potential government shutdown, there’s no obvious action-forcing device for bridging the huge divide between the two parties over the size and composition of stimulus legislation. Indeed, after October 1, the next huge day on the political calendar is November 3, Election Day. The perceived need for a stimulus bill to save Donald Trump and Republican control of the Senate remains the most important inducement for action, since most of the naysaying is in the GOP. And the sleeping giant of the stimulus debate is the widespread expectation among the roughly 160 million Americans who got a direct stimulus payment earlier this year that a second check is on the way. They will not be happy if the payment date turns out to be mañana.

Possible break points for the gridlock are September 4 and October 2, when the August and September jobs reports, respectively, are released. If they show a big economic slowdown, public and financial-market pressure for more stimulus could develop. But if there’s any way you can look at the data sideways and see a continuing economic recovery, then Republicans currently opposed to any stimulus will dig in their heels.

Why the Deal to Avoid a Government Shutdown May Be Bad News