What concentrated minds on Capitol Hill was not the shutdown itself, let alone the consequences for the administration of public services of the last three weeks of closure, muddle and misery. It was the need to raise the debt ceiling before the markets would have deemed the US to be in default. No surprise, perhaps, unless there were some political surprises about the terms on which the Republicans settled. However, it does mean that the shutdown will have been a little shorter in duration than that of 1996.
But, as discussed in the first posting on this blog, there will be consequences for federally administered public services, not only from the shutdown (as that first post examined) but from the manner of its ending.
The simplest is the one that has garnered headlines. The bill rushed through Congress on Wednesday night included a clause – that’s section 1001a to those of you who are insomniacs – with the adrenaline pumping title “Verification of household income and other qualifications for the provision of ACA premium and cost sharing subsidies”.[i] Don’t ever say they don’t know how to write a thriller up in Congress. This is the sop to the Republicans on Mr Obama’s health care law which says that officials must take extra care to check (“ensure that American Health Benefit Ex-changes verify”) that those who apply for subsidies declare their income accurately and truthfully. Ironically, this was given as a concession to a political party which is generally disposed to regard the work of the executive in doing diligent checks as “red tape”. Anyway, more work for officials, who are trying to operate IT systems for Obamacare in many states which are already creaking.[ii]
The bigger issue now is just how temporary the settlement will feel to staff who think they can get better jobs elsewhere and to contractors who think they might be able to find more reliable payers than federal government. The bill funds government until 15th January and debt repayments until February 7th, but there is a provision that enables government to use some emergency powers to go on paying after that date for a while. The best outcome for twitchy staff and contractors will be a settlement between the parties well before then, so that the US is not put through this same wringer all over again in the New Year. But it’s too early to count on that yet. In the face of this uncertainty, I’d expect to see contractors demanding either a premium on their prizes or other kinds of clauses in contracts to transfer risks back to government, if they are going to be prepared to enter fresh arrangements. America will find itself paying for the consequences of this shutdown and its messy, provisional end in all sorts of ways, and paying for years to come.
[ii] See e.g., The Economist, 15th October 2013, at http://www.economist.com/news/united-states/21587816-signing-up-obamacare-still-ridiculously-hard-obamacare-software-mess.