Lawmakers Avert Government Shut-Down, But Challenges Still Remain

In a vote of 91 to 9, the Senate has passed the House-crafted two-week continuing resolution (CR) to keep government doors open. Yesterday, this bill -- which will cut $4 billion in the next two weeks -- passed the House to set up this Senate vote. Congress was under pressure to reach an agreement before the current CR expires this Friday. Now the House and Senate leadership have until March 18 to reach another agreement, hopefully on a seven-month spending bill to fund the government for the rest of the fiscal year. The White House announced that Vice President Biden will be leading the Administration's negotiating team.

Reaching an agreement will not be easy, however, as Republicans in the House are demanding no less than the $61 billion in cuts they passed two weeks ago. Senate Democrats and President Obama have said this is not acceptable, saying these cuts would threaten the economic recovery. There have been a number of recent reports in the last week, with Goldman Sachs and Mark Zandi of Moody's both warning against cutting this year, and Stanford economist John Taylor arguing that spending cuts will encourage private sector growth. To add more to lawmakers' plates, in a hearing yesterday the Department of Defense made a case for Congress to move through a separate defense funding bill rather than continuing under a CR, which Defense officials agrue could potentially disrupt military operations.

Congress faces a number of challenges in the coming weeks. We hope that the Senate, the House, and the White House to come together and reach another compromise before this new CR expires. But all of this just continues to underscore how broken our federal budget process really is, and the dire need of reform. We're now five months into FY 2011 and federal agencies still do not know what funding levels they will face for the rest of the year.