Weekly update from the National Housing Conference

Greetings!

Last night, President Trump warned of a humanitarian crisis on the border as justification for his partial shutdown of the U.S. government, an assertion that has been widely disputed. Should the crisis drag on, a major humanitarian crisis could occur right here in the United States, directly impacting our country’s neediest citizens. As detailed below, over 1,000 federal contracts for the HUD Section 8 housing program have been expiring during the shutdown and some have suggested that thousands of families could be forced onto the street for nonpayment of rent. That’s unlikely, in large part due to the work of a small group of “essential” senior staff at HUD, working without pay to prevent this from happening. Many more people, however could see maintenance on their units curtailed or ended altogether. As The Washington Post reported on Jan. 4, the Trump administration had not anticipated a long-term shutdown (no one does), and “recognized only this week the breadth of the potential impact, several senior administration officials said.”

None of this needed to happen. Government shutdowns are terrible negotiating tactics and ultimately make everyone, especially the taxpayer, the loser. I know this because I have been directly involved in all five of the previous shutdowns in both Republican and Democrat administrations. My first shutdown was as a Republican staff person in the House of Representatives in 1986. This one lasted only a day, but the plight of federal workers was underscored to me by my chief of staff who told us that only essential workers would report to work and anyone who thought they were not essential should see him in his office. Congress has its own work rules and, needless to say, everyone came to work during the one-day closure that cost taxpayers over $60 million.

In 1995, the government was shut down after President Bill Clinton vetoed a spending bill the Republican-controlled Congress passed in a dispute over deficit spending and Medicare reform. President Clinton ended the shutdown five days later in what was seen as a temporary capitulation, emboldening Republicans to force a second shutdown of the government on Dec.16, 1995. That fight risked breaching the federal debt limit – a potentially catastrophic event that neither side wanted to actually see happen. My job was to prepare hundreds of pages of analysis on what federal money could be spent to fund the government before the debt limit was breached, which would turn a high stakes game of chicken into a bloody knife fight.

Ultimately, Treasury Secretary Robert Rubin’s intimate understanding of market psychology forced the Republicans to cave when Wall Street ignored one of the key thresholds we identified and the crisis was set to drag on indefinitely as a result. The shutdown bolstered President Clinton’s stature at a critical time and ironically contributed to both sides agreeing to budget cuts that led to the first balanced budget in a generation. While the White House might look at this experience as an encouraging precedent, negotiators on both sides in 1995/96 were bolstered by extensive experience, volumes of data and no small amount of presidential charm. Frequently during the tense negotiations, President Clinton would break the tension with ribald humor and folksy stories that sent Speaker Newt Gingrich and Majority Leader Dick Armey back to the Capital saying, “damnit, he did it to us again!”

The most frustrating shutdown was in October of 2013. It lasted 16 days and resulting in the furlough of 800,000 federal employees, while 1.3 million others were required to report to work without known payment dates. Like this one, it was driven by ideological extremes and resulted in nothing positive. House Republicans spurred on by Sen. Ted Cruz and House “Tea Party Republicans,” now known as the Freedom Caucus, waged a back-bench war against the Patient Protection and Affordable Care Act (known as "Obamacare"). In the face of President Obama’s refusal to back down, the House eventually capitulated and passed a continuing resolution and debt limit extension on Oct. 16, 2013. At the time, I was part of the White House’s task force on the Detroit bankruptcy and the entire team was deemed “non-essential.” We sat at home for 16 days, unable to make a single phone call under threat of jail for violating the 1884 Anti-Deficiency Act, which states that “an officer or employee of the United States Government… government may not accept voluntary services for either government or employ personal services exceeding that authorized by law except for emergencies involving the safety of human life or the protection of property...”

There’s no way to know how long this shutdown crisis will go on, but I can confidently predict that 1) no one will win, and 2) the taxpayers will pay millions for the drama.

Sincerely,

David M. Dworkin

President and CEO

National Housing Conference