Bloomberg News

Senate Votes to Avoid Government Shutdown, End Aid Dispute

September 27, 2011

(Updates with FEMA spokeswoman’s comments in 14th-16th paragraphs and Lew comments in 17th paragraph.)

Sept. 27 (Bloomberg) -- The U.S. Senate reached a bipartisan deal on stopgap spending designed to avoid a government shutdown and defuse a fight over aid to victims of hurricanes, tornadoes and other natural disasters.

Senators approved legislation yesterday, 79-12, to finance the government through Nov. 18, a measure including $2.65 billion for federal disaster assistance.

With the expectation that the House would consent, senators also passed on a voice vote a measure to tide the government over through Oct. 4 so that the House, in recess this week, can consider the longer funding measure. The 2011 fiscal year ends on Sept. 30, and the House can approve the short-term bill by unanimous consent without bringing members back to Washington.

“We expect speedy passage of this agreement by the House so that the flow of disaster aid is not interrupted,” New York Senator Charles Schumer, the chamber’s third-ranking Democrat, told reporters after the votes. “It is hard to see how the House Republicans could reject this proposal given the overwhelming” support it got in the Senate.

The House is expected to consider adopting the stopgap spending measure by unanimous consent at a previously scheduled pro-forma session on Sept. 29, said Laena Fallon, a spokeswoman for House Majority Leader Eric Cantor, a Virginia Republican. The House plans to act on the seven-week spending measure Oct. 4, she said.

Partisan Impasse

The Senate deal broke a partisan impasse over the insistence by House Republicans on cutting other programs to offset $1 billion the Obama administration sought to shore up the disaster-relief fund through Sept. 30. That issue became moot after the Federal Emergency Management Agency said yesterday it had enough funds to help disaster victims this week, said Brian Fallon, a spokesman for Schumer.

FEMA had previously said it would run out of money as early as yesterday or today. “FEMA says they have the money to cover it,” Fallon said.

“We’ve basically resolved this issue,” Majority Leader Harry Reid, a Nevada Democrat, said on the Senate floor last night. “It means we no longer have to fight over 2011 funding.”

Reid “has found a path forward,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said. “In my view, this entire fire drill was completely and totally unnecessary, but I’m glad a resolution appears to be at hand.”

‘Fiscally Responsible’

House Speaker John Boehner’s spokesman, Michael Steel, said in an e-mailed statement, “Republicans support getting Americans suffering in the wake of natural disasters the help they need -- and doing it in a fiscally responsible way.”

Democrats said there was a principle at stake for them, even if the amount of money they were fighting over was small in relation to the entire federal budget.

“That we found a way out is great, but I think the House has to learn there is no need to have confrontation,” said Senator Robert Menendez, a New Jersey Democrat. “I’d hate to be a senator from a state that is prone to hurricanes” faced with “every time I’m going to need disaster relief, I have to figure out an offset.”

The Senate’s No. 2 Republican, Jon Kyl of Arizona, called FEMA’s update on its financial needs “kind of serendipitous, because a few days ago they were claiming that they would run out of money. Now it turns out that they will have money.”

Recovered Money

FEMA recovered almost $180 million this month in unspent funding that had been allocated for completed disaster-relief projects, extending aid for five additional days, said Rachel Racusen, an agency spokeswoman, in an e-mailed statement.

Without this money “coupled with lower-than-expected registrations for disaster assistance over the weekend, FEMA would have run out of disaster funding this week,” she said. The fund today has $175 million, Racusen said.

FEMA has had to put $400 million worth of projects on hold, Office of Management and Budget Director Jacob Lew wrote in a Sept. 26 letter to congressional leaders.

House Republicans have insisted on offsetting disaster aid costs with $1.6 billion in cuts, including $1.5 billion from a loan program for green auto technologies and $100 million from a program that provided a $535 million federal loan guarantee to Solyndra LLC, which filed for bankruptcy protection this month.

Reid and other Democratic leaders had said they wouldn’t accept any spending cuts to pay for disaster assistance.

‘Major Change’

Requiring such offsets would be “a major change,” said Senator Mary Landrieu, a Louisiana Democrat who pushed Congress for federal money to rebuild New Orleans after flood damage from Hurricane Katrina.

“We cannot have a budget meeting every time there is a disaster in America” to decide what programs to cut before the government sends help, Landrieu said. “That’s no way to run a government.”

Public opinion polls continue to show diminishing confidence in congressional leaders, especially Republicans. A poll released by the Pew Research Center found that 35 percent of those surveyed Sept. 22-25 said they have a great deal or fair amount of confidence in Republican leaders to do the right thing about record U.S. budget deficits. That’s down from 47 percent in May. Sixty-two percent of the 1,000 adults surveyed said they have little or no confidence in Republican leaders on budget shortfalls.

Confidence in President Barack Obama’s handling of the budget deficit was unchanged, with 52 percent saying they have at least a fair amount of confidence that the Democratic president will do the right thing on the budget. That has barely changed from 55 percent in the earlier poll.

--With assistance from Brian Faler and Jeff Bliss in Washington. Editors: Don Frederick, Laurie Asseo

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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