WASHINGTON — Lawmakers have only a handful of days in session to prevent a government shutdown and a debt default, yet political leaders, with the crisis in Syria until recently dominating their attention, have made virtually no progress toward compromise.
Even in the absence of a fiscal crisis, the final result could mean deep cuts to sectors of the Massachusetts economy that depend on federal spending. That’s on top of the series of indiscriminate cuts imposed earlier this year after Congress failed to reach a spending deal with President Obama.
At Hanscom Air Force Base, for example, almost every civilian employee — 1,700 workers — took six days of unpaid leave earlier this year. Longer layoffs, program cuts, and even permanent staff reductions could be the price they pay if the budget stalemate continues.
“It’s that period of uncertainty, where nobody’s really sure what’s going to happen,” said Chuck Paone, public affairs director for the base. “Everybody likes to be optimistic until it becomes clear that that optimism is misplaced.”
Low-income families who depend on Head Start services for early childhood development are just beginning to feel the impact from cuts announced in March, and advocates worry they will get worse. As the school year begins, 2,015 children in Massachusetts who would have once qualified for services will not get them, said Pam Kuechler, executive director of the Massachusetts Head Start Association. That’s about a 12 percent of the children served compared with last year.
“We’re talking about the neediest of the needy,” Kuechler said. “If it were to continue, it’s going to be felt in a more widespread way.”
Many analysts are betting that the latest budget drama, and the associated anxiety inflicted on the economy, will drag on for several months. Even before the crisis in Syria overshadowed the fiscal threat, lawmakers and President Obama had done little to prepare for it.
The first deadline is two weeks away — and the House is on recess next week. By Sept. 30, Congress and the president must agree to fund the government to avoid a shutdown. A second deadline arrives in mid-October when the government is expected to run out of cash and lawmakers need to raise the federal borrowing limit to pay salaries, Social Security benefits, and other government debts. Failure on either front risks not only government jobs, services, and credit, it could also slow the broader economy.
“The fact that there is a threat of this kind of impasse means a number of companies are going to be holding off on making investments and hiring decisions,” said Andrew Lo, an MIT economist who serves as an adviser to the US Treasury’s Office of Financial Research. “It could very well put us back in a recession.”
Lo said these self-inflicted crises are now the most significant threat to the economic recovery, something that should infuriate all Americans.
“In any modern corporation, if the senior management could not agree on a policy and simply decided not to pay their bills, they would be fired immediately and sued for damages,” he said.
Most of the political fighting is occurring within the Republican Party. Tea Party allies want to kill Obama’s health care law by refusing to vote for any spending bill or increase in the debt limit that includes funding for the law. Some GOP leaders argue the tactic is doomed to fail because the Democrats control the Senate and White House.
The second fight pits Democrats against Republicans on how to address the series of across-the-board cuts known as sequestration. Democrats want to alter many of the cuts and replace about half of them with tax increases on corporations and high-earning individuals. Republicans, who gave ground on taxing high earners during the budget showdown at the end of last year, generally oppose any tax increases and want to restore military funding while making deeper cuts to domestic programs.
Despite the overlap in timing between the deadlines for funding the government and raising the debt limit, Obama has said it will not negotiate the debt ceiling limit and does not wish to tie other budget fights to that vote.
The threat of sequestration had been written into the 2011 budget deal as a cudgel to compel Democrats and Republicans to negotiate a more thoughtful compromise. But the parties remained in a stalemate for months, and the cuts — more than $80 billion this year — took effect in March. Congress has revoked some of them, including funding for air traffic controllers, but unless a new law is passed, most will remain on the books for 10 years.
Several drivers of the Massachusetts economy — including health care, higher education, and technology — are especially dependent on federal funding. Senator Edward J. Markey estimated before the sequester cuts took effect that they would mean the loss of more than $100 million in research funding and tens of thousands of jobs within the state.
“My hope would be that we could reach a deal that reduces defense cuts and reduces the cuts to education and biotech and clean tech and other programs central to the Massachusetts economy,” said Markey, a Democrat.
Senator Elizabeth Warren made the impact of the sequester a key feature of her constituent visits during last month’s congressional recess, with stops at military suppliers, bases, and medical research firms.
She said the loss of research dollars could add to the nation’s long-term health costs while government furloughs are already damaging cities and towns.
“That’s just a fancy word for pay cut,” she said. “And it’s hard on a family’s budget.”
But there is little agreement in Congress on the federal government’s role in local economies.
Last week, dozens of House conservatives advocated proposals that would tie either a spending bill or a bill to raise the debt ceiling to a yearlong delay in implementing Obama’s health care law.
House Speaker John Boehner, Republican of Ohio, has tried to appease his party’s conservative wing without committing to more drastic steps, such as threatening a government shutdown.
“I’m well aware of the deadlines. So are my colleagues,” he said late last week. “I think there’s a way to get there.”
But most observers predict that road to getting there will be ugly.