Shutdown Averted as Democrats Sink Into Turmoil

Senate Minority Leader Schumer (Reuters)
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Friday. The potential government shutdown has been averted. The Democratic rage and recriminations have not been. Here's what you should know.

Senate Averts Shutdown as Democrats Sink Into Turmoil

The Senate on Friday passed a House Republican plan to extend federal funding through September, averting a shutdown of government agencies that would otherwise have begun overnight. The bill now heads to President Trump's desk.

The 54-46 vote delivers another political win for Trump and House Speaker Mike Johnson - and leaves Democrats, including the party's top leaders in Congress - deeply divided and publicly clashing over how best to combat the Trump administration's dismantling of the federal bureaucracy. Democrats who opposed the House spending bill and those who allowed it to pass both warned about how the other side might empower Trump and Elon Musk's DOGE Service.

Congress has now funded federal operations for the rest of fiscal year 2025, some five and a half months after the fiscal year started. But lawmakers failed to pass any of the required annual spending bills, and the funding bill that was adopted Friday left House lawmakers and progressives furious at Senate Minority Leader Chuck Schumer and Senate moderates who were willing to advance the Republican plan.

Final passage in the Senate came after nine Democrats and one independent joined with Republicans to help the measure, called a continuing resolution, clear an earlier procedural hurdle requiring a 60-vote majority. The vote to break that filibuster threat was 62-38.

The Democrats who voted with Schumer to advance the resolution were Sens. Catherine Cortez Masto of Nevada, Dick Durbin of Illinois, John Fetterman of Pennsylvania, Kirsten Gillibrand of New York, Maggie Hassan and Jeanne Shaheen of New Hampshire, Gary Peters of Michigan and Brian Schatz of Hawaii. Sen. Angus King of Maine, an independent who caucuses with Democrats, also voted to break the filibuster.

King and Shaheen both voted for the actual spending bill as well. Sen. Rand Paul of Kentucky was the lone Republican to oppose the bill.

Democrats in serious disarray: Many House Democrats said they were dismayed by Schumer's backing down after they had stayed united through a tough vote against the GOP plan.

Schumer voted to advance the Republican resolution after initially saying that the Senate did not have the numbers to pass the bill. Democratic lawmakers were reportedly incensed by the lack of cohesiveness on strategy and messaging. And they worried that the funding bill gives Trump and Musk leeway to make spending decisions that break with congressionally approved appropriations.

Jeffries and Pelosi break with Schumer: House Democratic Leader Hakeem Jeffries was asked at a news conference Friday whether he had lost confidence in Schumer and whether it was time for new leadership in the Senate. "Next question," he said each time, declining multiple opportunities to voice support for Schumer.

Former Speaker Nancy Pelosi also called on Senate Democrats to reject the House bill. "Donald Trump and Elon Musk have offered the Congress a false choice between a government shutdown or a blank check that makes a devastating assault on the well-being of working families across America," she said in a statement. "Let's be clear: neither is a good option for the American people. But this false choice that some are buying instead of fighting is unacceptable. I salute Leader Hakeem Jeffries for his courageous rejection of this false choice, and I am proud of my colleagues in the House Democratic Caucus for their overwhelming vote against this bill."

Pelosi called on Senate Democrats to "Listen to the women" - a reference to Rep. Rosa DeLauro and Sen. Patty Murray, the top Democratic appropriators in the House and Senate, who were pressing for a 30-day stopgap funding bill meant to draw Republicans back to the negotiating table, where they could hammer out full-year spending bills that shield federal funding and programs from the Trump administration's cuts.

In a letter to Schumer on Friday, DeLauro and other Democrats on the House Appropriations Committee urged the Senate to reject the House CR, arguing that it "will only serve to unilaterally and unlawfully destroy the agencies and programs that serve the American people."

They added: "House Republicans openly admitted in interviews and on social media that they supported this continuing resolution because they expect President Trump to break the law and continue his pillaging of our government. ... We cannot acquiesce to Republicans' lawless destruction of our government, and we cannot forfeit Congress's Constitutional authority to dictate federal spending."

Schumer insists he did the right thing, protected his party: The Senate minority leader mounted a vigorous defense of his decision via speeches on the Senate floor, appearances on cable news and in an opinion piece for The New York Times.

"The CR is a bad bill, but as bad as the CR is, I believe allowing Donald trump to take even much more power via government shutdown is a far worse option. A shutdown would allow DOGE to shift into overdrive," Schumer said. "Donald Trump and Elon Musk would be free to destroy vital government services at a much faster rate than they can right now and over a much broader field of destruction."

Schumer argued that a shutdown would enable Trump and DOGE to determine what is considered essential and what is not and that Musk's team "has a plan in place to exploit the crisis for maximum destruction." He also argued that Trump and Musk could keep agencies shuttered for as long as they want, with "no offramp" for Democrats to end the showdown. And he said Democrats would be giving Trump a gift by shifting the narrative around his unpopular cuts. "A shutdown would be the best distraction Donald Trump could ask for," Schumer said.

Trump congratulated Schumer on Friday, saying in a social media post that the Democratic leader was "doing the right thing" and made a "really good and smart move" that "[t]ook 'guts' and courage!"

"The big Tax Cuts, L.A. fire fix, Debt Ceiling Bill, and so much more, is coming," Trump added. "This could lead to something big for the USA, a whole new direction and beginning!"

Why DOGE Might Cost More Than It Saves

The Trump administration's DOGE cost-cutting effort led by tech mogul Elon Musk claims to have saved more than $100 billion so far, largely through canceled contracts and workforce reductions. The details on those savings are anything but clear, though, and skeptical analysts have found DOGE's claims riddled with inaccuracies and inflated numbers, leading some to wonder just how much money the Musk team is really capable of saving as it chaotically slashes its way through the federal government. A new study from the Budget Lab at Yale raises an even more troubling question: What if DOGE actually costs more than it saves?

Analysts at the Budget Lab, a non-partisan policy research group at Yale University, took a look at how revenues would be affected by one notable goal of the DOGE project: severe cuts at the IRS. With the Trump administration reportedly considering staff cuts of as much as 50% at the tax agency, the analysts found that such a reduction would mean the IRS collects $395 billion less over 10 years due to reduced capacity. The layoffs would save about $45 billion over the same period, resulting in a net loss of $350 billion (see the chart from former Treasury adviser Steven Rattner illustrating the losses below).

The researchers said there is good reason to think that a smaller, weaker IRS would lead to an increase in noncompliance among taxpayers. Adding that factor to the analysis boosted the potential losses significantly, to $2.4 trillion over 10 years.

Those losses stand in stark contrast to the Biden administration's effort to bolster the IRS with $80 billion in extra funding over a decade, with the money being used to modernize the agency's technology, boost customer service and add agents targeting tax cheating by corporations and high-income households. In the Budget Lab analysis, that effort - which was resisted by Republicans, who managed to reduce the budget enhancement significantly - would have increased revenues collected by $637 billion over 10 years.

On Friday, the Treasury Department said it will pause the overhaul of the IRS initiated during the Biden administration. Earlier in the week, The Washington Post reported that the DOGE team at the IRS has told the acting head of the tax agency to eliminate 18,000 jobs, or about 20% of its workforce.

chart-DOE-cuts-IRS-YALE-03142025-600

Number of the Day: 11%

Consumer sentiment plunged this month, with the University of Michigan's closely watched index dropping 11%, from 64.7 in February to 57.9 this month, in another sign of increasing concern over how President Trump's trade war and other policies will affect the U.S. economy. The latest reading is the lowest since November 2022 and fell well short of economists' expectations. Joanne Hsu, the director of the survey, noted that the declines were consistent across all groups by age, education, income, wealth, political affiliations, and geographic regions. "Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one's policy preferences," she said.

Sentiment has fallen by 27% over the past year, according to the Michigan survey.

Inflation expectations for the coming year jumped from 4.3% last month to 4.9%, the highest reading since late 2022.

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