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00:00About a month ago, might have been a little bit more than that. Patrick McHenry said in this studio that October is going to be a doozy. He might have used a different word than that, but he's with us now. Bloomberg Politics contributor, former Republican congressman, chair of the House Financial Services Committee, Speaker Pro Tem, the only in American history. Patrick McHenry, great to see you.
00:21Thanks. It wasn't doozy. It was off camera and it was more colorful. I thought that was right. Yes. Therefore, I could have said anything and they would have believed me. But it's coming true. When you see Mike Lawler standing in front of Hakeem Jeffrey's office with a piece of paper to get into a shouting match for the benefit of the cameras tells us we are aware. Not yet at the negotiating table. The performative. It's a form of peace. The only thing that brings policymakers to some resolution is pain.
00:48And the announcement, it's not goodwill. Everybody's like, oh, everybody's going to come together with their disagreements and it's going to be goodwill that gets out of the shutdown. It never is that. It is the party that instigated it has to take the pain in order for us to get out of it. That's where we are. Usually it's been Republicans. This has been a much more chill shutdown in terms of what's happening here in D.C. is like the rhetoric here in D.C.
01:14And it's because the Democratic Party is traditionally the defenders of federal employees and the federal government and federal regulatory powers.
01:24They're the ones that have instigated the shutdown in the name of a health care battle, a health care policy. But they've instigated it.
01:31They've been very muted about the effects of the loss of government services. They're usually the ones that are first at the press.
01:37Yeah. And now you have Republicans are traditionally believe that we need to spare like I'm sorry, pare down the federal government, not spare anyone in the federal government.
01:47They're the ones that are saying, well, look, we we need to try to make this work for as long as we can.
01:53So you see some agencies are still open because they have account balances.
01:58OMB has these massive set of powers during government shutdown, which enables OMB director, in this case, Russ Vogt, to take very specific action individual by individual agencies and account levels to either continue normative services or in this case have substantial layoffs.
02:19So, Mr. Chairman, we had a House Speaker Mike Johnson on the other night and Joe, try as he might, did not help resolve the shutdown that evening.
02:27But one thing he did ask the speaker was, why not just schedule a vote as the Democrats have been asking for and the shutdown?
02:35That's obviously not in his political will to do.
02:39He was saying it was not in his process capability to do.
02:43How do you unpack that? Take us behind the scenes.
02:44Could he do that? And would it be in his interest at all?
02:47Two things, two things, two things can be true at once.
02:50And in this case, Mike can be correct and Joe can be correct.
02:54So, yes, Washington.
02:56Everybody wins.
02:57So, so what the speaker has said is we've passed a continued resolution.
03:03That is a normative act in D.C.
03:05Unfortunately, since the 52 years we've had this budget process, we've failed most years to follow the budget process in the law.
03:14But a continued resolution is now the default in the fall.
03:19What the Democrats say is we have to, in order to reopen the government, you have to have this expansion of health care benefits into next year.
03:28And what Republicans have said, if you want to have a debate about this, let's have a debate about it.
03:33But we should not hold the government hostage.
03:35Now, the last government shutdown we had, it was flipped.
03:39It was Republicans saying we're going to hold a hostage and Democrats saying, no, no.
03:44Once you reopen the government, we'll have that conversation.
03:47Right.
03:47So these roles are completely reversed and scrambled.
03:51The process in the House would require us, the House initiating a new bill, going through the Rules Committee.
03:57They're not the votes on the Rules Committee to pass what the Democrats have requested, which is about $200 billion of new spending for next year on health care in order to reopen the government.
04:09That is a really large bid just to keep the lights on for six weeks.
04:13It is an absurd bid.
04:16In order to continue the Obamacare subsidies for one year that was the original debate here, it would cost about $26 billion to keep the government open for six weeks.
04:27I mean, these are big numbers.
04:29And so what the speaker said is, look, we'll have that debate, happy to have the debate, but I'm not going to go originate a piece of legislation in the hopes my Democratic colleagues will then adhere to their rhetoric about why we have the shutdown.
04:44OK.
04:44That said, we also talked about back pay.
04:47Oh, yeah.
04:48The president really started something here.
04:49He said, hey, listen, he said, maybe not everybody gets back pay to the point of saying some don't deserve to be taken care of.
04:56And I asked the speaker about that, and he said, well, there are a couple of different legal interpretations of that law because we all thought the 2019 law made clear that they had to be paid back when they were brought back from furlough.
05:11Are we really making this a jump ball?
05:13Is that good politics?
05:15It's – before 2019, the law changed.
05:17It has been – it's always been a jump ball.
05:19Yeah.
05:20It's always been a jump ball, an open question whether or not federal employees will get back pay.
05:24However, history has shown at every government shutdown that has ever occurred in the last century, they've gotten back pay.
05:33So these are federal employees that have signed up to do a job, and it is not their fault that the government shut down.
05:39It's not their fault that Congress can't get their act together.
05:42So I believe that Congress will have the sense to pay all federal employees for back pay, number one.
05:49Number two, I don't think there's clear – I don't think there's – this is a debatable thing.
05:53The law is very clear that this is what will happen.
05:55It seems like it.
05:56And number three, you have the filibuster in the Senate, which means the Democratic minority controls whether or not the government is open.
06:03We have a shutdown right now because Schumer has the votes to withhold – to filibuster.
06:09And to stop the bill being taken up that passed the House to keep the government open.
06:14I don't think the Democrats would come to the table unless there's back pay.
06:17So there's a waterfall of things that are true here.
06:21I think if you're a federal employee –
06:24So this is a distraction.
06:25It is a distraction.
06:26Now, the pain of the rifts, that's real.
06:29And there's a massive amount of not legal uncertainty but definitive certainty on the power of OMB to take these actions in a governmental shutdown.
06:37That should be concerning to Democratic leaders on the Hill.
06:40Absolutely.
06:41So, Mr. Chairman, you correctly predicted this would be a mess a while ago.
06:44So I'm going to ramp up the pressure on your predictive capabilities.
06:46But next week, when we're looking the days ahead, we've got the military paycheck issue as well.
06:51Is this going to be resolved next week or is this something that waits until after the shutdown whenever that is?
06:58I'll take the over.
06:59I'll take the over.
07:01And every offer that I've – everybody that presented me with a date, I've taken the over.
07:06I think the backstop of this is Thanksgiving.
07:09I think we're going to have a lot more pain before this thing gets resolved and people come to their senses.
07:14The fact is that you've already seen Schumer lose three Democratic senators.
07:21It hasn't spread beyond that.
07:23But as the pain ramps up, I think Democratic politicians in the Senate will come to the negotiations.
07:29I think we'll have a reopening.
07:32And then we'll have a debate about health care and extending some of these subsidies.
07:36And then we'll have the longer-term funding for the federal government.
07:39But it's going to be choppy waters.
07:41This piece of paper is going to be junk soon, though, right?
07:43November 21st.
07:44Who cares?
07:44If they pass it in a couple of weeks, the government is just going to shut down again.
07:49And there are many who do think that once this is resolved, we will hit another shutdown at the end of the year.
07:55We just keep kicking CRs through the spring?
07:59Or what's the best-case scenario?
08:00Don't say regular order.
08:02Well, this is regular order.
08:03A continued resolution is a normative thing in the House.
08:07Two years ago, this was the finite cause of the ouster of Speaker McCarthy that we passed a continued resolution.
08:15So this is a normative act in Washington.
08:19Unfortunately, every couple of administrations, a normative act is also a government shutdown.
08:25It doesn't win you the policy, the underlying policy.
08:29It does elevate your party in a political fight.
08:31And this is not about the policy.
08:33It is actually about politics.
08:36Schumer is getting hammered on late-night TV like never before.
08:40Jon Stewart, who I don't frequently quote, called him a flat tire.
08:45I mean, these are very insulting things.
08:46I saw that sketch.
08:47That was a bad joke, the KF.
08:50I mean, there are a lot of bad jokes on late-night TV.
08:52Don't get me.
08:53No, I mean the Schumer joke that got him in hot water there.
08:55But Schumer, Schumer's in this fight because he looked feckless and weak in March and is now trying to look like he's giving a valiant fight to his Democratic base.
09:05Hakeem Jeffries is doing the same thing.
09:07So those fights, that physical confrontation you almost saw on Capitol Hill is trying to elevate Schumer and Hakeem Jeffries, Hakeem Jeffries to the speakership, Schumer to the majority.
09:18They need to show a fight against President Trump, and they have very little power to do it outside of a shutdown.
09:24If a Democratic member had done that, were we going to be talking about censure in the House?
09:27Oh, for sure.
09:28For sure.
09:29I mean, look, all this stuff, all these performative acts are fun and games until somebody opens the door.
09:36And that is always the case, right?
09:38Door's open.
09:38You're like, I'm going to go fight with somebody.
09:40And we're like, well, you're on a TV.
09:42I think they're in the two rooms behind you, right?
09:44Why don't you go just talk to them instead of yell on the screen?
09:47So as far as the pressure points, though, you mentioned Thanksgiving.
09:50I wonder if part of that timeline is the flights issue.
09:53Are we seeing enough pain on flight delays, air traffic controller shortages, that sort of lane that the American public cares about to have a change in the negotiations?
10:04Yes, and this is about, again, the nature, the timing of the reopening will be based off of pain and how that maps out.
10:15And you can't predict what the pain will be like for either party in a week's time.
10:19Now, I think the Democratic Party is the one that has to fold in order for the reopening to happen.
10:26But you can see different movement based off of who is deeply influenced by their constituents feeling pain.
10:33Or, frankly, they go to the airport and they can't get on their flight.
10:37That is a form of pain for those of us that travel.
10:40So you're still looking at Virginia, Maryland, with the big concentrations of federal workers to maybe crack and join the jailbreak?
10:47Yes, but those senators, the Democratic delegation there in the Senate is very locked down.
10:53I mean, Warner is here not going to go there, right?
10:55Yeah.
10:56Van Hollen, not so much.
10:58No, but you also don't know how these federal employees map out.
11:01Like if you're talking about air traffic control disproportionately, they're located in Oklahoma.
11:04There's not a single Democratic federal office holder from the state of Oklahoma.
11:10So you don't know how these things are going to model out.
11:12That's really interesting.
11:13You also don't know how that Oklahoma delegation is communicating with the OMB to ensure that their people are paid.
11:19So there's all this subtlety that if you're in charge of the OMB, you can either met out pain to your opponents or help your friends.
11:31And in this case, I think OMB is being quite adept at being targeted on who they're sharing pain with and targeting who they're helping and maintaining account balances where they need to help.
11:44Speaking of mapping out, it'll be really interesting to see where these all land.
11:47I don't know how long it'll take before we have that data, but we'll, of course, bring it to you here on Bloomberg.
11:52Patrick McHenry, Bloomberg Politics contributor, former Republican congressman.
11:56Great to have you.
11:56How often when you're on the plane, they recognize you're the guy who replaced Kevin McCarthy?
12:01Zero without a bow tie.
12:02Okay, well, that's a good answer.
12:04And you brought it with him today.
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