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Cooperation in Washington DC? Mnuchin, Pelosi cut deal to keep gov't in operation

Who says Americans can’t reach across the great partisan divide to split up imaginary money? [checks notes] Well, usually 535 members of Congress say that on a regular basis, but last night’s deal between Nancy Pelosi and Treasury Secretary Steve Mnuchin offered a rare moment of comity. With the budget deadline approaching in 26 days, both sides have agreed to a clean continuing resolution to keep government in operation, The Hill reported late yesterday.

One extra bonus — both sides agreed to keep Phase 4 negotiations separate as well:

Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi (D-Calif.) have informally agreed to pursue a clean, short-term stopgap measure to avert a government shutdown at the end of the month, sources in both parties confirmed Thursday.

That means the continuing resolution (CR) needed to keep the government open past Sept. 30 would be free of controversial policy riders that have bogged down previous funding bills, significantly lowering the odds of a shutdown leading up to the crucial Nov. 3 elections.

The tentative deal also means the government funding bill and a new coronavirus relief package being negotiated between Pelosi and Mnuchin would not be part of the same talks.

That issue might get mooted to a large extent anyway. Today’s jobs report shows clearly that the economy is not dependent on government bailouts any longer. What the economy needs is support for wider reopening. The only real brake on expanding the economy are state and local government restrictions on commerce and on school access. To the extent Congress acts to assist in removing those restrictions, a Phase 4 bill could help, but the fact that the economy kept adding jobs and boosted wages in August shows that the training wheels are off.

Regardless, the normal budgeting issues will now be disconnected from those questions, which should allow Congress to work more rationally on the FY2021 plan. The people who finally shape that budget will depend on how long the CR lasts, though:

One other outstanding question: How long will Congress fund the government? Ahead of an election, it’s generally tradition to extend funding through mid-December and renegotiate once the results of the presidential race are clear.

But if Democrats are confident of a presidential win for Democratic nominee Joe Biden, it’s possible they could push for something farther into 2020 — which could spark Republican outcry.

Senate Republicans will likely want the CR to expire between Election Day and Christmas, just in case they can’t hold their majority in November. Democrats may push for a six-month CR in case they win the presidency and/or the majority in the upper chamber. That could still derail the Pelosi/Mnuchin deal on a “clean” CR, but there are probably enough benefits from a quick punt on budget negotiations for both sides to keep that agreement in place while the timing on the expiration date gets sorted out.

There’s another reason why Democrats might not insist on a later date. They could always demand another punt in early December if the election gives them that much leverage, and Republicans wouldn’t have much political capital to stop another CR from becoming the solution. But if the election doesn’t go their way, then they can recalculate at that point and determine whether they need to make a quick deal before the next session of Congress starts. A shorter CR might be better for all sides, and I’d bet Pelosi has already figured that out.