With the clock ticking away on the last session of the 111^th Congress, the Democratic leadership in the House and Senate have a few bills they still need to get passed. The largest, most important one is the budget for the government. The federal fiscal year began October 1^st, and the federal agencies have been running on continuing resolutions – or “CRs” – ever since.

As we noted in our blog on December 8^th, a CR is legislation that keeps agencies running at the previous year's funding levels to avoid a government shut down. Government shut downs occur when Congress fails to enact the spending bills agencies need to fund their operations. The last time this happened was under President Clinton, who faced off against a Republican Congress. He vetoed the budget for Fiscal Year 1996 because he did not agree with the spending cuts passed by Congress. At the time the government was running a deficit, and the President's proposed budget would require raising the debt ceiling, or the money the Treasury is allowed to borrow. Then Speaker of the House Newt Gingrich refused to raise the debt ceiling, leaving Congress and the President at an impasse, and forcing the government to shut down temporarily.

Do these events seem familiar to you? Many of these same situations are playing out today. The Democrats wanted to pass an omnibus bill based on President Obama's budget request for Fiscal Year 2011 that would cover government spending through to October 1^st of 2011. Republicans, who are retaking the House in January, wanted to construct a new FY 2011 budget that reflects their priorities, rather than running the government on the Democratic budget all year. It seems as though the Republicans won this round. The Senate is considering another continuing resolution which will fund government operations through March 4^th. As this resolution expires, the Republican majority in the House and the almost evenly divided Senate will debate the budget yet again.

However, Republicans are not waiting to exercise their strong hand. In addition to winning a shorter term for the latest CR, they have also avoided funding implementation of the health care overhaul and increased oversight for Wall Street. Rep. John Boehner of Ohio, the House Speaker-elect, has indicated his willingness to cut spending back to pre-Obama administration levels, which means cuts of up to 20% for some agencies. With funding that will expire at midnight on March 4^th and a strongly partisan new House of Representatives looking for a fight, a Clinton era-style shut down is becoming a real possibility.

The House passed a similar version of this CR yesterday. The Senate is expected to pass it today and send it back to the House for final approval. Should this not happen, however, the current continuing resolution expires at midnight tonight, at which time – you guessed it – a government shut down.

While Congress chips away at their primary duty, the U.S. debt continues to rise, like a balloon, toward the debt ceiling. Treasury Department officials estimate they will hit their borrowing limit by the second fiscal quarter of 2011, which ends in March. At this time, the 112^th Congress will need to decide if the debt ceiling will be raised. If not federal spending cuts need to happen immediately or the government will shut down.

There's an old adage, “Those who do not learn from history are doomed to repeat it.” The way the current political battle lines are drawn in Washington seem to bear this out. In the coming months, the shifting demographics of Congress will give way to differing priorities between the White House and Congress, which doesn't necessarily mean trouble. It's when elected officials refuse to do their job and keep the government running that stubbornness becomes an issue.