In this post, Robert Hubbell explains the budget impasse and its implications. This is really worth a read. It is very informative.

He writes:

On Wednesday, Elon Musk instructed congressional Republicans to walk away from a bipartisan agreement to fund government operations through March 2025. Congressional Republicans dutifully obeyed Musk even though he hasn’t a clue about the consequences of his actions. Musk ordered Republicans not to pass “any bill” until Trump is sworn in on January 20, 2025. If Republicans follow Musk’s command, there will be no government funding for a month (at least)–from Friday, December 20, 2024, through Monday, January 20, 2025.

If that happens, chaos will ensue.

The urge to pick a newsletter headline of “President Musk” or “The Musk Administration” was strong. But, in truth, Musk is not in charge; he is an agent provocateur of chaos. Musk lobbed a political hand grenade into the GOP congressional caucus and ran in the opposite direction.

There is much to unpack in today’s events, which will dominate the headlines for days (if not weeks). So, let’s examine today’s events to understand the chaos that Musk has inflicted on the GOP and the American people.

How the budget process is supposed to work.

There is a rhythm to the federal budgeting process that is more honored in the breach than in the observance. Understanding that rhythm is key to understanding just how disruptive Musk’s order to Republicans will be.

Congress has the “power of the purse.” “Section 9 of Article I states that funds may be drawn from the Treasury only pursuant to appropriations made by law.” See Congressional Research Service, Introduction to the Federal Budget Process.

The Budget and Accounting Act of 1921 requires the President to gather requests from agencies for funding, which are then collated into a consolidated request for funds that is submitted to Congress. The President is required to submit the consolidated funding request at the beginning of the calendar year. President Biden submitted the FY 24-25 request in March 2024.

The federal fiscal year is October 1 through September 30. In a perfect world, the budget would be passed by Congress before the beginning of the fiscal year (i.e., October 1).

Taken together, the above deadlines drive the schedule set forth below:

For clarity, the “bipartisan” funding bill killed by Elon Musk on Wednesday was the bill for the fiscal year October 2024 through September 2025.

Continuing resolutions—a patchwork remedy when Congress fails to pass a budget

In reality, Congress rarely passes a budget “on time” to begin the new fiscal year (Oct – Sep). To keep the government running in the absence of a budget, Congress passes a “continuing resolution” that funds agencies at the funding levels of the prior fiscal year.

As of 2022, the federal government had operated under continuing resolutions for all but 3 of the last 46 years. See General Accounting Office, Federal Budget: Strategies to Manage Constraints of Continuing Resolutions

The current continuing resolution expires this Friday, December 20, at midnight.

What happened on Wednesday

On Wednesday, Speaker Mike Johnson and Minority Leader Hakeem Jeffries announced they had negotiated a continuing resolution that would have funded government operations until March 14, 2025.

The GOP House caucus is a fractious majority that has failed to pass budgets or continuing resolutions on their own at any point in the 118th Congress. So, Speaker Mike Johnson has relied on majority support from Democrats to pass continuing resolutions and budgets during the 118th Congress.

Because Mike Johnson needed help from Democrats to pass the bill, Democrats were able to include new spending in the continuing resolution for the following items (per CBS News)

  • Disaster relief “$110.4 billion in disaster aid: $29 billion for FEMA’s disaster relief fund; $8 billion for federal highways and roads; $12 billion for the Community Development Block grants and disaster relief.”
  • Baltimore Bridge Rebuilding
  • Health care policy extenders and reforms
  • Transparency in ticket and hotel prices
  • Transfer of ownership of RFK Stadium to the District of Columbia

As usual, some member of the GOP House caucus objected to the continuing resolution, but passage seemed assured because Hakeem Jeffries promised to deliver sufficient Democratic support.

Elon Musk tweets, “This bill should not pass.”

On Wednesday, Elon Musk tweeted that “This [bill] should not pass” and that “no bill” should pass until Trump is inaugurated on January 20, 2025. Musk also tweeted that

Any member of the House or Senate who votes for this outrageous spending bill deserves to be voted out in 2 years

It is not clear whether Elon Musk understands that the bill he killed was designed to keep the government open until March of 2025. In tweets throughout the day, Musk betrayed a shocking but unsurprising ignorance of the federal budget process or the consequences of the federal government not having money to operate. See Politico, Elon Musk fueled backlash to spending plan with false and misleading claims.

Per Politico,

Musk didn’t seem to think a government shutdown would have significant consequences for the country. He responded “YES” to a post that read, “Just close down the govt until January 20th. Defund everything. We will be fine for 33 days.” Another Musk post said a shutdown “doesn’t actually shut down critical function.

While it is true that some “critical functions” will continue during a shutdown, many critical government employees—like US military members—will not be paid even though they are expected to remain on duty. About 800,000 workers went without pay for a month during the last shutdown (2018). Although Musk could survive without a bi-weekly paycheck for a month, millions of Americans could not.

Trump reacts, rather than leads

Trump remained on the sidelines of the budget debate until after Musk tweeted “This bill should not pass.” Trump posted a statement that “Any Republican that would be so stupid as to do this should, and will, be Primaried.”

But then Trump threw a curveball. He also posted, “Unless the Democrats terminate or substantially extend the Debt Ceiling now, I will fight ’till the end.”

Increasing the debt ceiling is something that does not need to be done until June of 2025. But Trump doesn’t want a debt ceiling increase to happen on his watch. We know this because Trump said so in a post on Truth Social:

If Republicans try to pass a clean Continuing Resolution without all of the Democrat ‘bells and whistles’ that will be so destructive to our Country, all it will do, after January 20th, is bring the mess of the Debt Limit into the Trump Administration, rather than allowing it to take place in the Biden Administration,”

The reason that Trump wants to force a debt limit increase under Biden is that Trump needs a debt limit increase to pay for the proposed extensions of his 2017 tax cuts for millionaires and corporations. See The Hill, Lawmakers caught off guard by Trump debt ceiling demand.

Per The Hill,

And in a post on X, Sen. Chris Murphy (D-Conn.) accused Trump of wanting Democrats “to agree to raise the debt ceiling so he can pass his massive corporate and billionaire tax cut without a problem.”

“Shorter version: tax cut for billionaires or the government shuts down for Christmas,” he added.

The fallout

  • Trump looks like he is subordinate to Elon Musk.
  • JD Vance has been “disappeared.”
  • Musk has—for now—seized momentum from Trump as the dominant political force in the second Trump administration.
  • It is difficult to see how Mike Johnson survives as Speaker—or why he would want to. Johnson has been humiliated and back-stabbed by Trump and Musk. Mike Johnson’s credibility with his own caucus and Democratic counterparts is non-existent. It is a waste of time to negotiate with Johnson.

The chaos caused by Musk foreshadows a second Trump administration with unelected, unaccountable billionaires mucking about in the people’s business. What could go wrong?