The IRS will continue to process electronic tax returns under its contingency plan, and it will take steps to protect data and continue criminal enforcement operations. But it won’t be able to perform exams, give phone assistance, or accept non-electronic returns. Only 9 percent of the agency’s personnel (about 8,700 of the 95,000 employees) will be allowed to work. The plan did not address what would happen if the shutdown continued into the filing season, but it said that if the situation lasted more than five days, the IRS would reevaluate its needs.
Very few people anticipate a long shutdown, and there was some chance that the House and Senate would come together on a short-term extension of current funding. In some ways, the IRS is fortunate that the crisis is occurring at the end of the year rather than the beginning, when any cessation of the agency’s operations could affect refunds and the all-important filing season. A government shutdown, however, will still do some damage to tax administration.
The essence of the contingency plan is that the IRS will essentially be crippled during any shutdown. But implementation of the Affordable Care Act will proceed. That’s right -- the October 1 launch date for many provisions of the ACA will be unaffected by any government shutdown. The Department of Health and Human Services contingency plan made it clear that healthcare exchanges will open on schedule. The IRS ACA office will have four employees, including its director, exempted from the shutdown.
ACA implementation can proceed because it is mandatory spending not tied to the annual appropriations bills. There is some legal wriggle room for HHS and the IRS to push forward on the ACA despite a shutdown, and, of course, the administration plans to use it. This isn’t new information. In July the Congressional Research Service informed Oklahoma Republican Sen. Tom Coburn that a government shutdown would not cause all ACA functions to cease. The CRS, like HHS, cited the mandatory spending components of the ACA to support its finding.
So Republicans can’t win their fight against Obamacare simply by shutting down the government. Obstruction isn’t enough. ACA implementation will proceed whether a continuing resolution is agreed to or not. Republicans need to actually pass legislation. Their only hope for victory is to get the Democratic Senate to pass a bill that delays or defunds healthcare reform -- and then for President Obama to sign it. No one, not even Sen. Ted Cruz, has ever outlined a plausible (or even an implausible) scenario for how that will happen.
So if House Republicans can’t destroy Obamacare, what is their goal? What is the endgame? That’s hard to know. In some ways, the GOP has already won on a key point. No one is talking about undoing the effects of the sequester. The focus on the ACA has shifted the debate from the harsh discretionary spending cuts to defunding efforts. So any possible “clean” continuing resolution will still include the sequester cuts. But Republicans have frittered away the political benefits of that triumph by making it seem as though this debate is all about the healthcare law. That means Democrats will seem like winners when Republicans inevitably have to accept the fact that Obama isn’t going to sign a bill that undoes his signature accomplishment.