❮ Return to Our Work

Blog Post | September 29, 2023

MAGA-Engineered Government Shutdown Will Make October a Great Month to Be a Corporate Criminal

Administrative LawConsumer ProtectionCorporate CrackdownExecutive BranchGovernment CapacityLabor
MAGA-Engineered Government Shutdown Will Make October a Great Month to Be a Corporate Criminal

As a coalition of payday lenders and their GOP backers attempts to defund the Consumer Financial Protection Bureau, House Republicans are on the verge of defunding virtually every other regulatory body that corporate executives find burdensome. Because the CFPB, like many financial regulators, is not funded through the annual appropriations process, predatory loan sharks represented by Jones Day—one of Trump’s favorite law firms—had to take their case to the Supreme Court. The fate of the agency now depends on how corrupt right-wing justices on the high court, whose composition has been shaped by veterans of the Jones Day machine, rule. But whether vast swaths of the administrative state cease to function on Sunday is directly up to House Republicans. The forces that stand to benefit most from a government shutdown are corporate miscreants—a fact that President Joe Biden and his Democratic surrogates should point out.

How Did We Get Here?

Republicans in the lower chamber have so far passed just four of the 12 appropriations bills (collectively called an omnibus) needed to fund the federal government for fiscal year 2024, which begins on October 1. They have also refused to consider a clean continuing resolution (CR), the frequently used stopgap designed to maintain spending at existing levels and give lawmakers more time to finalize an annual budget. The so-called CR introduced last week by House Republicans would slash spending on most federal agencies by 8% in exchange for keeping the government open through October 31. The cruel appropriations bills they have proposed would unleash even more damaging cuts to social services and other crucial government functions, with their goal being to reduce nonmilitary discretionary spending by roughly 27% for an entire year.

While the Senate this week advanced a CR to keep the government fully funded through November 17, chances are increasingly slim that the House will do the same before FY 2023 ends on September 30. House Speaker Kevin McCarthy (R-Calif.), who caters to his more aggressive Freedom Caucus members because he knows “moderate” Republicans have no independence and will do whatever he wants, said Wednesday that he won’t hold a vote on the Senate’s short-term funding bill. If five House Republicans join all 213 of their Democratic counterparts who have already signed a discharge petition, the lower chamber could bypass McCarthy and bring the Senate’s CR to the floor for a vote (and approve it by a margin of 218-217)—but there’s no way the complicated bipartisan maneuver could happen before Saturday’s midnight deadline.

As a result, another Republican-manufactured government shutdown is now imminent. In fact, with many federal agencies now making preparations for a shutdown to begin this weekend rather than carrying out their regular duties, Kate Oh of Demand Progress pointed out in a Thursday email that “a soft shutdown is already underway.” I’ve compiled a list of many of the harms the GOP is poised to inflict on millions of people across the United States through this shutdown. It’s based largely on White House projections, executive branch contingency plans, and historical data provided by the Congressional Progressive Caucus Center. What becomes immediately evident is the devastating and far-reaching nature of the expected consequences. The ruinous impacts of disrupting the provision of lifesaving benefits—including nutrition and housing assistance for millions of low-income households—and furloughing most of the public servants tasked with ensuring the safety of the nation’s air, water, and food are guaranteed to grow worse the longer a shutdown lasts. 

One underappreciated effect of the looming shutdown I’d like to focus on is that corporate criminality—already rampant and too frequently permitted—will receive even less scrutiny than usual. In the following section, I identify how the wheels of corporate wrongdoing will be greased and provide examples (in italics) of sharp rhetoric that White House officials and surrogates could use to punch through the discourse. Issues are taken in alphabetical order.

Here’s How a Government Shutdown Will Help Corporate Crooks

The Revolving Door Project has long stressed that cracking down on widespread corporate abuses is a popular and tangible way for the Biden administration to improve working people’s lives despite GOP obstructionism in Congress and the courts. Right-wing efforts to hamstring the federal agencies responsible for enforcing laws prohibiting white-collar crime, by contrast, are designed to benefit wealthy rip-off artists and polluters at the expense of the vast majority. It’s why the payday lending industry is trying to kill the CFPB, it’s why billionaire-backed lawmakers and jurists are intent on weakening the Internal Revenue Service’s ability to collect taxes, and it’s one of the reasons why House Republicans are bringing Washington to a standstill. Below are some of the ways the MAGA-driven government shutdown will make October a great month to be a corporate criminal.

Civil Rights

The public will not be able to submit complaints alleging violations of anti-discrimination law to the Commission on Civil Rights. Furthermore, the Department of Education’s Office for Civil Rights will pause ongoing investigations, and the Department of Housing and Urban Development will freeze nearly all of its fair housing work. 

Fraudulent for-profit college administrators and racist landlords are rejoicing at the prospect of a government shutdown!

Consumer Protection

Among other things, the Federal Communications Commission will stop responding to consumer complaint phone lines and enforcing consumer protection and local competition rules. Just days ago, FCC Chair Jessica Rosenworcel announced that the agency’s five-person leadership panel—which finally has a Democratic majority after being mired in a 2-2 deadlock for nearly three years—plans to restore net neutrality provisions repealed in 2017 by then-FCC chair and ex-Verizon lawyer Ajit Pai. Under a shutdown, the commission will be forced to put most of its work on hold. 

Cell phone, cable, and other telecom monopolists are breathing a sigh of relief.

The Federal Trade Commission has enough leftover funding to continue its operations for three weeks, but if the shutdown lasts beyond October 20, the agency will have no choice but to pause its research and rulemaking activities, as well as “the vast bulk” of its antitrust and consumer protection investigations and prosecutions. Just days after FTC Chair Lina Khan announced that the agency is joining 17 states in suing Amazon over the e-commerce giant’s alleged anti-competitive practices and price-gouging, the commission will be forced to halt its litigation. The FTC in June filed another lawsuit accusing Amazon of deceiving consumers into paying for Prime, and it is also in the middle of a protracted legal battle against Facebook’s parent company Meta. The FTC’s run-of-the-mill consumer protection efforts, which are less glamorous than antitrust suits but vitally important, are also at risk of being delayed.

Meanwhile, the Department of Justice said this week that its “criminal litigation will continue without interruption” during a shutdown, but much of its “civil litigation will be curtailed or postponed.” This means that incipient trials will be pushed back and investigations obstructed. During the 2018-2019 shutdown, a lack of funding for government attorneys undermined the judiciary’s ability “to operate normally,” according to the Brennan Center for Justice. “Judges in several districts… issued blanket orders delaying all civil cases in which the United States [was] involved.”

Jeff Bezos and Mark Zuckerberg are looking forward to the upcoming reprieve.

Environmental Protection

As my colleague KJ Boyle detailed this week, the Environmental Protection Agency is already doing a woefully inadequate job of safeguarding the nation from lead-contaminated water and toxic air emissions due to a lack of funding and staffing. A lapse in appropriations will only exacerbate the problem. The White House has warned that during a shutdown, “most EPA-led inspections at hazardous waste sites as well as drinking water and chemical facilities would stop.” About 1,200 inspections were canceled amid the 2013 shutdown, according to the American Federation of State, County, and Municipal Employees (AFSCME). In addition, the White House said last week, “EPA would halt oversight and review of permits and plans to ensure safe water and clean air in communities.” Furthermore, it continued, “efforts to address dangerous contaminants like PFAS—which are linked to severe health effects, including cancer—would be delayed, and cleanup activities at Superfund sites would slow or cease.” 

The EPA is already trying to do its job with one hand tied behind its back, and now the agency will be without both hands. Oil refineries are more than happy to be let off the hook.

Financial Regulation

The Commodity Futures Trading Commission has said that it will “cease the vast bulk of its operations,” including “work related to rulemakings and other responsibilities mandated by Dodd-Frank Wall Street Reform and Consumer Protection Act.” Meanwhile, Securities and Exchange Commission Chair Gary Gensler has warned that a shutdown will reduce staffing to “skeletal” levels. As a result, most of the agency’s rulemaking, investigations, and responses to whistleblower complaints will be frozen. Just last week, Wall Street’s top regulator adopted a new rule to prevent investment funds from engaging in greenwashing and other deceptive marketing practices, but proposed rulemaking on climate-related financial risk will now grind to a halt

You know who’s cheering on the government shutdown? The crypto industry, ESG fraudsters, and other financial tricksters.

Tax Enforcement

The Internal Revenue Service previously thought that it would be able to use the $80 billion boost provided by the Inflation Reduction Act to weather the impending government shutdown. “But that abruptly changed this week,” The Washington Post reported. “On Thursday, the tax agency released an updated contingency plan showing that it will furlough up to two-thirds of its workforce—60,000 employees—if the government comes to a halt on Sunday.” As a result, audits and enforcement will cease, and there will be “a return to the backlogs at all levels of service that had begun to disappear in the last year,” the newspaper noted.

Wealthy tax cheats can rest easy knowing that IRS audits will stall and the agency’s backlog will grow.

Workers’ Rights

The Occupational Safety and Health Administration will be forced to drastically limit workplace inspections except where deaths or imminent dangers are present. Workers in hazardous occupations will be at increased risk of injuries and fatalities if their profit-maximizing employers cut corners because they know that no regulator is coming for a surprise visit. Some 1,400 inspections were canceled during the 2013 shutdown, per AFSCME. In addition, Department of Labor investigations will be suspended, meaning that workers who are owed back pay would face further delays. Moreover, the National Labor Relations Board will be forced to postpone taking action on union representation petitions and unfair labor practice complaints. This comes just a few weeks after the DOL proposed a rule to extend overtime protections for millions of salaried workers. It also comes on the heels of an NLRB ruling that promises to go far in curbing union-busting. 

Bosses are thrilled to see key workplace regulators being pushed to the sidelines!

Case Study: East Palestine

Last week, Biden issued an executive order to ensure that “the people of East Palestine are protected now and in the future.” In the wake of the toxic Norfolk Southern train derailment that occurred in early February near the Ohio-Pennsylvania border, members of Congress on both sides of the aisle expressed interest in responding to the environmental and public health calamity. While many lawmakers’ stated commitment to enacting stronger rail safety measures aimed at preventing similar disasters in the future has diminished in response to an influx of industry cash, the GOP-induced shutdown means that ongoing cleanup efforts will be delayed.

A lapse in appropriations runs directly counter to the Biden administration’s goals, which are “to hold Norfolk Southern fully accountable under the law for this disaster and any of its long-term effects and to provide additional federal assistance that the affected states, the people of East Palestine, and all those affected in surrounding communities may need.” Multiple agencies will face severe constraints in what they can accomplish during the shutdown. To take just one example, the Federal Emergency Management Agency will be unable to conduct long-term recovery efforts. The Washington Post reported recently that in anticipation of a shutdown, FEMA in August “took the rare step to begin rationing its money, pausing about $1.5 billion in longer-term recovery projects to ensure it has enough cash on hand in the event of a major, deadly crisis.” The newspaper noted that “the primary federal fund for disaster recovery has fallen to about $2.4 billion,” which FEMA says is “unsustainable” amid hurricane season. Last year, the agency spent more than that—roughly $2.6 billion—in the first 30 days after Hurricane Ian hit Florida.

The GOP Wants a Shutdown. Biden Should Make Them Pay a Political Price for Harming Americans

It’s worth recalling that the deal Biden negotiated with McCarthy earlier this year was designed, ostensibly, to avert both a spring default and an autumn shutdown. Just four months ago, Congress passed and Biden signed the so-called Fiscal Responsibility Act, which simultaneously raised the nation’s debt ceiling—an arbitrary and arguably unconstitutional cap on federal borrowing—and established topline spending levels for the next two fiscal years (with, alas, more money going to the Pentagon, less money going to the hungry, and additional giveaways to the fossil fuel industry). The understanding was that because GOP lawmakers had managed to impose austerity via the compromise bill, they would pass omnibus packages for FY 2024 and FY 2025 consistent with that legislation. House Republicans have refused to do so, however, quickly reneging on the Biden-McCarthy pact and proposing far more draconian cuts to social welfare, climate action, and tax enforcement.

What exactly are Trump’s allies in the House hoping to achieve with their imminent shutdown? Journalist Andrew Perez of The Lever argued this week that “the point is to make people’s lives more miserable and difficult, because voters will ultimately blame Joe Biden.” In other words, House Republicans are willing to sacrifice the well-being of millions of people if it means improving the chances of a second Trump presidency.

Biden should make sure the GOP suffers a political price for its callous irresponsibility by making clear that House Republicans are freeing up the worst corporate elites to go on a rampage.

The photo at the top of this page is a work of the U.S. federal government and in the public domain.

Administrative LawConsumer ProtectionCorporate CrackdownExecutive BranchGovernment CapacityLabor

More articles by Kenny Stancil

❮ Return to Our Work