The friends of liberty appear to be in danger of suffering two defeats— first, a budget deal that rolls back the sequester without reforms to the core of entitlements and, second, the resurrection of Eximbank. The second defeat would be more devastating than the first, because the procedural advantages are all with liberty in the case of Eximbank.
Although the Republicans have a majority in both houses of Congress, they confront substantial obstacles to working their will on the budget. The President can veto (without fear of override) any appropriation bill they send up. Even worse, the Democrats can filibuster any bill in the Senate. As a result, the Republicans cannot even send a continuing resolution funding the government to the President’s desk without substantial Democratic support.
Without that resolution, the government will shut down. In the past, government shutdowns have been blamed on Republicans when in control of Congress. People are rationally ignorant of politics and will not follow the various machinations to understand that Republicans are not to blame. Moreover, the Republicans are the party favoring smaller government and thus seem in some sense the logical party at fault. Because of the likely landscape of public opinion, Republicans have little leverage in spending battles when the government is divided as now.
Mike Rappaport and I have suggested that when Republicans gain control of the entire government, they could create a default appropriation rule that keeps the government running but with a lower level of spending.