Washington, Sept 26 (The Street Press) – On Tuesday, the U.S. Senate made progress on a bill that both Democrats and Republicans support to prevent a government shutdown in just five days. Meanwhile, the House tried to move forward with a different plan supported only by Republicans.
The Senate voted 77-19 to start discussing a proposal that would keep the government funded until November 17. This proposal also allocates about $6 billion for responding to domestic disasters and another roughly $6 billion to aid Ukraine.
On the other hand, the Republican-controlled House of Representatives aimed to proceed with its own partisan strategy, which was unlikely to gain approval in the Democratic-majority Senate.
The House conducted a procedural vote to advance four spending bills aligned with conservative priorities. However, these bills had little chance of becoming law. Even if they were passed, they would only fund a portion of the government and wouldn’t prevent a shutdown.
The division between the two chambers indicates a growing likelihood of the federal government experiencing its fourth shutdown in a decade this coming Sunday. This ongoing pattern of partisan disagreements is starting to impact Wall Street’s confidence in U.S. government credit.
To address this, Senate Majority Leader Chuck Schumer, a Democrat, and Senate Republican Leader Mitch McConnell worked together to secure approval for a short-term extension of federal funding at current levels, aiming for a bipartisan solution.
House Speaker Kevin McCarthy has indicated his intention to seek approval from his divided Republican colleagues for a bill that would provide temporary government funding. However, his plan involves attaching stringent border and immigration restrictions, which are unlikely to garner enough support from Democrats in both the House and Senate to become law.
It’s worth noting that earlier in May, Democratic President Joe Biden and McCarthy had aimed to prevent a shutdown this year by agreeing to discretionary spending of $1.59 trillion for the fiscal year starting on October 1, following a standoff over the federal debt ceiling.
The White House has called on Republicans to uphold the previously agreed-upon deal. Press Secretary Karine Jean-Pierre stated, “House Republicans should join the Senate in doing their job, stop playing political games with peoples’ lives, and abide by the bipartisan deal two-thirds of them voted for in May”.
Some conservative members to the right of McCarthy have opposed the existing deal and are pushing for an additional $120 billion in cuts.
McCarthy’s proposal includes resuming the construction of the U.S.-Mexico border wall, a prominent policy from former President Donald Trump’s administration, and introducing stricter immigration policies. Critics argue that these measures could effectively eliminate the possibility of asylum for immigrants in the United States.
McCarthy has urged President Biden and congressional Democrats to reconsider their stance, while Senate Majority Leader McConnell made a plea to his House counterpart to support the Senate bill.
McConnell emphasized the negative consequences of government shutdowns, saying, “Government shutdowns are bad news, whichever way you’d look at it”.
In response, McCarthy proposed a solution: “Let’s do something on the border, keep the government open and show this nation that we can do it right, and solve the rest of our problems as we go”.
If an agreement isn’t reached, hundreds of thousands of federal workers could face furloughs, and a wide range of services, including economic data releases and nutrition benefits, would be suspended starting on Sunday.
The current standoff has raised concerns at Moody’s credit rating agency, although it’s uncertain whether it will negatively impact U.S. creditworthiness. Past government shutdowns have generally not had a significant impact on the world’s largest economy.
Former President Trump, the leading contender for the 2024 Republican nomination, has expressed support for the idea of a government shutdown.
It’s important to note that the cuts being advocated by hardliners represent only a small portion of the total U.S. budget, which is set to reach $6.4 trillion for this fiscal year. Lawmakers are not considering reductions to popular benefit programs like Social Security and Medicare, which are expected to grow significantly as the population ages.
Throughout the years, Congress has faced government shutdowns 14 times since 1981, but most of these funding gaps have been brief, lasting only a day or two.
