The U.S. Senate and House of Representatives are on different paths regarding funding bills, increasing the chances of a government shutdown. The Senate is moving forward with a bipartisan stopgap funding bill aimed at preventing a partial shutdown, while the House is voting on partisan Republican spending bills that are unlikely to become law. If federal agencies run out of money on Sunday, it could lead to furloughs and the suspension of various services. The funding fight primarily revolves around a small portion of the overall U.S. budget and does not involve cuts to popular benefit programs like Social Security and Medicare.
The House Republicans, including a group of hardline conservatives, have rejected fiscal year 2024 spending levels negotiated by Speaker Kevin McCarthy and President Joe Biden. They are demanding additional cuts and tougher legislation related to the U.S.-Mexico border. McCarthy is under pressure to cut spending and address conservative priorities, with the threat of being ousted from his leadership position if he passes a spending bill that requires Democratic support. Former President Donald Trump has been advocating for a shutdown, while McCarthy suggests that addressing border issues could help avoid it.
Credit agencies have warned that political polarization and brinkmanship are negatively impacting the U.S. financial outlook. Moody’s recently stated that a shutdown would harm the country’s credit rating, while Fitch already downgraded the U.S. government to “AA+” after the nation’s debt was nearly defaulted on earlier this year. Senate Majority Leader Chuck Schumer emphasized the importance of bipartisanship to avoid a shutdown and the economic and social harm it would cause.
