US government shutdown looms despite compromise plan
As the United States (US) government moves toward a possible shutdown, House Speaker Mike Johnson presented a compromise proposal that excludes stringent conservative demands such as reducing expenditure and limiting immigration. A government shutdown could lead to a downgrade in the US credit rating by Moody's Investors Service, which has identified political instability as an increasing concern for bond investors. With time running out, Congress must pass a new temporary bill before funding expires on November 17.
Why does this story matter?
Under the Antideficiency Act, federal agencies cannot spend any money without appropriation (or other approval from Congress). In case Congress fails to enact 12 annual appropriation bills, federal agencies must stop all non-essential functions until Congress acts. This leads to a complete shutdown. There is a partial shutdown if Congress enacts some but not all of the 12 appropriations bills. In this case, all the agencies sans the appropriation bills are deemed non-functional.
What all the bills pitched by Johnson?
The compromise spending plan submitted by Johnson encompasses four spending bills that would be extended till January 19. These include bills pertaining to veterans' programs, transportation, energy, housing, and agriculture. Eight other spending bills, covering areas like defense, Homeland Security, and the US State Department, will be extended until February 2. Notably, the proposal does not include President Joe Biden's request for funds for Ukraine, Israel, and the country's border with Mexico. Congress will vote on the bill on Tuesday.
Bill could get bipartisan support
Democrats have not been vocal in their response to Johnson's proposal, but there are early indications that it could garner bipartisan support, Blomberg reported. Conservatives, known for their disapproval of such temporary bills, have shown some leeway to pass legislation that would give Congress an extended period to negotiate on a long-term agreement. Notably, the White House claims that Johnson's plan would only result in future shutdowns.
Rising costs of 'Bidenomics'
Impact of shutdown on US economy
An initial government shutdown would have a minor economic impact; however, it could eventually spiral as millions of employees go without pay, consumer uncertainty rises, and private contractors are sacked. At present, all the federal agencies in the US are operating at a funding level approved last year. Notably, a complete shutdown was averted in October after Congress passed a 47-day continuing resolution. The resolution, however, cost Representative Kevin McCarthy his speakership.
