US Lawmakers Remain Deeply Divided as Hours Tick Toward Government Shutdown

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Photo taken on March 19, 2020 shows U.S. dollar banknotes in Washington D.C., the United States. The Trump administration's plan to send Americans relief money as part of a massive stimulus package in response to COVID-19 could be 1,000 U.S. dollars per person, and 500 dollars per child, Treasury Secretary Steven Mnuchin said Thursday. (Xinhua/Liu Jie)
Photo taken on March 19, 2020 shows U.S. dollar banknotes in Washington D.C., the United States. The Trump administration's plan to send Americans relief money as part of a massive stimulus package in response to COVID-19 could be 1,000 U.S. dollars per person, and 500 dollars per child, Treasury Secretary Steven Mnuchin said Thursday. (Xinhua/Liu Jie)

Barely 24 hours remain for Democrats in the US Congress to strike an agreement with their Republican rivals on a budget deal to avert a government shutdown, although a compromise might be elusive given their polarizing views.

If a budget deal is not struck, the federal government will run out of funding at 11:59 p.m. local time on Thursday before the fiscal year begins on October 1.

In addition, Congress must make a deal to raise the debt ceiling by October 18 to prevent the country’s first ever default on payments.

SHUTDOWN LOOMS

The US has seen ten government shutdowns over the past two decades, with the last under the Trump administration.

The 2019 shutdown lasted an historic 35 days, cost taxpayers $11 billion, and forced 300,000 federal workers onto furlough.

If lawmakers do not have a budget in place by the time October begins, agencies will be unable to obligate new spending. As a result, the government is forced to reduce agency activities and stop nonessential operations.

The federal government would also stop issuing paychecks for all US troops and federal employees, and only certain essential federal employees would be allowed to work. However, active-duty service members would continue working, although the flow of their paychecks may be disrupted.

A shutdown would also affect Social Security, Medicare and food assistance benefits, national parks, environmental and food inspection, air travel, among other services.

DEBT CEILING

Although failure to reach a budget deal is concerning, failure to raise the debt ceiling, which currently stands at $28.5 trillion, would have more serious consequences including damaging the country’s credit rating.

In 1939, Congress created the first aggregate debt limit, setting it at $45 billion. The ceiling represents the legal limit on the total amount of federal debt the government can accrue.

Since the end of World War II, the debt ceiling has been modified nearly 100 times.

But at no time ever has the United States defaulted on its debt payment before, with Treasury Secretary Janet Yellen to House Speaker Nancy Pelosi and even President Joe Biden warning repeatedly over the past month of the ramifications of such action on not just the No. 1 economy but also the world.

An almost certain downgrade of the United States’ gold standard credit rating by Standard & Poors and Moody’s will result from it as well.

Yellen warned on Tuesday that a debt default by the United States from its lawmakers’ inability to raise the country’s debt ceiling will be a “self-inflicted wound of enormous proportions.” Republicans, on their part, have accused Democrats of wasteful spending and say that extending the debt ceiling will put the country further down a debt path of no return.

Biden’s rivals have tied the raising of the debt limit, which is to pay everyday bills like social welfare, to the president’s more ambitious $4 trillion infrastructure rebuilding plan that the administration says will be funded partly by higher taxes on wealthy Americans.

“We won’t address the real problems in this country that led us to be $28 trillion plus in debt, and now you’re asking us to get further in debt. I’m horrified. My constituents are horrified,” Cynthia Lummisl, a Republican Senator for the state of Wyoming, told Yellen at a Senate hearing on Tuesday.

WHERE NEGOTIATIONS STAND

On Wednesday, The House passed legislation in Congress to suspend the existing debt limit. For a conclusive deal, Democrats will still need bipartisan support from the Republicans.

To ensure no internal opposition to the Democrats’ vote, Biden was personally negotiating with senators Kyrsten Sinema and Joe Manchin who had previously expressed deep concern over the size of the president’s spending plans, and threatened to block these.

The Politico news portal reported that Democratic leaders had reached an agreement with moderates in the party to vote on the debt limit and that the group will no longer block it on the House floor. There was no confirmation of this, however.

White House Press Secretary Jan Psaki said the administration was working around the clock with lawmakers to finalize legislation to avoid a government shutdown ahead of Thursday’s deadline.

The Senate failed on Monday to pass a key procedural vote to advance the House-passed short-term government funding bill as the deadline to avert a shutdown looms at the end of the week.

The Senate voted 48 to 50 on the procedural motion, with Republicans opposing the stopgap measure because it included an extension of a debt ceiling. Republicans said they were unwilling to support the debt limit increase and are demanding that Democrats take the political heat for the vote.

All Republicans voted in opposition and Democrats supported the measure, with Senate Majority Leader Chuck Schumer switching his vote to “no” in a procedural move that allows him to call for another vote on the measure.

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