Party leaders in both houses of Congress reached agreements on a short-term spending bill to fund the government that would avoid a shutdown.
“This is a good compromise which leaves enough time for both parties in both houses to complete the supply negotiations,” Senate Majority Leader Chuck Schumer said in a speech Thursday.
The House plans to vote on the temporary funding measure, known as the continuing resolution, later Thursday and send it to the Senate as soon as possible, Speaker Nancy Pelosi said Thursday. It is expected to pass both the House and the Senate by midnight Friday, when current government funding runs out.
“To push for an omnibus, the RC includes virtually no changes to existing funding or policy,” DeLauro said, except for $ 7 billion for evacuees from Afghanistan.
The RC is extending the current funding until February 18. Current funding expires at midnight Friday. If Congress failed to pass the measure by then, the government would have partially closed its doors, resulting in hundreds of thousands of holidays and the shutdown of government institutions.
The White House was confident Congress would pass the CR by then, press secretary Jen Psaki told reporters on Thursday.
“We still believe it is time for lawmakers to put aside reckless and irresponsible political games and pass a short-term, continuous resolution that would fund the government until early next year and leave time for it. a budgetary agreement for the whole year, which is obviously our primary objective, ”she declared during a press briefing.
Psaki added that the Office of Management and Budget had started preparing federal agencies for a shutdown since last Friday and would meet with them again on Thursday, according to standard procedure.
“But again, our goal is, of course, to prevent the government shutting down,” Psaki said.
Due to the short deadline, the only way to avoid a shutdown was for all 100 senators to agree to schedule a vote before the deadline.
Ahead of Thursday’s announcement of the deals, Democrats and Republicans disagreed over some key funding details. Democrats were pushing for a resolution with a shorter deadline in an attempt to pressure Republicans to negotiate the long-term budget for fiscal 2022. Republicans have indicated they are willing to extend the resolution continues for up to a year.
“While I wish it had been sooner, this agreement allows the crediting process to move forward towards a final funding agreement that meets the needs of the American people,” DeLauro said in his statement.
Most of the long-term finance bill’s provisions have already been passed by the House, but there are still provisions to be negotiated, Pelosi said Thursday.
Conservative Republicans at House Freedom Caucus urgeMcConnell to drag out the ongoing resolution process unless he prohibits funding for the Biden administration’s vaccine mandates.
“The Senate Republican Conference enjoys significant leverage against these mandates,” the caucus wrote in a letter to McConnell Wednesday. “We are therefore writing to ask you to use all the procedural tools at your disposal to deny the timely adoption of the CR unless it prohibits the funding – in all respects – of immunization and immunization mandates. their application. “
Some of those Republicans have suggested breaking the deadlock by allowing a simple majority vote on an amendment to the temporary funding bill that removed funding from vaccine mandates.
As of Monday, three judges have frozen federal rules on Covid-19 vaccines in parts of the country. A Louisiana federal judge on Tuesday suspended the administration’s mandate requiring healthcare workers to be vaccinated.
Senator Thom Tillis (R.-NC) was more pessimistic, stating CNN he was planning a shutdown following the decision of some of his colleagues to block the vaccine mandate.
Senator Roger Marshall (R.-Kan.) Said CNN On Thursday, he was still opposed to passing the resolution continuing unless there is an amendment vote to fund the mandates.
Congress is also set to pass legislation increasing the country’s borrowing limit before the year’s suspension, as Treasury Secretary Janet Yellen continues to warn of the consequences of delaying the decision.
“I cannot stress enough that it is essential that Congress address this issue,” Yellen said at a Senate Banking Committee hearing on Tuesday. “America needs to pay its bills on time and in full. If we don’t, we’ll gut our current recovery. “
Yellen still estimates that the Treasury could run out of funds as early as December 15, around the same time the Treasury invests a $ 118 billion loan in the Highway Trust Fund. The Bipartisan Policy Center estimates that the “X” date could be between mid-December and early February.
Democrats are still announcing a bipartisan solution to raising the debt ceiling, with Schumer expressing optimism that a compromise can be reached.
“I recently had a good conversation with the Republican leader on this issue, and I plan to continue these talks on finding a bipartisan solution to the debt limit problem,” Schumer said during a speech delivered on Tuesday.
But Republicans strike a different note, still pushing Democrats to raise the limit through budget reconciliation, a process that bypasses the 60-vote obstruction and allows them to increase it through a one-party vote.
“Our fellow Democrats can raise the debt ceiling themselves at any time, and Republicans can do nothing to stop them,” Sen. Patrick Toomey (R.-Penn.) Said during the committee hearing senatorial bank.
Failure to meet the debt ceiling could have far-reaching repercussions. After a showdown in 2011 in which Congress narrowly avoided defaults on its loans, Standard & Poor’s downgraded the United States’ long-term credit rating from AAA to AA +. The Office of Government Accountability estimated later that the delay in raising the debt ceiling increased the government’s borrowing costs by $ 1.3 billion in 2011. The S&P 500 fell almost 20% before recovering.
“A US government default would be far worse than the collapse of Lehman Brothers in 2008,” said Beth Ann Bovino, chief economist at S&P Global US. A default would “push the US economy back into recession, wiping out much of the recovery’s progress,” she added.
Government closures, on the other hand, have generally not been a problem for the stock market. Goldman Sachs analysis showed that in the 14 closings since 1980, the S&P 500 has posted a median return of -0.1% on the day the budget was due to expire, 0.1% during close times and 0 , 3% on the day the closure was resolved.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
