Dueling US Senate, House views on funding raise likelihood of government shutdown

The U.S. Senate and House of Representatives are at odds over a bipartisan bill to prevent a government shutdown. This divide suggests that the federal government is likely to experience its fourth shutdown in a decade, which is concerning for Wall Street. Senate Majority Leader Chuck Schumer and Senate Republican Leader Mitch McConnell are working together to pass a short-term extension of federal funding at current levels. The Senate bill includes funding for domestic disaster responses and aid for Ukraine. However, the details of the measure have not been revealed yet. The Senate is set to vote on whether to open debate on the bill. Meanwhile, House Speaker Kevin McCarthy plans to seek approval from Republicans for a bill that would also temporarily fund the government. However, this bill includes tough border and immigration restrictions that are unlikely to gain enough support from Democrats. President Joe Biden and McCarthy had previously agreed on discretionary spending for the fiscal year, but hardliners within the Republican party have rejected this deal. McCarthy’s bill would restart construction of the U.S.-Mexico border wall and tighten immigration policies. Critics argue that it would effectively end U.S. asylum for immigrants. Both McConnell and McCarthy acknowledge that government shutdowns are detrimental and urge their counterparts to reconsider their positions. If an agreement is not reached, hundreds of thousands of federal workers will be furloughed and various services will be suspended. The standoff has raised concerns at credit rating agency Moody’s, although the impact on U.S. creditworthiness remains uncertain. The government shutdown issue is also becoming a factor in the 2024 presidential election, with former President Donald Trump supporting the idea. The cuts demanded by hardliners only represent a fraction of the total U.S. budget, and popular benefit programs like Social Security and Medicare are not being considered for cuts. Biden has called on House Republicans to honor their deal with McCarthy. In response to their concerns, McCarthy has scheduled a procedural vote to take up spending bills that reflect conservative priorities but have no chance of becoming law. The outcome of this vote could complicate efforts to pass a stopgap spending bill and avoid a shutdown. Congress has experienced 14 government shutdowns since 1981, although most have been short-lived.