U.S. government shutdown looms amid budget conflict

Along with other U.S. government agencies, the White House sent a message on Thursday to its staff with the critical logistical instructions for preparing for a government shutdown if one occurs. 

“If a shutdown occurs, employees should consider themselves furloughed unless told by their component leadership or authorized supervisor that they are exempt or excepted,” an email obtained by CNN said. 

The U.S. Congress faces a deadline of midnight on September 30 to pass a new budget before many federal employees are placed on unpaid leave.

Budget conflict

The Republican-led House of Representatives failed to pass a short-term spending bill on Friday. Some Republicans refused to support the bill despite its steep spending cuts of nearly 30 percent to many agencies and severe border security provisions, calling it insufficient.

Traditionally, the House moves first on spending and revenue bills but Republican infighting paralyzed the lower chamber, forcing senators to make the first move on a stopgap bill in the last week ahead of a possible shutdown.

A bipartisan Senate-proposed bill, unveiled Tuesday, is expected to fund the government until November 17, the week before Thanksgiving, with the funding levels continuing at the same levels as before. 

U.S. House Speaker Kevin McCarthy said earlier this week that he didn’t see support for the Senate measure in the House, which means there is little chance it will be brought to the House floor. 

A group of conservatives have voiced concerns about Ukraine aid, urging the Biden administration to make it part of the spending cuts, and criticized the bill for a lack of border security provisions, which revealed the partisan divide over immigration policy.

Senate Majority Leader Chuck Schumer described the “continuing resolution” as a “bridge” to buy negotiators more time to reach an agreement on a longer-term funding bill. Conservative Republicans, however, have demanded steep spending cuts and leaned against any stopgap bill.

Schumer on Wednesday lashed out at McCarthy for “constantly adhering to what the hard right wants,” saying that this approach will inevitably lead to a shutdown.

Potential risks

The White House estimated that 3.5 million federal workers will have to go without pay if the government shuts down.

U.S. Treasury Secretary Janet Yellen said on Friday that a U.S. government shutdown would be a “risk factor” for a potential economic recession.

“A shutdown would impact many key government functions – from loans to farmers and small businesses, to food and workplace safety inspections, to Head Start programs for children. And it could delay major infrastructure improvements,” she said, adding that such investments boost economic growth.

Her remarks echoed those of the White House’s top economic adviser, Lael Brainard, who said on Friday that a government shutdown was an “unnecessary risk” to a resilient economy now with moderating inflation.

Goldman Sachs’ chief economist Jan Hatzius predicted a shutdown lasting two to three weeks starting October 1, Fortune magazine reported on Thursday.

“A government shutdown this year has looked likely for several months, and we now think the odds have risen to 90 percent,” said Hatzius.

(With input from agencies)

(Cover: A traffic barrier is seen front of the dome of the U.S. Capitol in Washington D.C., U.S., September 28, 2023. /CFP)

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