The Senate began the process this weekend to avoid a partial government shutdown, but it is still far from certain that Washington can avoid a shutdown, at least for a short period of time.
Difficult Senate rules and a strong Republican opposition remain obstacles.
“Time is of the essence,” Senate Majority Leader Chuck Schumer (D-N.Y.) said Tuesday as he began voting on another short-term continuing resolution (CR). The Senate passed the first motion to advance the bill 68-13.
“We hope that if both sides continue to work in good faith, we will be able to complete the work on the CR by Thursday at the latest.”
But good faith is still not guaranteed, with more than a dozen senators voting against it on Tuesday night, and Senate rules give one of them the power to delay a final vote.
And even if it’s completed, House Speaker Mike Johnson must pass the bill through the House and send it to President Joe Biden’s desk by midnight Friday.
In any case, the economic damage from the short-term shutdown starting Friday night will be negligible, especially if it is resolved before government offices reopen on Monday.
But new signs of government gridlock could be a fresh blow to credit rating agencies, which have cited dysfunction as the cause of an increasingly bleak view of U.S. creditworthiness.
Currently, Washington state faces a partial shutdown starting Jan. 19, which will see the closure of agencies such as the Department of Agriculture, Department of Transportation, and Department of Energy. After that, it will be completely closed on February 2nd. The bipartisan plan is to delay these two deadlines while maintaining the “ladder” approach favored by Johnson.
The new deadlines are March 1st and March 8th.
Multiple points for Republican opponents
Passing a deal will now face multiple bottlenecks. The first is the Senate, which would need the full Senate’s consent to fast-track Mr. Schumer’s policies.
13 Republican senators Who opposed Tuesday night’s measures? They included a wide range of prominent figures, from Sen. Ted Cruz (R-Texas) to Sen. Rand Paul (R-Ky.) to Sen. J.D. Vance (R-Ohio). Final voting in both cases could be delayed until the weekend.
A second potential hurdle is the House, where Speaker Johnson has signed the bill but faces pushback from some of its most conservative members. Some House Republicans want to refrain from using the phrase “close the border or shut down the government,” instead linking the shutdown to parallel border policy negotiations.
Johnson, who has signed the agreement, has urged his colleagues to join him, saying further delays are needed to give Republicans time to win policy wins throughout the spending process.
But the far-right House Freedom Caucus is already strongly opposed to the deal, and passing the bill in the House would be controversial. It’s called “surrender.”
Another level of complexity is that top leaders in Congress, including both Schumer and Johnson, are scheduled to visit the White House on Wednesday afternoon to meet with President Biden.
The meeting will officially be about border issues and Biden’s demands for more spending on Ukraine and Israel. What remains to be seen is whether consideration of closure will have an impact before or after. Expect to be nervous.
The procedural maneuver that Mr. Schumer began Tuesday night is aimed at passing a bill already under consideration in the Senate, in this case the bill. Amend the 2013 Perpetual Electronic Duck Stamp Act — and use it as a legislative instrument, replacing its entire content with the text of a closure resolution within days.
How that process unfolds will likely be closely monitored by credit rating agencies.
In 2011, S&P decided to downgrade the U.S. credit rating following a series of brinkmanship moves in the dispute over the debt ceiling. Last August, Fitch followed up with its own downgrade, citing government dysfunction as the main reason. Moody’s took its own action in November, turning negative toward the United States, but not downgrading it.
White House Budget Director Shalanda Young recently told reporters that her main concern about combating the government shutdown is that a new wave of Washington dysfunction is “on the minds of credit agencies that continue to examine America’s creditworthiness.” The question is whether it will continue to have a significant impact in the future.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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