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Uh-Oh! Why Policymakers Only Have 2 Weeks Left to Avoid a Government Shutdown in January.

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  • The threat of another government shutdown looms large, as a January deadline approaches.
  • With only two week’s worth of legislative days left before the deadline, the clock is ticking.
  • There has been some progress made, but the market doesn’t like uncertainty.
government shutdown - Uh-Oh! Why Policymakers Only Have 2 Weeks Left to Avoid a Government Shutdown in January.

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Returning to Washington after Thanksgiving, Republicans encountered an ominous sign as no government funding bills are scheduled for the House floor this week. With a mid-January deadline looming, the window to avoid a partial government shutdown is narrowing.

Skipping a week without advancing an appropriations bill won’t trigger a shutdown, but it adds pressure. With only 16 legislative days left before the Jan. 19 funding deadline and an additional two-week extension until Feb. 2, the current delay intensifies the time constraints.

So what does this all mean? Will a government shutdown really happen in January? Let’s delve into the details.

Spending Bill Passed to Avert Government Shutdown

On November 14, the U.S. House of Representatives approved a short-term spending bill to prevent a government shutdown, securing bipartisan support. The bill, set to extend funding until mid-January, awaits Senate approval, with leaders from both parties expressing their endorsement. 

In a notable vote, House Speaker Mike Johnson (R-LA) secured a victory with a 336-95 outcome, overcoming resistance from fellow Republicans. This marked a significant moment early in Johnson’s tenure, elected to the position less than three weeks prior. With a delicate GOP majority, he could only afford to lose a couple of Republican votes on legislation opposed by Democrats.

Following the vote, Senate Majority Leader Chuck Schumer expressed satisfaction with the strong bipartisan support for the bill. He pledged to collaborate with Republican Senate Minority Leader Mitch McConnell for a swift passage. The temporary spending bill aims to maintain current funding levels into 2024, allowing lawmakers additional time to formulate comprehensive spending bills spanning various sectors. 

Certain Republicans, particularly on the party’s right wing, voiced frustration over the absence of desired deep spending cuts and border security measures in the bill.

The bill secured approval with 209 Democratic and 127 Republican votes, while 93 Republicans and two Democrats opposed it. Speaker Mike Johnson’s legislation, supported by both parties, averted a shutdown. His bill extended funding for various sectors until Jan. 19, with defense funding expiring on Feb. 2. It marked Congress’s third fiscal standoff this year, contributing to Moody’s downgrade of the U.S. credit rating outlook from “stable” to “negative.”

Recent Movements

Johnson faces challenges from Republicans urging bold spending cuts, echoing sentiments that led to the removal of his predecessor. The current schedule reflects the struggle within the slim majority on how to address remaining appropriations, with conservatives pushing for the passage of all 12 government spending bills individually.

Despite GOP leaders’ claims to meet demands, disagreements over funding, social policies and other issues have derailed several remaining funding bills in the House. Speaker Johnson faces challenges in navigating the thin majority and uniting Republicans on appropriations, even after a weeklong break failed to yield a clear plan.

Johnson, like his predecessor, grapples with keeping the government open, navigating demands from conservative spending hawks. Despite past concessions, signals suggest a tougher stance, and the speaker ruled out another short-term stopgap, raising the specter of a partial government shutdown in 2024. He remains optimistic about avoiding a shutdown, expressing confidence in negotiating and meeting deadlines.

The Dilemma

However, the legislative agenda contradicts this optimism. Two pending funding bills crucial for programs and agencies face challenges, exemplified by resistance to restrictions on the abortion pill mifepristone inside the legislation covering agriculture programs and the Food and Drug Administration.

Disagreements over spending cuts, particularly affecting Amtrak, led to disputes in the Transportation, Housing and Urban Development funding bill, causing its withdrawal earlier this month. The House struggled to pass three out of the eight funding bills due by Feb. 2, encountering obstacles related to abortion, FBI proposals and budget reductions. 

The challenge for Speaker Johnson lies in reconciling the demand to pass all 12 appropriations bills, advocated by conservatives, with their opposition to specific proposals on the floor, primarily led by the hardline House Freedom Caucus.

Former Freedom Caucus leader Rep. Andy Biggs (R-AZ) supported conservative resistance, emphasizing the need to revisit and refine spending bills. He highlighted the deliberative nature of the process. GOP leaders face pressure from moderates who are pushing back against cuts and social policies advocated by the right wing.

Before Thanksgiving, four New York Republicans in swing districts, along with Conservative members, thwarted a procedural vote on a funding bill. Some representatives shifted blame to the Senate, urging them to pass the bills already sent by the House.

The House GOP faces time constraints not only in resolving its funding bills but also in negotiating with the Democratic-controlled Senate, which lags in passing funding measures. The Senate’s inclination toward a massive omnibus package conflicts with Speaker Johnson’s stance. Concerns arise that the House GOP’s struggle with conservative spending bills weakens its negotiation position with the Senate.

What Should America Expect?

The last time the U.S. government faced a 34-day shutdown was in December 2018. former President Donald Trump sought funds for a U.S.-Mexico border wall, leading to a deadlock with Democrats controlling the House. Eventually, a continuing resolution was passed, ending the longest U.S. government shutdown.

The United States faced the imminent threat of a government shutdown as Congress struggled to pass legislation for a federal funding extension. Johnson proposed a unique and uncertain approach to avert a shutdown and ensure federal employees receive pay ahead of the Thanksgiving holiday. The situation echoed the challenges encountered by former House Speaker Kevin McCarthy (R-CA), marking a critical moment on Capitol Hill.

Facing a looming deadline, Congress had to pass a federal agency funding bill to avert a government shutdown after midnight on Saturday. The House introduced a “laddered” funding bill on Tuesday, expecting a Senate vote later in the week. If the Senate approves the bill, it will head to President Joe Biden for enactment. 

Shutdowns impact most federal workers, leaving many unpaid, while exempted employees, like those in public safety, work without pay, receiving full compensation after the shutdown ends.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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