The United States is bracing for a government shutdown, as members of Congress race to negotiate a last-minute budget deal that would keep federal services funded through the new year.
Early on Friday, US media reported that the Office of Management and Budget, under outgoing President Joe Biden, had already signalled that federal agencies should prepare to shutter.
Government funding is set to expire just past midnight, on Saturday at 12:01am East Coast time (05:01 GMT).
But at a midday press briefing on Friday, White House Press Secretary Karine Jean-Pierre offered a note of optimism, saying a government shutdown might not occur if a bipartisan deal can be passed.
“There’s still time. We believe there’s still time for that to not happen,” Jean-Pierre said. “Our focus is keeping the government open. That’s what we want to see.”
A final Trump-Biden clash
However, as congressional negotiations continued throughout the day, Democrats and Republicans exchanged recriminations, with the budget bill shaping up to be a final battle royale between Biden and his successor, President-elect Donald Trump.
Trump, a former Republican president who is set to take office again on January 20, was a key figure in scuttling a bipartisan bill on Wednesday to keep the government running through March.
He repeatedly indicated that, if a shutdown should occur, it should happen under Biden, his Democratic rival.
“If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under ‘TRUMP’,” the president-elect said on Friday in a social media post.
Biden, meanwhile, has not spoken directly to the public about the budget showdown, but in Friday’s news conference, Jean-Pierre emphasised that her voice represents the president’s.
She placed the blame on Trump and his allies like tech entrepreneur Elon Musk, who was among the high-profile Republicans to speak out against the bipartisan bill.
The press secretary also called on Speaker of the House Mike Johnson, another Republican leader, to “clean up the mess” after the collapse of the bipartisan agreement.
“There was a bipartisan deal on the table. They were moving forward. The speaker agreed to do this, to move forward with the bipartisan deal. And they stopped that because of what the president-elect said and what Elon Musk said,” Jean-Pierre told the news conference.
“They wanted to clear a way for their billionaire friends.”
Battling bills
Wednesday’s bipartisan legislation weighed in at a whopping 1,547 pages. It included $10bn in farm aid and $100bn for disaster relief, after yet another punishing hurricane season in the US.
Other provisions set aside money for childcare programmes, gave Congress members a 3.8 percent pay raise for cost-of-living increases, and allowed the District of Columbia to develop a stadium for the Washington Commanders football team on federal land.
Still, Republicans baulked at the length of the bill, and Trump accused it of being stuffed with “Democratic giveaways”.
On Thursday, the party unveiled its own Trump-approved version of the budget stopgap bill, designed to temporarily keep the government open. Winnowed down to 116 pages, the bill kept the disaster relief supplement and the money earmarked for farmers — but ditched many of the other provisions.
Critically, it also proposed lifting the national debt ceiling until January 2027, midway through Trump’s upcoming presidency. This was a key demand Trump had injected into the discourse.
What is the debt ceiling?
The debt ceiling governs how much money the federal government can borrow to pay its bills, but it was not originally part of the budget negotiations. The budget bill pertained to government spending, not borrowing.
Still, with the deadline to lift the debt ceiling fast approaching on January 1, Trump has expressed fear that it would fall to his administration to handle.
In recent days, the president-elect has increasingly advocated for Republicans to increase the debt ceiling under Biden’s watch — or abolish it entirely.
“If Republicans try to pass a clean Continuing Resolution without all of the Democrat ‘bells and whistles’ that will be so destructive to our Country, all it will do, after January 20th, is bring the mess of the Debt Limit into the Trump Administration,” Trump wrote on social media on Wednesday.
“Everything should be done, and fully negotiated, prior to my taking Office on January 20th, 2025.”
Critics on the left, however, warned that eliminating the debt ceiling would make it easier for Trump to implement drastic tax cuts during his administration. Others opposed it as a pathway to unlimited government borrowing.
Ultimately, in a Thursday night vote, the Trump-endorsed bill failed to pass in the House of Representatives, with 235 members voting against it and 174 votes in favour. Joining the opposition were 38 Republicans.
“The Musk-Johnson proposal is not serious. It’s laughable. Extreme MAGA Republicans are driving us to a government shutdown,” House Minority Leader Hakeem Jeffries said earlier this week, with a jab at Trump’s Make America Great Again (MAGA) movement.
Another Democrat, Representative Pramila Jayapal, told reporters she does not believe the debt ceiling should be a “bargaining tactic” in the current spending bill.
“You want to negotiate on the debt ceiling? Fine. That’s going to be a discussion that comes up in the spring, not in the 11th hour of an already agreed-upon, negotiated deal on the continuing resolution,” she said on Thursday.
By Friday, negotiators in both the House and the Senate had largely moved away from a bill that would include changes to the debt ceiling.
What is a government shutdown?
Unless a bipartisan agreement can be reached and passed by Friday night, the government may be forced to close all nonessential services in the early hours of Saturday.
The threat of a government shutdown is a regular occurrence in US politics — and the stakes can be high, particularly for federal workers, contractors and Americans who rely on federal programmes.
If the government grinds to a halt, hundreds of thousands of nonessential government employees are furloughed until a budget can be passed.
Typically, they receive backpay once funding resumes, but in the meantime, members of the military and other federal agencies have reported struggling to make ends meet.
Certain government services also deemed nonessential could also stop. A shutdown could mean a temporary halt to food and safety inspections, civil proceedings in federal court, and access to national parks and monuments.
The ability of low-income families to access the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, could also be affected in the case of a prolonged shutdown.
On Friday, Jean-Pierre emphasised the dangers of an impending shutdown in her remarks to reporters.
“The impact of this would hurt our veterans and would hurt vulnerable Americans across the country,” she said. “That’s what we’re talking about. Republicans need to do their job, and they need to uphold their side of the deal here.”
The last government shutdown happened during the first Trump administration, in late 2018 and early 2019.
It lasted 34 days — the longest of any shutdown in modern US history. The Congressional Budget Office (CBO) estimated that the funding gap at the time delayed nearly $18bn in government spending.
Due to slower economic activity, the shutdown also reduced the inflation-adjusted gross domestic product (GDP) by approximately $3bn during the last quarter of 2018 and $8bn during the first quarter of 2019.
Although much of those economic losses were eventually recovered, the Congressional Budget Office anticipated $3bn would not be.
