THE government could face a shutdown this week after a new deal, between Republicans and Democrats, was blocked and the Thursday, September 30, deadline nears.
Monday’s Senate vote was 48 to 50. It failed to pass a bill to fund the government, which would have allowed President Joe Biden’s $3.5trillion federal restructuring to proceed.
“It’s one of the most reckless, one of the most irresponsible votes I’ve seen taken in the Senate, and it should send a signal to every family, small business, market watcher, about who in this chamber is in favor of endangering the economic stability of our country,” Democratic Majority Leader Chuck Schumer said after the vote, according to NBC News.
According to NBC News, Democrats are willing to attempt to pass the bill again before federal funding ceases at midnight on Thursday. This is the end of the fiscal year.
Last week, the House approved the government funding package. It also suspended the federal debt limit. The House also provided disaster and refugee support.
According to a report circulated by Democrats, a possible downturn in government funding would result in 6 million job losses and stock market losses that would wipe out $15 trillion worth of household wealth.
Since 2011, when tea party legislators refused to allow an increase in the debt limit, it was a routine issue, raising the debt limit has become a political weapon of choice.
WAYS TO SUSPEND THE DEBT LIMIT
Reuters describes two ways for Democrats to suspend the debt limit.
“Democrats could present a stand-alone debt limit increase as a gamble that there will then be so much pressure on Republicans to go along that they either vote for the bill or decline to “Filibuster” it in Congress.
“The latter would allow the bill to pass by a simple majority of 48 Democrats, two independents, and a tie-breaking vote by Vice President Kamala Harris.”
WHAT IF THE SENATE REPUBLICANS BLOCK THE BILL
Sen. Republicans have threatened to block it, which would mean that Democrats will have very little time to act before the government shutdown.
According to Reuters, they could ” simply remove the debt limit provision from the bill and rush to pass the revised bill in the House and then in the Senate.”
But this would have to be done before midnight on September 30 and there is a risk of Republicans slowing this process by filibustering
WHAT IS INVOLVED IN A GOVERNMENT SHUTDOWN?
According to Reuters, a government shutdown includes ” the shuttering of some national parks, fewer airport security screenings, an interruption to public health services during the COVID-19 pandemic and eventually an interruption in benefit checks to veterans and retirees and keeping national parks open.”
RISKS OF DEFAULTING ON DEBT
But if the US defaults on this debt, the country’s creditworthiness could go down.This would mean the loans people take out to pay for things like mortgages, credit cards, car loans, could cost a lot more.
Lending will go up because banks will be tightening their spending if there is not more bond released to the market. Banks usually buy bonds which increase the money supply and make loans cheaper.
RAISING THE COUNTRY’S DEBT
To pay for the American Rescue Plan stimulus relief bill and other economic recovery efforts, the Biden administration raised the country’s debt by about $3.5 trillion.
The government had to borrow this money in order to finance the pandemic relief and stimulus checks. They now have to repay it with bonds.
JEN PSAKI ON VOTE
White House press secretary Jen Psaki told reporters that “in our view, this should not be a controversial vote.” Psaki said Congress has raised the debt ceiling numerous times on a bipartisan basis, including three times under President Donald Trump.
Once a routine matter, raising the debt ceiling has become a political weapon of choice for Republicans in Washington ever since the 2011 arrival of tea party lawmakers who refused to allow the increase.
SIX MILLION JOBS
A report being circulated by Democrats warned that a potential downturn from government funding cutbacks would cost 6 million jobs and stock market losses would wipe out $15 trillion of household wealth.
The House voted last week to keep the government funded, suspend the federal debt limit and provide disaster and refugee aid, setting up a high-stakes showdown with Republicans who oppose the package despite the risk of triggering a fiscal crisis.
END OF THE FISCAL YEAR
The government could face a shutdown this week if a new deal cannot be struck between Republicans and Democrats.
If funding is stopped at midnight on Thursday, which marks the end of the fiscal year, the federal government could be shut down.
“Everything’s drama. We play drama with people’s lives. We can’t shut the government down. We’re going to shut the government down in the middle of a pandemic? It’s the most irresponsible action that anybody could take,” said Rep. Debbie Dingell, D-Mich.
“And it’s the same on the debt limit. It’s total political rhetoric, drama. And it is real people’s lives, it’s our position in the world, and it’s bulls—.”
‘DESTROY OUR ECONOMY’
Wisconsin Senator Tammy Baldwin revealed she will vote to fund the government as to not “destroy our economy.”
“We have to find our common ground, [be] respectful of each other’s views,” Pelosi said on ABC’s “This Week.”
“But this isn’t about moderates vs. progressives. Overwhelmingly, the entirety of our caucus, except for a few whose judgment I respect, support the vision of Joe Biden. And we will pass ― make progress on it this week.”
ON THEIR OWN
Republicans would consider not delaying the process as much as possible if Democrats decide to deal with the debt limit on their own, Sen. John Cornyn (R-Texas) told HuffPost.
“It seems to me that that would largely satisfy our desire to make sure that they’re the ones who are responsible for it,” Cornyn said.
DISAGREEMENTS OVER TIMELINE
Senate Minority Leader Mitch McConnell (R-Ky.) has said it would only take a week to add the debt ceiling to the budget.
Yarmuth said it would take “significantly longer.”
SLOWING THE PROCESS
According to the Huffington Post, “Amending the bill to include a debt limit hike may take a few weeks due to procedural rules in the Senate and likely GOP objections that could slow the process down even further.
“The House Budget Committee chairman, John Yarmuth (D-Ky.), said last week that there may not be enough time for Democrats to do so — and that an adverse ruling by the Senate parliamentarian could make it impossible.
“Our staff research shows that it is very risky to try and amend our existing budget reconciliation bill,” Yarmuth said to the outlet.
“There’s a real risk that the parliamentarian would rule the entire thing out of order.”
UNABLE TO PAY BILLS
The Treasury Department revealed that the government will run out of cash and will be unable to pay its bills sometime next month.
The exact date is not known.
REPUBLICANS COULD OFFER THEIR OWN SPENDING SOLUTION
“I think Republicans will offer a clean continuing resolution that funds the government … there would be a lot of Republican votes for that,” Sen. Pat Toomey (R-Pa.) said Sunday during an interview with CNN.
Amid of another possible shutdown, Americans are evoking this past tweet from Pelosi speaking about a similar situation when the Republican Party controlled the Senate.
PELOSI TARGETING REPUBLICANS
Nancy Pelosi seems to be blaming Republicans for the possible shutdown, evoking the past shutdown under Donald Trump.
KEEP THE GOVERNMENT OPEN
“We fully expect Congress to work in a bipartisan fashion to keep our government open, get disaster relief to the Americans who need it, and avoid a catastrophic default, especially as we continue to confront the pandemic and power an economic recovery,” said Abdullah Hasan, an OMB spokesman, in a statement.
“In the meantime, prudent management requires that the government plan for the possibility of a lapse in funding. Consistent with long-standing practice across multiple Administrations, OMB is preparing for any contingency, and determinations about specific programs are being actively reviewed by agencies.”
Pelosi and Schumer revealed that they have a framework agreement in mind on how to pay Democrats’ $3.5 trillion tax-and-spending measure.
They didn’t share much information.
SHUTDOWN DURING COVID
“This would be the first shutdown during a declaration of national emergency,” Hoagland said.
“In the midst of an ongoing pandemic and non-resolved issues related to the delta [variant of the coronavirus], to have a shutdown of some of the major federal agencies would add unbelievable complications to our ability to recover.”
PARTS OF THE CDC COULD CLOSE
During a government shutdown, parts of the Centers for Disease Control and Prevention and the National Institutes of Health could close due to a lack of funding.
Bill Hoagland, a senior vice president at the Bipartisan Policy Center and former Republican staff director for the Senate Budget Committee, said a very brief shutdown may occur, but he doubted it would go on for “any length of time” because of the implications.
The Washington Post describes the weight of the past shutdown on government employees.
During that time period, “Coast Guard families were told to consider holding garage sales to bring in extra income while they waited to be paid.
“Other federal employees sold personal belongings online to try to raise cash so they could pay their bills.
“Trump demanded money for a wall along U.S./Mexico borders, which he held on to for more than a year, but Democrats refused to back down.
“Trump eventually backed down when some air traffic controllers refused to work without pay, delaying flights and triggering outrage.”