A government shutdown in the US is imminent due to disagreements between Democrats and Republicans about significant cuts to public expenditure.
The House of Representatives Republicans’ severe ideological disagreements were the cause of the political impasse.
The US Congress must approve 12 appropriations bills before the end of the current fiscal year, October 1, in order to fund government operations. Funding for federal agencies will expire at midnight on September 30.
A relatively tiny portion of the $6.4 trillion US budget for the current fiscal year is the subject of the funding debate.
By Saturday night (0400 GMT Sunday), the US Congress must pass legislation that Democratic President Joe Biden can sign into law in order to prevent the furlough of hundreds of thousands of federal employees and the fourth halting of a wide range of services, from economic data releases to nutrition benefits.
The spending caps for the fiscal year 2024 that were agreed upon by Speaker Kevin McCarthy and Vice President Joe Biden in May have been rejected by House Republicans.
In fiscal 2024, the agreement called for $1.59 trillion in discretionary spending.
Republicans are calling for an additional $120 billion in budget cutbacks as well as stricter measures to halt the immigration flow at the US-Mexico border.
However, US politicians do not plan to decrease funding for well-known benefit programmes like Social Security and Medicare.
The Senate’s short-term spending package would keep the government operating until November 17 and authorises around $6 billion for domestic disaster relief and support for Ukraine’s defence against Russia.
There was a potential of a fourth partial closure of the federal government on Thursday because the US Senate and the House were expected to move forward with opposing government financing measures.
While the House of Representatives is scheduled for late-night votes on four political budget measures that have little chance of becoming law, the Senate has scheduled a procedural vote on a stopgap funding package that has broad bipartisan support in the chamber.
McCarthy is under a lot of pressure from his caucus to accomplish their objectives. If McCarthy approves a budget measure that needs Democratic votes to pass, a number of hardliners have vowed to remove him from his leadership position.
The US economy continued to expand at a respectable 2.1% annual rate in the second quarter, and it now appears to be gaining steam this quarter as a robust labour market fuels significant pay growth.
Estimates of growth for the quarter of July to September range as high as 4.9%. However, if there is a US government shutdown, the fourth quarter could experience a significant downturn.