Shutdown looms as US Senate, House advance separate spending plans

The Democratic-led US Senate forged ahead on Thursday with a bipartisan stopgap funding bill aimed at averting a fourth partial government shutdown in a decade, while the House prepared to vote on partisan Republican spending bills with no chance of becoming law.

The divergent paths of the two chambers appeared to increase the odds that federal agencies will run out of money on Sunday, furloughing hundreds of thousands of federal workers and halting a wide range of services from economic data releases to nutrition benefits.

The Senate voted 76-22 to open debate on a stopgap bill known as a continuing resolution, or CR, which would extend federal spending until Nov 17, and authorise roughly US$6 billion (RM28.15 billion) each for domestic disaster response funding and aid to Ukraine to defend itself against Russia.

The Senate measure has already been rejected by Republicans, who control the House of Representatives.

The House planned late-night votes on four partisan appropriations bills that would not alone prevent a shutdown, even if they could overcome strong opposition from Democrats and become law.

House Republicans, led by a small faction of hardline conservatives in the chamber they control by a 221-212 margin, have rejected spending levels for fiscal year 2024 set in a deal speaker Kevin McCarthy negotiated with US President Joe Biden in May.

The agreement included US$1.59 trillion in discretionary spending in fiscal 2024. House Republicans are demanding another US$120 billion in cuts, plus tougher legislation that would stop the flow of immigrants at the US southern border with Mexico.

The funding fight focuses on a relatively small slice of the US$6.4 trillion US budget for this fiscal year. Lawmakers are not considering cuts to popular benefit programmes such as Social Security and Medicare.

McCarthy is facing intense pressure from his caucus to achieve their goals. Several hardliners have threatened to oust him from his leadership role if he passes a spending bill that requires any Democratic votes to pass.

Former president Donald Trump has taken to social media to push his congressional allies toward a shutdown.

McCarthy, for his part, suggested on Thursday that a shutdown could be avoided if Senate Democrats agreed to address border issues in their stopgap measure.

"I talked this morning to some Democratic senators over there that are more aligned with what we want to do. They want to do something about the border," McCarthy told reporters in the US Capitol.

"We're trying to work to see, could we put some border provisions in that current Senate bill that would actually make things a lot better," he said.

The House Freedom Caucus, home to the hardliners forcing McCarthy's hand, in an open letter to him on Thursday demanded a timeline for passing the seven remaining appropriations bills and a plan to further reduce the top-line discretionary spending figure, among other questions.

"No member of Congress can or should be expected to consider supporting a stop-gap funding measure without answers to these reasonable questions," the letter, led by the group's chair, Republican representative Scott Perry, read.

'One option'

The Senate measure has passed two procedural hurdles this week with strong bipartisan support.

"Congress has only one option – one option – to avoid a shutdown: bipartisanship," Senate majority leader Chuck Schumer said on Thursday. "With bipartisanship, we can responsibly fund the government and avoid the sharp and unnecessary pain for the American people and the economy that a shutdown will bring."

Without a bipartisan agreement between senators to expedite its parliamentary process, the Senate is unlikely to act on its stopgap measure until after the government shuts down.

Credit agencies have warned that brinkmanship and political polarisation are harming the US financial outlook. Moody's, the last major ratings agency to rate the US government "Aaa" with a stable outlook, said on Monday that a shutdown would harm the country's credit rating.

Fitch, another major ratings agency, already downgraded the US government to "AA+" after Congress flirted with defaulting on the nation's debt earlier this year.

Most of Congress – including many Senate Republicans – has largely rejected House Republicans' attempts to make the situation at the border with Mexico the focus of the shutdown.

"We can take the standard approach and fund the government for six weeks at the current rate of operations, or we can shut the government down in exchange for zero meaningful progress on policy," Senate minority leader Mitch McConnell said on Wednesday.

The House is expected to vote on Friday on its own short-term funding measure. The continuing resolution's success could depend on whether House Republicans can pass fiscal 2024 spending bills for homeland security, defense, agriculture, and State Department and foreign operations in a voting session expected to end after midnight on Thursday.

Three of the bills – defence, foreign operations and agriculture – are opposed by some Republicans, lawmakers said.

The House continuing resolution is expected to include conservative Republican border restrictions that will not pass the Senate, meaning the risk of a shutdown remains high.