US government shutdown looms as Republicans block spending

President Joe Biden has called on Republicans in Congress to “start doing the job America elected them to do”, warning that black Americans will be particularly hurt if the government runs out of money on Saturday without a new budget passed.

But former President Donald Trump, the frontrunner to be Republican presidential nominee for 2024, has called on his hard-line allies in the House, including Matt Gaetz and Marjorie Taylor Greene, to hold the line.

“UNLESS YOU GET EVERYTHING, SHUT IT DOWN!” he wrote on his Truth Social platform, claiming the country was “being systematically destroyed by the Radical Left Marxist, Fascists and Thugs — THE DEMOCRATS”.

Barrelling towards shutdown

Four months after barely avoiding the more serious prospect of a credit default, the world’s largest economy is once again on the verge of a convulsion, with the lights due to go out at the weekend.

A partial government shutdown would mean pay and welfare checks for millions of Americans would stop from October 1.

Republicans, who lead the 435-member House of Representatives with a razor-thin majority of 221, have been unable to pass the usual series of bills setting out departmental budgets for the next financial year, which begins on Sunday.

A small group of right-wing Republicans have refused to pass the budget bills.

House Speaker Kevin McCarthy, who spent the weekend trying to negotiate a deal without success, said on Monday he was holding out hope for a breakthrough.

“Look, I’m a believer in everything,” he told reporters. “I never give up.”

The party’s leadership does not even have the votes to advance a short-term funding bill at 2023 spending levels — known as a continuing resolution — to keep the government open past midnight on Saturday.

A shutdown would put at risk the finances of workers at national parks, museums and other sites operating on federal funding, but it could also carry significant political risk for Mr Biden as he runs for re-election in 2024.

“Funding the government is one of the of the most basic, fundamental responsibilities of the Congress,” the Democrat told reporters at the White House.

“And if Republicans in the House don’t start doing their job we should stop electing them.”

Black community will suffer

Mr Biden said he and Mr McCarthy had agreed to spending levels for the government a few months ago that would “fund essential priorities and still cut the deficit by $US1 trillion over the next decade”.

“Now a small group extreme House Republicans they don’t want to live up to that deal and everyone in America could be faced with paying the price for that,” he said.

“We made a deal, we shook hands, and said this is what we’re going to and now they’re reneging on the deal which is not much of a surprise these days.”

Mr Biden warned “the black community in particular is going to suffer if that occurs”.

“For example, a shutdown is going to risk nutrition assistance for nearly seven million mums and children,” he said.

“It’s going to disproportionately affect black families. The Department of Housing and Urban Development would have to stop nearly all of its enforcement work fighting housing discrimination. The EPA would have to stop its important work bringing environmental justice.”

Call to halt Ukraine aid

The funding deadlock arose after House Republicans refused to support the government spending levels agreed between Mr Biden and Mr McCarthy, the top Republican in Congress.

A major sticking point has been a request for additional aid for Kyiv, after Ukrainian President Volodymyr Zelensky visited Congress last week pleading for more weapons to battle Russian forces 18 months into the war.

Both parties in the Senate support the $US24 billion aid bill. But a handful of hard line Republicans in the House are threatening to block any funding measures that include the aid.

While pushing for the continuing resolution this week, Mr McCarthy will simultaneously plough ahead with individual appropriations bills meant to fund operations through next year.

So far, the House has only passed one out of 12.

But Ms Greene is foiling plans to advance the rest, vowing to vote against the rules for those bills until aid to Ukraine is removed entirely.

“Congress should be focused on AMERICA, not Ukraine!” she wrote on X.

“Tomorrow, I will VOTE NO on the rule to advance a BLANK CHECK to Ukraine. How many Republicans will join me and how many will vote to fund Biden’s proxy war?”

Mr Gaetz, who has served as Mr McCarthy’s chief GOP agitator, shared Mr Trump’s Truth Social post on X. “Trump agrees with me,” he wrote. “Not Speaker McCarthy. No continuing resolution. Break the fever. Hold the line.”

New levels of polarisation

The budget vote in Congress regularly turns into a standoff, with one party using the prospect of a shutdown to seek concessions from the other, usually without success.

Mr Trump forced a 35-day shutdown over border controls in 2018 but ended up reopening the government after failing to secure a single concession from Democrats.

The impasse is invariably resolved before the stand-offs become crises but this year the showdown is exacerbated by new levels of polarisation on Capitol Hill.

In the Senate, debate is led by two political heavyweights, Democratic majority leader Chuck Schumer and Mitch McConnell, his Republican counterpart.

The House and Senate will be back in session on Tuesday after an extended break for a three-day weekend and the Jewish holiday of Yom Kippur.

Mr Schumer has been paving the way for a continuing resolution, including Ukraine aid, in talks with Mr McConnell and the White House.

A measure that would keep the government open through early December has support on both sides of the Senate — but would likely not be ready for a vote before the shutdown and would not have the support of the Republican right.

Democrats have been slow to throw Mr McCarthy a lifeline and he seems reluctant to accept one as GOP rebels dangle a motion to oust him.

“I’ve never seen a group that is as hellbent on a shutdown as these crazy MAGA Republicans — that small group,” Mr Schumer told CNN last week.

“I am still hopeful. I am still optimistic that once the Senate acts in a bipartisan [way] … that maybe the House will follow our example.”

If Mr Schumer works with Mr McConnell to pass a spending stopgap, which would likely need 60 votes, at that point Mr McCarthy would be given the choice of whether or not to take that up for a vote in the House — further enraging his right flank.

Mr Trump, writing on Truth Social, slammed Mr McConnell as “the weakest, dumbest, and most conflicted ‘leader’ in US Senate history”.

“HE’S ALREADY GIVEN THE DEMOCRATS EVERYTHING, THEY CAN’T BELIEVE HOW LUCKY THEY GOT,” he wrote.

‘Historically weak’ Speaker

Perth USAsia Centre chief executive Professor Gordon Flake said unlike previous shutdowns, “what we have in the House today is not actually a contest between Republicans and Democrats but between different wings of the GOP”.

“So, we have a historically weak Speaker of the US House of Representatives, Speaker McCarthy, and a group of 10 to 15 kind of MAGA, Make America Great Again Republicans, who are determined to undermine him,” Prof Flake told Sky News.

“So the issue here again isn’t a failure of agreement between Democrats and Republicans, it’s the fact that the Republican rebels if you will, have blocked the passage of individual spending bills with each step.”

The White House — facing polls showing Americans dissatisfied with President Biden — has ramped up its attacks on the Capitol Hill GOP.

An ABC-Washington Post survey released on Sunday found that 40 per cent of registered voters would primarily blame Democrats for a government shutdown, while 33 per cent would blame Republicans. The Washington Post dubbed its own poll an “outlier”.

“This will be a Republican shutdown,” White House press secretary Karine Jean-Pierre insisted to reporters Monday. “This shouldn’t be happening.”

Moody’s issues warning

The shutdown prospect comes just four months after the US came dangerously close to defaulting on its debt, which could have had disastrous consequences for the American economy and beyond.

Moody’s — the only major ratings agency to maintain its maximum score for US sovereign debt — warned that the latest drama could threaten its top tier status.

“While government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other AAA-rated sovereigns that we have highlighted in recent years,” Moody’s analysts wrote.

The US government employs more than two million civilian workers, as well as uniformed military personnel and federal contractors. Civil servants deemed “non-essential” would be asked to stay home during a shutdown, getting paid only on their return.

“A government shutdown is looking inevitable from October 1,” ANZ economist Arindam Chakraborty said in a note on Monday.

“Past shutdowns show that most of the output during the shutdown is usually recovered. Financial markets tend not to be phased by these events.”

— with NY Post