The federal government is barreling toward a shutdown.
With a new fiscal year set to begin, the House of Representatives returns Tuesday to vote on a series of spending bills to fund the government before September ends. But each bill faces challenges, as Republicans have struggled to find common ground among their own ranks let alone with Democrats.
Many Republicans are pushing for cuts to bring spending below the level leadership agreed to with President Biden during the debt ceiling standoff earlier this year. The so-called Freedom Caucus of the party, a group of hard-line conservatives, are pushing for deeper cuts.
Democrats, meanwhile, have pushed for an increase in spending, including additional funding for the Ukranian war and natural disaster relief.
Legislators could still pass a stopgap spending law that keeps the government funded while they hash out these differences. But the clock is running out. If Congress fails to act before the end of Saturday, the government will shut down for the fourth time in the past decade.
The government’s biggest annual expenses—and the main drivers of U.S. debt—are retirement and healthcare programs like Medicare, Medicaid, and Social Security. The U.S. spent nearly $3 trillion on those programs last year, making up half of the federal government’s total budget.
But this budget fight hasn’t centered on those programs. House Republicans have sought cuts of more than $100 billion each year in discretionary domestic spending for programs that provide education services, medical research, aid for people in poverty, as well as spending on law enforcement and border security.
The cuts would make up 1.5% of the total federal budget, but each of the affected programs would see much a larger impact on their budgets. The Food Safety and Inspection Service, for example, would see its budget slashed by 11%.
Still, slashing those programs would do little to rein in the federal deficit. The annual federal deficit is expected to rise to $2.7 trillion by 2033, according to the Congressional Budget Office, up from roughly $1.4 trillion this year.
Hard-line House Republicans are pushing for other priorities, including a ban on mail delivery of abortion pills nationwide, which some moderate Republicans oppose. The caucus has also prevented other pieces of the spending bill from passing because it included funding for Ukraine.
A short-term stopgap bill, also known as a continuing resolution, appears off the table too. A small group of House Republicans say they would block the option.
“Don’t let the D.C. uniparty scare you into thinking that a government shutdown is the end of the world,” Arizona Republican Rep. Andy Biggs wrote on X, formerly Twitter, last week. “A so-called shutdown is really a pause in nonessential federal spending.” He called out the $33 trillion national debt as the bigger and “insane” problem to solve.
House Speaker Kevin McCarthy appeared headed for a tough choice—either risk a shutdown or bypass the minority of Republicans opposing him to work directly with Democrats for a solution. The latter, however, risks McCarthy’s speakership, as that small group of Republicans could vote to remove him.
Meanwhile, the Democratic-controlled Senate will try to advance its own short-term spending bill that would likely include additional funding for disaster aid and the Ukraine war. The Senate aims to send the bill to the House by the weekend, and McCarthy would need to decide whether to put it up for a vote.
All this political brinkmanship is making creditors concerned about the U.S. government’s financial future. Earlier this year, Fitch downgraded the U.S. debt rating to AA+ from AAA due to “repeated debt-limit political standoffs and last-minute resolutions,” which, the agency says, has eroded its confidence in the U.S. government’s fiscal management capabilities.
Moody’s said Monday that while any shutdown would likely be temporary and the impact would be concentrated in government-heavy areas like Washington, D.C., it would be negative for the U.S.’s credit and “underscore the weakness of U.S. institutional and governance strength relative to other Aaa-rated sovereigns.”