U.S. economy may shutdown on Sunday
The U.S. is just days from a Federal Government shutdown at 12:01 a.m. ET on Sunday. If history repeats itself, the lapse in funding could actually set the stock market up for short-term gains.
This is because hardline Republicans in the U.S. House on Friday rejected a bill proposed by their leader to temporarily fund the government, making it all but certain that federal agencies will partially shut down beginning on Sunday.
The House of Representatives rejected in a 232-198 vote a measure to fund the government for 30 days to give lawmakers more time to negotiate.
That bill would have cut spending and imposed immigration and border security restrictions, Republican priorities that had little chance of passing the Democratic-majority Senate.
The Senate, meanwhile, on Thursday, the Senate voted 76-22 to debate a stopgap bill that would extend federal spending until 17 November, and authorise roughly $6 billion (€5.67 billion) for domestic disaster funding and aid to Ukraine.
“It’s not the end yet; I’ve got other ideas,” Republican House Speaker Kevin McCarthy told reporters following the defeat of a bill he had backed.
He did not immediately say what those ideas were.
The National Park Service will close, the Securities and Exchange Commission will suspend most of its regulatory activities, and disrupt pay to up to 4 million federal workers beginning at 12:01 a.m. ET on Sunday (0401 GMT on Sunday) if Congress does not pass a spending package that can be signed into law by President Joe Biden before then.
U.S. Treasury Secretary Janet Yellen said on Friday that a government shutdown would “”undermine” U.S. economic progress by idling key programs for small businesses and children, and could delay major infrastructure improvements.
The shutdown would be the fourth in a decade and comes just four months after a similar standoff brought the Federal Government within days of defaulting on its $31 trillion-plus in debt.
The repeated brinkmanship has raised worries on Wall Street, where the Moody’s ratings agency has warned it could damage the nation’s creditworthiness.
Time is running out. If Congress does not reach an agreement before midnight on Saturday, the US government will shut down.
With agency reports
