The U.S. still faces a risk of a government shutdown at the end of this week despite a new compromise plan by Speaker Mike Johnson, R-La., that leaves out hard-line conservative priorities like cutting spending and curtailing migration.
A shutdown would threaten to bring a downward U.S. credit rating adjustment by Moody's Investors Service, which has cited political dysfunction as a growing risk to bond investors. A federal funding lapse would also have political repercussions for both parties.
Congress has just days to pass a new stopgap bill before funding runs out after Nov. 17. Johnson on Sunday suggested his plan would buy lawmakers time to negotiate individual spending bills, which fiscal conservatives have demanded.
"Washington's spending addiction cannot be broken overnight," he said on the social media site X, formerly known as Twitter. "But I will not allow end of year megabus spending packages to continue under my leadership."
Johnson's plan could still run aground in the face of combined resistance from GOP conservatives and the White House, which is irked by the lack of Ukraine aid in the plan and the fact it extends funding for some agencies to Jan. 19 and others to Feb. 2. His plan would extend current funding until Jan. 19 for the departments of Veterans Affairs, Energy, Agriculture, and Transportation, as well as Housing and Urban Development, with the rest extended to Feb. 2. It also extends farm subsidies until Sept. 30.
The House plans to vote on the plan today. Johnson will need some Democratic votes given his narrow majority and opposition by fiscal conservatives.
Even before that stopgap vote, conservatives could block the plan before it comes to the floor or on a procedural vote setting up debate.
"Disappointing is as polite as I can muster. I will be voting NO," conservative Rep. Warren Davidson of Ohio said on X Saturday.
Democrats have been muted in their reaction to Johnson's plan, but there were some early signs it could receive bipartisan backing.
"I don't like what the House is talking about, but I'm willing to listen," Sen. Chris Murphy, D-Conn., said on NBC's "Meet the Press."
The White House, however, said Johnson's plan would only lead to future shutdowns.
Florida Rep. Debbie Wasserman Schultz, a senior Democrat on the House Appropriations Committee, excoriated the Republican proposal, saying Monday it "recklessly opens the door to a double whammy shutdown."
But the bill lacks the strings that many Democrats had feared, and a veto threat could allow Republicans to blame the shutdown on the president.
This year has brought the U.S. near a debt default, provoked Fitch Ratings to downgrade the nation's sovereign debt and cost Johnson's predecessor his job. Republican hard-liners ousted then-House Speaker Kevin McCarthy of California after he offered a similar strings-free stopgap.
Moody's, the only major credit grader still to give the U.S. its top rating, on Friday changed its ratings outlook for the U.S. from stable to negative, citing risks to the nation's fiscal strength and political polarization in Congress.
The chaotic three-week process to elect a new House speaker damaged Republicans' standing in swing states, according to a Bloomberg News/Morning Consult poll from Oct. 30 through Nov. 7.
By a 9 percentage-point margin, more swing-state voters said the House speaker chaos made them more likely to vote Democratic in 2024 than those who said the process made it more likely they would vote Republican. Among independents, the margin was 7 points in favor of Democrats.
A shutdown beginning Saturday would furlough hundreds of thousands of federal workers just before the Thanksgiving holiday and delay government contracts and vendor payments. Military personnel, law enforcement officers and other essential employees would continue to work but go without pay until the impasse is resolved.
The limbo they face highlights a stark disparity in the way the government treats career public servants and the laborers who perform the often unglamorous work that keeps their offices running. Federal employees who are furloughed or forced to work without pay during a shutdown are guaranteed by law to receive back pay for their missed wages. Contract workers have no such protections.
More than 200 such employees provide hospitality services to lawmakers and their staffs in the U.S. Capitol Complex, according to union leaders. Several thousand others perform similar duties in federal buildings in Washington and beyond.
These workers are some of the lowest-paid employees in and around government, typically earning between about $17 and $25 an hour as janitors, cooks, cashiers, catering workers and security guards, according to the unions that represent them. Most are Black or Latino, and many live paycheck-to-paycheck.
Losing work for even a couple of weeks can exact an immediate and long-lasting financial toll on these employees. After the last shutdown, which began in late 2018 and lasted 35 days, some workers spent months repaying personal loans they took out to cover their expenses. Now, they are dealing with the added pressures of post-pandemic inflation and higher interest rates.
In previous shutdowns, unions helped their members file for unemployment. They raised money for families in need and gave out gift cards to reduce some of the financial stress. Union leaders say they will continue offering that kind of support in another shutdown.
Financial markets so far have shrugged off the growing risk of a shutdown as investors focus on high interest rates, volatility in bond markets, slowing consumer spending and war in the Middle East.
A government shutdown would initially have a mild economic impact but build incrementally as millions of workers go without salary, private contractors are not paid and consumer uncertainty grows. The University of Michigan Consumer Sentiment index slid to a six-month low in its preliminary November reading.
Senate Majority Leader Charles Schumer, D-N.Y., had teed up a procedural vote Monday afternoon to advance placeholder legislation for temporary funding, likely into January.
Senators in both parties have also been discussing a path forward for $106 billion in security funding Biden sought for Ukraine, Israel, Taiwan and the U.S. border. The package has been held up by Republican demands for asylum and other immigration policy changes.
Chances for reaching a deal this week that also includes the emergency security assistance are dropping given the complexity of the immigration issue.
Information for this article was contributed by Erik Wasson, Gregory Korte and Billy House of Bloomberg and by Derek Hawkins of The Washington Post.