Hardline Republicans refuse stopgap, shutdown two days away

PHOTO CAPTION: U.S. House Speaker Kevin McCarthy (R-CA) speaks with reporters as the deadline to avert a partial government shutdown approaches on Capitol Hill in Washington, U.S., September 28, 2023. REUTERS/Craig Hudson/ File Photo

By Moira Warburton

WASHINGTON (Reuters) -The U.S. government was two days from a partial shutdown on Friday, as a handful of hardline House Republicans refused to support a bipartisan stopgap spending bill meant to give lawmakers more time to negotiate a full-year deal.

The National Park Service will close, the Securities and Exchange Commission will suspend most of its regulatory activities, and hundreds of thousands of federal workers will be furloughed 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.

The Republican-controlled House of Representatives was due to hold an afternoon vote on a partisan 30-day funding measure known as a continuing resolution, or CR, that is expected to fail on strong opposition from Democrats and a handful of hardline conservatives.

The measure would cut spending to a 2022 level of $1.47 trillion on an annualized basis, impose immigration and border security restrictions, and establish a bipartisan commission to study the U.S. debt.

On Friday morning, Democrats warned that the Republican CR would mean a 30% spending cut in benefits for poor women and children and a 57% cut in resources for battling wildfires. It would increase spending for defense and homeland security.

Hardliners who oppose the measure want Congress to press on instead with full-scale spending legislation for fiscal 2024.

House Speaker Kevin McCarthy succeeded in passing three of four bills late on Thursday that would fund four federal agencies. The bills were written to accommodate hardline conservative demands and stand no chance of passing the Democratic-controlled Senate, though even if they became law, they would not avert a partial shutdown because they do not fund the full government.

Republican hardliners have said they will not take up a Senate bill to fund the government through Nov. 17, which has advanced with broad bipartisan support, including that of top Senate Republican Mitch McConnell.

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.

McCarthy and Biden, a Democrat, in June agreed to a deal that would have funded the government with discretionary spending at $1.59 trillion in fiscal 2024, but House Republican hardliners are demanding another $120 billion in cuts plus tougher legislation that would stop the flow of immigrants at the U.S. border with Mexico.

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

Several hardliners have threatened to oust McCarthy from his leadership role if he passes a spending bill that requires any Democratic votes to pass, an outcome almost guaranteed given that any successful House bill must also pass the Senate, controlled by Democrats 51-49.

Former President Donald Trump, Biden's likely election opponent in 2024, has taken to social media to push his congressional allies toward a shutdown.

'FRUSTRATED'

House Republicans expressed annoyance late Thursday with their hardline colleagues, who have stymied the process at almost every turn.

"They can't set a fire, call the fire department, turn off their water supply and then blame them for not putting out the fire," Representative Dan Crenshaw told Reuters. "That's kind of what's happening right now."

Representative Mike Garcia, a member of the House Appropriations Committee, described himself as "frustrated."

"We don't have a good position going into what would be a negotiation with the Senate," he told Reuters.

Representative Richard Neal, the ranking Democrat on the tax-writing House Ways and Means Committee, described the appropriations process as "the worst in the 35 years I've been here."

Moderate Republicans are pushing for a vote on their own short-term spending measure, which would also most likely not pass the Senate if it includes the expected harsh border measures that Democrats do not support.

"We are in a mess," Representative Marc Molinaro, a moderate Republican, said in a statement on Wednesday, referring to the situation at the border. "In a bipartisan government, our solution must be bipartisan."

A shutdown will also delay vital economic data releases, which could trigger financial market volatility, and delay the date that retirees learn how much their Social Security payments will rise next year. Social Security payments themselves would continue.

(Reporting by Moira Warburton; Editing by Scott Malone and Jonathan Oatis)