Shutdown three days away as Senate, House advance separate spending plans

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

By Moira Warburton

WASHINGTON (Reuters) -The U.S. Senate and House on Thursday were due to push ahead with conflicting government funding plans, raising the chances of the fourth partial shutdown of the federal government in a decade beginning in just three days.

The Senate planned a procedural vote on a stopgap funding bill that has broad bipartisan support in the chamber, while the House of Representatives is set for late-night votes on four partisan appropriations bills that have no chance of becoming law and would not alone prevent a shutdown even if they did.

Congress must pass legislation that Democratic President Joe Biden can sign into law by midnight Saturday (0400 GMT on Sunday) to avoid furloughs of hundreds of thousands of federal workers and halting a wide range of services, from economic data releases to nutrition benefits, for the fourth time in the last decade.

House Republicans, led by a small faction of hardline conservatives in the chamber they control by a 221-212 margin, have rejected spending levels for fiscal year 2024 set in a deal Speaker Kevin McCarthy negotiated with Biden in May.

The agreement included $1.59 trillion in discretionary spending in fiscal 2024. House Republicans are demanding another $120 billion in cuts, plus tougher legislation that would stop the flow of immigrants at the U.S. southern border with Mexico.

The funding 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.

McCarthy is facing intense pressure from his caucus to achieve their goals. Several hardliners have threatened to oust McCarthy from his leadership role if he passes a spending bill that requires any Democratic votes to pass.

"I think that the speaker is making a choice between the speakership and American interests," Biden told a group of donors at a fundraiser in San Francisco on Wednesday.

Former President Donald Trump has taken to social media to push his congressional allies toward a shutdown.

McCarthy, for his part, suggested on Thursday that a shutdown could be avoided if Senate Democrats agreed to address border issues in their stopgap measure.

"I talked this morning to some Democratic senators over there that are more aligned with what we want to do. They want to do something about the border," McCarthy told reporters in the U.S. Capitol.

"We're trying to work to see, could we put some border provisions in that current Senate bill that would actually make things a lot better," he said.

The Senate's stopgap funding measure would extend federal spending until Nov. 17, and authorizes roughly $6 billion each for domestic disaster response funding and aid to Ukraine to defend itself against Russia.

'NOT AN IMPOSSIBLE PUZZLE'

The measure passed in an initial procedural vote with strong bipartisan support on Tuesday.

"This is not an impossible puzzle to solve," Senate Majority Leader Chuck Schumer told reporters on Wednesday. Referring to Trump's "Make America Great Again" slogan, he added, "Speaker McCarthy needs to stop letting the MAGA radicals drive his decisions."

Credit agencies have warned that brinkmanship and political polarization are harming the U.S. financial outlook. Moody's, the last major ratings agency to rate the U.S. government "Aaa" with a stable outlook, said on Monday that a shutdown would harm the country's credit rating.

Fitch, another major ratings agency, already downgraded the U.S. government to "AA+" after Congress flirted with defaulting on the nation's debt earlier this year.

Most of Congress - including many Senate Republicans - has largely rejected House Republicans' attempts to make the situation at the border with Mexico the focus of the shutdown.

"We can take the standard approach and fund the government for six weeks at the current rate of operations, or we can shut the government down in exchange for zero meaningful progress on policy," Senate Minority Leader Mitch McConnell said on Wednesday.

Representative Henry Cuellar, a conservative Democrat from Texas who serves as ranking member of the Homeland Security Subcommittee, criticized Republicans in a Wednesday committee hearing on an appropriations bill that would deal with many aspects of the border.

"There are migration issues we need to address," he said. "But this bill relies on outdated strategies that we know do not work."

The House is expected to vote on Friday on its own short-term funding measure, known as a continuing resolution, or CR. Its success could depend on whether House Republicans can pass fiscal 2024 spending bills for homeland security, defense, agriculture, and State Department and foreign operations in a voting session expected to end after midnight on Thursday.

Three of the bills - defense, foreign operations and agriculture - are opposed by some Republicans, lawmakers said.

The House CR is expected to include conservative Republican border restrictions that will not pass the Senate, meaning the risk of a shutdown remains high.

(Reporting by Moira Warburton in Washington; additional reporting by David Morgan and Jeff Mason; Editing by Heather Timmons, Grant McCool and Jonathan Oatis)