Trump Threatens "US Government Likely to Shut Down October 1st" as Democrats "Prepare for Major Battle" - Will This "Wolf" Finally Come?

Stock News
09/20

Although Republicans narrowly passed a short-term spending bill in the US House of Representatives, neither this bill nor the competing Democratic version managed to gain approval in the Senate, bringing the threat of a federal government shutdown in early October closer to reality.

In Friday's Senate vote on September 19th Eastern Time, a Republican-proposed short-term spending bill failed to reach the required 60-vote threshold for passage, receiving only 44 votes in favor against 48 opposed. The bill had earlier passed the House on Friday by a narrow 5-vote margin of 217-212.

The Senate also voted earlier Friday on a competing short-term spending bill drafted by Democrats. Due to Republican opposition, this bill also failed to pass, with results showing 47 votes in favor and 45 against, falling short of the 60-vote threshold.

The failure of both parties' short-term spending bills to clear the Senate has left Congressional efforts to avoid a government shutdown at an impasse. Current legislation only supports federal government operations through the end of this month. This means Congress must pass at least one short-term spending bill within less than two weeks, or parts of the government will shut down on October 1st, the first day of the new fiscal year.

After Friday's market close, President Trump issued a warning that the federal government could shut down due to bipartisan deadlock. He stated: "We will continue dialogue with Democrats, but I believe the country (government) will very likely shut down for a period of time."

The rejection of both parties' bills is not entirely unexpected. Democrats demand increased healthcare spending, which Republicans refuse to agree to, instead supporting a simple bill to maintain operations until November 21st. Republican leaders hope Democrats will abandon their demands and make concessions as the deadline approaches, rather than risk blame for disrupted government services.

However, compared to previous occasions, the possibility of a government shutdown is higher this time. In March, when the US government similarly faced shutdown threats, Senate Democratic Leader Charles Schumer chose to compromise, but his concession drew strong criticism from within his party. This time he has chosen a tougher stance while finding solid ground on a prominent economic issue - the Affordable Care Act tax credits set to expire at year-end.

According to a survey by the left-leaning polling organization Data for Progress, most voters believe Social Security, Medicare, and healthcare should be priority issues when Congress considers government funding plans. The survey shows 32% of voters blame President Trump, 27% blame Congressional Republicans, and 34% blame Democrats.

**Both Party Spending Bills Include Security Funding, Main Difference Lies in Healthcare Policy**

The Republican bill voted on by both chambers on Friday would provide funding to keep the government running until November 21st and includes an additional $88 million in security funding for legislators, the Justice Department, and executive officials. However, the bill does not include Democratic-advocated healthcare policy provisions.

The Democratic government spending bill introduced Wednesday totals $1.5 trillion, providing funding to extend government operations until October 31st. It similarly includes additional security funding for legislators, executive officials, and federal judicial members.

Unlike the Republican "clean" bill, the Democratic proposal also involves healthcare-related policies. Its allocation includes $350 billion to permanently extend expiring Affordable Care Act subsidies - the middle-class tax subsidies introduced under the Obama administration.

The Democratic bill would restore nearly $1 trillion in Medicaid cuts implemented in the tax legislation Republicans pushed through this summer, reverse cuts to medical research spending, restore funding for NPR and PBS, and prevent the White House from unilaterally refusing to spend congressionally appropriated funds.

Schumer defended the healthcare battle in Thursday's Senate speech, stating that with insurance companies set to issue premium increase notices on November 1st, fighting for Obamacare subsidies now is necessary. He said: "Americans will see a stark contrast between the Republican plan and the Democratic plan - the former continuing Trump healthcare cuts and high-cost status quo, the latter lowering premiums while avoiding government shutdown, fixing Medicaid, and protecting science and medical research funding."

**Both Parties Stand Firm, Healthcare Policy Becomes Core Dispute**

Republicans firmly refuse to include healthcare provisions in short-term spending bills. House Speaker Johnson stated Republicans would "absolutely not" reverse any content of their signature tax reform but hinted that negotiations on Obamacare subsidies might occur before year-end.

Twelve House Republicans from swing districts have signed onto a plan to extend subsidies for one year, and moderate Senate Republicans are also conducting closed-door discussions on possible legislation.

Johnson and other Republican leadership say if any version of Obamacare subsidies were to be extended, they would want stricter income limits and anti-fraud controls implemented. However, they state they will not consider these contents in temporary spending bills currently.

Johnson said Thursday: "Chuck Schumer must make a choice. If he wants to shut down the government, he will bear the consequences, and everyone can clearly see what's happening here."

Senate Republican Leader John Thune called the Democratic proposal "dirty," representing a strategic reversal after passing 13 temporary spending bills during Democratic Senate control and Biden's presidency. Thune stated the bill is "loaded with partisan policies and measures designed to appeal to the Democratic left-wing base."

On the Democratic side, some legislators view opposing spending bills as a way to resist Trump administration decisions, including canceling previously approved program funding, firing federal workers, and using executive actions to bypass Congressional consent.

Democratic Senator Chris Murphy of Connecticut said Thursday: "I don't think Democrats have an obligation to fund actions that undermine our democratic system."

**Neither Party's Bill Could Secure Sufficient Opposition Support in Senate**

In the Senate, Republicans hold a 53-seat majority while Democrats control 47 seats, but 60 votes are needed to pass temporary spending bills before October 1st. This means Republicans need support from at least 7 Democratic senators.

In Friday's Senate vote, only one Democratic senator defected to support the Republican bill, while two Republicans voted against their own party's proposal. In the Democratic bill vote, seven members were absent, all Republicans.

In March, Schumer had compromised over similar government shutdown threats, allowing 10 Democratic senators to vote for temporary spending legislation. But this time he has taken a tougher stance, though some of those senators refuse to reveal how they will ultimately vote.

Schumer faces enormous political pressure from grassroots activists demanding resistance to Republicans and the Trump administration. Unable to obstruct Trump's agenda or even gain media attention, Democrats face pressure to risk government shutdown.

Senate leadership prepared to vote simultaneously on both the Republican spending bill passed by the House and the Democratic version. Schumer said in Thursday's Senate speech: "Republicans choose: either listen to Trump and shut down the government, or break the deadlock by supporting our bill and keep the government running."

The current annual funding dispute involves only about one-quarter of the $7 trillion federal budget, which also includes mandatory programs like Social Security and Medicare, plus interest payments on $37.5 trillion national debt.

Federal government operating funds should come from annual budget appropriations. Both Congressional parties should typically pass new annual appropriation bills before the new fiscal year begins on October 1st. However, due to intense partisan fighting in recent years, they often cannot reach agreement in time, so Congress attempts to pass temporary funding bills to temporarily maintain federal government operations.

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