As the Democrats and Republicans in Washington can’t agree on anything, the chance of a U.S. government shutdown is growing. President Donald Trump said on Friday that the government would “very well end up with a closed country for a period of time” because of the stalemate.
The deadline for a financing agreement is coming up, and things got worse when Senate Republicans and Democrats blocked each other’s plans for short-term funding. The Senate is presently on break until September 29, while the House is on break until October 7. This puts the country on the approach of a government shutdown.
The Healthcare Standoff
The main point of the disagreement is how much money to spend on health care. Democrats want more money for healthcare. They want the middle class to keep getting tax breaks from Obamacare that are about to run out, and they want the cuts to Medicaid spending that were made in Trump’s tax bill this summer to be undone. Senate Democratic Leader Chuck Schumer has put the senators in a tough spot: they can either “stand with Donald Trump and keep the same lousy status quo and cause the Trump healthcare shutdown, or stand with the American people, protect their healthcare, and keep the government running.”
Republicans, on the other hand, are not giving up. They want a “clean” continuing resolution (CR) to keep the government financed at its current levels until November 21. Senate Majority Leader John Thune said that the Democrats’ plan was “unserious” and that their demands were a partisan attempt to keep the country “hostage.” He said that Democrats have a “pretty clear” choice: either pass a short-term CR without any problems or the government would shut down. The Republican plan only got 44 votes, which wasn’t enough to move it forward. The Democrats’ plan also lost in a 47-45 vote.
Effects on Politics and the Economy
In the past, financial markets have ignored warnings of shutdowns, but economists think this time could be different since both sides are more determined. A short shutdown might not have a big effect on the U.S. economy, but a prolonged one could. Bloomberg Economics says that a month-long closure may cut quarterly GDP growth by 0.4 percentage points.
Democrats seem to be standing their ground more firmly now than they did in a similar situation in March, when Schumer bowed down and let a temporary budget bill pass. This is because their base is putting pressure on them to do so. But the prospect of a shutdown and the blame that comes with it are still big political issues for both sides.