U.S. Government Shutdown More Likely; Budget Proposal Rejected by Hardline Republicans in House of Representatives

Hardline Republicans in the U.S. House of Representatives rejected a temporary funding proposal by their leader Kevin McCarthy on Friday, September 29. According to Reuters, this suggests that federal agencies in the United States will shut down starting Sunday. The House voted 232 against to 198 in favor of the proposal, which aimed to provide lawmakers with more time to negotiate by offering a 30-day budget. The rejection was caused by 21 hardline Republicans voting against it. The proposal included spending cuts and imposed restrictions on immigration and border security, priorities of the Republicans that have little chance of passing in the Democrat-majority Senate. Meanwhile, the Senate is advancing a bipartisan proposal known as a continuing resolution or 'CR' to fund the government until November 17. After the failure of the proposal he supported, Kevin McCarthy, the Republican Speaker of the House, told reporters, 'It’s not over yet, I have other ideas.' Both the House and Senate must ultimately agree on the budget; otherwise, the U.S. government will shut down due to a lack of temporary funding. In the event of a shutdown, all but emergency government services will cease until Congress reaches an agreement on funding. U.S. Treasury Secretary Janet Yellen stated on Friday that a government shutdown would 'weaken' U.S. economic progress by nullifying key programs for small businesses and children, and could delay significant infrastructure advancements. If this occurs, it will be the fourth government shutdown in the past decade, coming just four months after a similar deadlock nearly led the federal government to default on its $31 trillion debt. The possibility of a federal government shutdown has raised concerns on Wall Street, with experts warning of negative consequences for the U.S. economy.