(Nov 10): The US Senate took a major step toward reopening the government after a group of moderate Democrats broke with their party leaders and voted to support a deal to end the record-breaking shutdown.
The Senate voted 60-40 on a procedural measure to advance the bill Sunday (Nov 9) evening. The Senate has not yet scheduled a vote for final passage. The House also needs to approve the measure before it goes to President Donald Trump’s desk for his signature.
Under the agreement, Congress would pass full-year funding for the departments of Agriculture, Veterans Affairs and Congress itself, while funding other agencies through Jan 30. The bill would provide pay for furloughed government workers, resume withheld federal payments to states and localities and recall agency employees who were laid off during the shutdown.
It’s not yet clear how quickly the shutdown can end. The Senate will need the consent of all members to end the shutdown quickly. Any one senator can force days of procedural delays.
Speaker Mike Johnson has also said he will give House lawmakers two days' notice to return to Washington.
“It looks like we’re getting closer to the shutdown ending,” Trump told reporters Sunday evening as he returned to the White House.
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Contracts for the S&P 500 rose 0.7% and those for the Nasdaq 100 index advanced 1.1% as prospects for the deal boosted appetite for risk. Asian shares also gained while bonds fell across the curve with the yield on 10-year Treasuries rising three basis points to 4.13%. The yen, a traditional safe haven currency, fell 0.3% against the dollar.
Democratic Senator Tim Kaine, whose state of Virginia is home to many federal workers, supported the deal, citing the bill’s ban on new federal layoffs through Jan 30.
House passage is not guaranteed. Democratic leaders have spoken out against any deal that doesn’t include extending expiring Obamacare subsidies, which this bill does not do. Conservative Republican members want a bill that would fund the entire government until next Sept 30.
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The face-saving accord also falls far short of the goals of House and Senate Democratic leaders, who had demanded an extension of expiring Obamacare premium subsidies and a repeal of Medicaid cuts passed by Republicans earlier this year.
Democrats secured a pledge by Republicans to vote on a bill to renew the Affordable Care Act tax credits by mid-December, according to a person familiar with the talks.
That promise, which Senate Majority Leader John Thune first offered weeks ago, was not satisfying to all Democrats.
“We will fight the GOP bill in the House of Representatives,” House Democratic leader Hakeem Jeffries said in a statement Sunday night.
The approaching resolution of the 40-day shutdown mirrors that of past showdowns where the party attempting to leverage a government closure for policy victories ends up without a victory. Trump failed to secure border wall funding through the 2018-2019 shutdown and Republicans failed to repeal Obamacare during the 2013 closure.
Democrats this year voted 14 times to block a no-strings stopgap measure passed by the House on Sept 19 that would have kept departments and agencies open through Nov 21. On Wednesday, the shutdown became the longest in US history, exceeding the 35-day closure in 2018 and 2019 under the first Trump administration.
Senate Democratic leader Chuck Schumer opposed the deal. On Friday, Schumer said Democrats would allow the government to reopen in exchange for a one-year extension of the expiring Obamacare tax credits.
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That offer was swiftly rejected by Republicans, many of whom are demanding a wholesale replacement of Obamacare with a yet-to-be-unveiled GOP alternative.
Republicans decided to stonewall Democrats on their demands for US$1.5 trillion in new spending by keeping the House out of session since Sept 19. The White House escalated the pressure by firing government employees en masse, threatening not to pay more than 600,000 furloughed federal workers and working to defy court orders to pay food stamp benefits.
As the busy Thanksgiving travel season neared, Transportation Secretary Sean Duffy ordered airlines to cancel flights, causing major headaches for travellers. On Sunday, he said it would only get worse in the holiday season.
The tactics largely worked in getting enough Senate Democrats to fold under pressure. Republicans, despite controlling both houses of Congress, needed eight Democrats to go along with a stopgap spending bill to shut off debate in the Senate.
Talks among a group of bipartisan senators accelerated after Democratic sweeps in the off-year elections in New York City, New Jersey, Virginia, California and elsewhere. Republicans said that Democrats appeared concerned that backing off their shutdown demands before voters went to the polls would depress turnout.
It’s unclear whether Congress will come to a deal on extending the Obamacare subsidies before they expire at the end of December. House Republican leaders say they are opposed to the extension and instead have floated a series of conservative priorities that include expanding short-term health insurance plans to compete with the Obamacare exchange plans and imposing abortion-related restrictions.
Senate Republicans have said any extension would have to include major changes, such as income caps on who can receive subsidies and a requirement that recipients pay at least some premium. Some, however, are demanding a wholesale rewrite of the Affordable Care Act before agreeing to anything.
The shutdown consequences are costing the US economy about US$15 billion a week. And the Congressional Budget Office estimates that the shutdown will reduce the annualised quarterly growth rate of real GDP by 1.5 percentage points by mid-November. Consumer sentiment hit a three-year low on Friday amid heightened anxiety about the shutdown, prices and the job market.
It has led to a suspension of most government economic data, causing the Federal Reserve to fly blind as it navigates stubbornly high inflation and rising unemployment.
The full-year spending bills contain some wins for Democrats, including a rejection of international food aid cuts sought by the Trump administration and an increase for Capitol Police security spending to protect lawmakers.
The bill would hand the beer industry a major win by restricting the sale of intoxicating hemp products. The hemp industry claims the provision threatens 325,000 jobs.
Uploaded by Arion Yeow
