Washington, September 20: The United States is facing the possibility of a government shutdown in less than two weeks, and the situation is becoming increasingly critical as lawmakers struggle to reach an agreement on a short-term spending bill.
Multiple budget proposals are currently under discussion in Washington, but none have garnered enough support to pass both the Democrat-controlled Senate and the Republican-led House of Representatives.
The deadline for lawmakers to reach an agreement is midnight on September 30, after which government funding for essential services is set to run dry.
During her testimony in Congress, Mira Resnick, the deputy assistant Secretary of State for Regional Security, indicated that she couldn’t predict the exact outcome, but historically, the State Department’s bureau of political and military affairs has faced challenges in processing new licenses or facilitating new military sales to any partner, including Taiwan, in the event of a government shutdown, unless it was deemed an emergency situation.
“This is a scenario we hope to prevent,” she conveyed during a House of Representatives hearing focused on defense cooperation with Taiwan.
Government shutdowns pose a serious financial risk to hundreds of thousands of workers who may be furloughed without pay, leading to the closure of federal properties such as parks and museums.
Although policymakers generally aim to avoid such a scenario, some supporters aligned with former President Donald
Trump have thus far opposed all proposed bills.
The White House expressed its concerns, stating, “With less than two weeks remaining in the fiscal year, extreme House Republicans are playing partisan games with people’s lives.”
This political deadlock could have implications for the conflict in Ukraine, as the White House is pushing for any budget bill passed by lawmakers to include $24 billion in military and humanitarian aid for Kyiv.
Rallying allies to provide support for nations such as Ukraine and Taiwan has become a central pillar of US foreign policy under the Biden administration.
China’s military has significantly increased its activities around Taiwan in recent years, despite Beijing’s territorial claims over the island. CIA director William Burns has stated that Chinese President Xi Jinping has directed his military to be prepared for a potential invasion by 2027.
While this proposal enjoys bipartisan support in the Senate, it faces significant opposition in the House, including from far-right Representative Marjorie Taylor Greene, who stated, “I will not vote to fund a single penny for the war in Ukraine, Covid, or a politically weaponized government.”
This situation unfolds as US President Joe Biden is scheduled to meet with Ukrainian President Volodymyr Zelenskyy in Washington later this week.
“At the very moment when President Zelenskyy comes to the United States to make the case for standing firm against Russian President Vladimir Putin, Republican leadership in the House of Representatives is essentially telling him, ‘You’re on your own,'” noted Senate Democratic Majority Leader Chuck Schumer.
This impending shutdown marks the second time in recent months that the world’s largest economy has faced a financial standoff. In June, the United States narrowly averted a potential debt default when US senators voted to suspend the federal debt limit following weeks of tense negotiations.
While a default would have been unprecedented, the United States has experienced government shutdowns before, including the longest in its history, a 35-day period from late 2018 to early 2019 under former President Donald Trump.
A shutdown this time around could leave a tangible impact on the economy, according to Gregory Daco, the chief economist at EY. He estimates that each week of a government shutdown could cost the US economy $6 billion and reduce GDP growth by 0.1 percentage points in the fourth quarter.
Furthermore, Daco pointed out that beyond the direct macroeconomic consequences, financial markets and private sector confidence could also be adversely affected by a government shutdown.
(ToI With inputs from agencies)