US Senate tries to avert government shutdown

Democrat leader Chuck Schumer and his Republican counterpart Mitch McConnell endorsed the bill passed by 77 to 19 votes.

Mitch McConnell arrives at the US Capitol Building on Tuesday. Picture: Getty Images

The US Senate has advanced a last-ditch budget proposal to avoid a destabilising federal government shutdown, which is on track to start within days unless enough Republican hardliners in the House of Representatives support the measure.

Both Democrat Senate majority leader Chuck Schumer and Republican minority leader Mitch McConnell endorsed the bill, which would keep the government open until November 17, in a night session on Tuesday (Wednesday AEST).

If a deal isn’t reached by midnight Saturday (Sunday AEST), hundreds of thousands of federal employees could be furloughed, potentially curtailing a wide swath of services provided by the federal government, including National Parks, tax collection services and payments to military personnel.

“Shutting the government down over a domestic budget dispute doesn’t strengthen anyone’s political position,” Senator McConnell said after the Senate voted 77-19 in an initial step in what Senator Schumer called a “bridge towards co-operation”.

“It just puts important progress on ice. And it leaves millions of Americans on edge,” Senator McConnell said.

A minority of house Republicans has demanded swingeing cuts as a condition of passing a budget to fund the federal government, in the face of ballooning fiscal deficits that recently prompted Fitch credit rating agency to downgrade the US government’s rating from AAA.

Susan Collins of Maine, the top Republican on the Senate appropriations committee, urged lower house colleagues to support the plan, saying shutdowns “do not accomplish the goals people who advocate government shutdowns think will be accomplished”.

“I’ve been through two government shutdowns,” Senator Collins said, “and I can tell you they are never good policy.”

The federal government has shut down 21 times in the past five decades when the two major parties have disagreed on the federal budget; congress has until September 30 to pass a set of spending bills or come up with a short-term plan.

Democrat President Joe Biden has blamed a small group of “extremist” Republican politicians in the house, saying he had previously reached a deal on the budget with Senator McConnell. The house hardliners “are determined to shut down the government,” Mr Biden said in a video message.

The US budget deficit, forecast to be $US1.5 trillion earlier this year for the fiscal year ending September, 30 is expected to run to around $US2 trillion on more recent estimates, up from $US1 trillion last fiscal year.

Marc Goldwein, an analyst at the nonpartisan Committee for a Responsible Budget, said partisan politics was getting in the way of resolving an inevitable fiscal crisis, given US spending was wildly in excess of revenue despite record low unemployment.

“It turns out that last year was just an unusually good year, which is kind of pretty crazy to say given it was a trillion dollars,” he told The Australian. “We’ve never had deficits this high outside of a war, or recession or major disaster so this is unprecedented.”

The prospect of the world’s largest economy being unable to produce a government budget comes just four months after Washington came dangerously close to defaulting on its debt due to political deadlock.

Moody’s – the only major ratings agency to maintain its maximum score for US sovereign debt – this week warned that the latest drama could threaten its top-tier status rating.

The Senate draft bill confirmed that Ukraine would still receive $US6bn in additional funding, although significantly below the $US24bn the White House had requested.

Some Republicans in the house have said they don’t want any more money going to Kyiv, after the $US43bn already provided since Russia’s invasion began in February 2022.

“When you’ve got a president who is more concerned about the sovereignty of Ukraine than our own national sovereignty, then you’ve got a problem,” said Republican representative Chip Roy, referring to Mr Biden.

House Speaker Kevin Mc­Carthy with other Republicans representatives pressed for more border funding to combat undocumented immigration.

“If they want to focus on Ukraine and not on the southern border, then their priorities are backwards,” Mr McCarthy said.