Congress hopes to avoid a government shutdown as Friday deadline approaches

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  • Washington and Wall Street were optimistic on Monday that Congress could pass a bill to fund the government and postpone a partial shutdown before Friday’s deadline.
  • Democrats and Republicans appeared to be gathering around a bill to fund the government in late January or early February, a person familiar with the discussion told CNBC.
  • Defaults in government funding can result in the furlough of federal employees and the default of certain government services.
  • Congress has a long list of priorities in the coming weeks, including funding the government, raising or suspending the debt limit, the annual defense budget bill and the Democrats’ $1.75 trillion Build Back Better Act.

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Washington and Wall Street were optimistic on Monday that Congress could pass a bill to fund the government and postpone a partial shutdown before Friday’s deadline.

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It was not clear how long the legislators would try to run the government. Democrats have a list of priorities in the coming weeks as they try to avoid shutdowns, pass their $1.75 trillion Build Back Better bill, boost debt limits and approve a new defense budget bill .

Congressional staff and Washington policy analysts who spoke to CNBC on Monday expressed optimism about Congress’s chances of passing a temporary spending plan, known as an ongoing resolution. Failing to pass legislation before the end of Friday could result in the furlough of government employees and the default of some federal services.

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As of Monday afternoon ET, Democrats and Republicans appeared to be gathering around a bill that would fund the government in late January or early February, a person familiar with the discussion told CNBC. Another aide said the key negotiators were confident they could reach an agreement to avoid the shutdown before time runs out.

They asked not to be named to speak openly about the ongoing and private talks between the party leadership.

Some on Wall Street shared the optimism.

“The good news is that both sides of the aisle want to avoid a government shutdown and Republicans are unwilling to mount a filibuster that could delay a spending bill. The open question that must be resolved before Friday is That’s when the next CR will take place, Tom Block, Washington policy strategist at Fundstrat Global Advisors, wrote in an email Monday morning.

He explained that some Democrats want to extend government funding for a few weeks to force Congress to make more significant changes to spending priorities in the current fiscal year. If MPs pass a continuing resolution for a longer period, it would freeze spending at current levels.

Although lawmakers decided to go ahead, Senate Majority Leader Chuck Schumer, D.N.Y., would need to persuade Senate Minority Leader Mitch McConnell, R-Ky., to pass an ongoing resolution by the end of the week. Senate Republicans are not expected to oppose the short-term funding bill just before the year-end recess.

A spokesman for Schumer’s office declined to comment. A representative for McConnell said talks are ongoing.

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A spokeswoman for House Speaker Nancy Pelosi, D-Calif., did not respond to a request for comment. A report from Monday morning punch bowl news suggested the chamber’s Democrats could introduce the stopgap funding bill on Tuesday and vote on it as soon as Wednesday.

While the government closed twice under former President Donald Trump, Republicans and Democrats generally agree that Congress should keep the federal government running.

The two sides are often divided over proposed additions to “clean” funding bills, which generally do not include unrelated provisions. This happened in September, when Democrats tried to link the government funding law to an increase in the debt limit.

Shutdowns often cause the Departments of Housing and Urban Development, Education, Interior, Labor and Commerce to send most of their workers home unless Congress approves a new funding bill.

Government funding talks about how to suspend or increase the US debt limit are detracted from thorny debates. Treasury Secretary Janet Yellen has warned lawmakers that the government could exhaust its ability to pay the nation’s bills by December 15.

If the Treasury Department is unable to honor its regular loan payments, the US will default in the first place. Yellen warned that a default, while unlikely, would result in a recession and a rise in interest rates. It could also undermine the role of the US dollar as the world’s reserve currency.

Efforts to lift the debt limit in recent months have led to a bitter fight between Republicans and Democrats.

Republicans have refused to vote to raise the limit. He has argued that Democrats should be responsible for lifting the cap because they control Congress and are acting alone to pass their $1.75 trillion package that addresses education, health care and climate policy, among other issues. will address.

Democrats note that raising the debt limit does not authorize additional spending for taxpayer dollars. Yellen explained in September thatEven if the Biden administration did not authorize any spending, Congress would still need to raise the borrowing limit.

Congress voted to suspend the debt limit three times during the Trump administration.

NBC News reported that Schumer and McConnell discussed year-end legislation, including debt limits, earlier this month. McConnell told reporters after that meeting that the pair had “good discussions about many different issues” and that they agreed to “talk and work together”.

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