The draft regulates the funding of the federal authorities until mid-March; the currently valid transition funding expires at midnight. If no new law is passed by then, a budget freeze will lead to a so-called shutdown, the forced vacation for hundreds of thousands of state employees, which will result in restrictions on public life.
In order to pass an interim budget, both chambers of Congress must agree; the Republicans of future President Donald Trump also need votes from the Democrats. Almost all Democrats in the House of Representatives voted for the new draft on Friday.
Since the party currently still holds the majority in the Senate, it was expected that the senators would also approve it – but it was questionable whether this would happen in time for midnight. However, the scenario of a long-lasting shutdown over the Christmas period has become less likely again with recent developments.
Both parties had actually already agreed on a draft this week that would have secured financing until mid-March. However, Trump and the high-tech billionaire Elon Musk, who he appointed as a government advisor, rejected this as too “costly”.
The future president then surprisingly attached the condition to a budget agreement that the debt ceiling in force in the USA should be suspended for at least two more years.
The debt ceiling is the legal limit on the amount the U.S. government can borrow to meet its obligations. It was last suspended in June 2023, but this deadline ends on January 1, 2025. Trump would like to see this limit continued to be suspended in his first two years in office, or ideally abolished entirely.
However, a draft taking this requirement into account was rejected by a large majority of MPs, including some Republicans, on Thursday, which meant a defeat for Trump. Trump’s request was no longer taken into account in the draft passed by the House of Representatives on Friday.
The fact that Musk intervened massively in the budget debate and played a key role in burying the first agreement caused some dissatisfaction among parliamentarians. The multi-billionaire also spoke out against the draft that was being voted on on Friday: “Is this a Republican or Democratic law?” he asked in an online post.
Republican Representative Rich McCormick told CNN that, as far as he knew, Musk did not have the right to vote in Congress. “Now he has influence and he’s going to put pressure on us to do what he thinks is right,” McCormick said. “But I have 760,000 people who voted for me to do the right thing for them.”
Actually, Congress must pass funding for government agencies for the coming fiscal year by October 1st each year. However, this deadline is regularly missed, so short-term interim budgets have to be agreed instead. The necessary negotiations often provide an opportunity for political haggling.
In the event of a shutdown, hundreds of thousands of federal employees will be sent on unpaid leave due to the budget freeze. This leads to restrictions on government services, disruptions to air traffic, for example, and to numerous public facilities such as national parks and state museums.
