As of: 09/30/2021 11:28 pm
The US Congress has prevented the impending default. Majorities in both chambers approved a transitional budget. But President Biden must continue to fear – prestige projects of his term in office are shaking.
The impending budget freeze in the USA was averted at the last minute. After the US Senate, the House of Representatives also voted with a large majority for a transitional budget that will ensure funding for the federal authorities until December 3. Otherwise, the US would have slipped into a so-called shutdown after midnight, in which hundreds of thousands of federal employees would have been sent on unpaid forced leave.
The transitional budget passed both chambers of congress with a large majority: in the Senate there were 65 yes votes and 35 no votes, in the House of Representatives 254 yes votes and 175 no votes. In addition to the Democrats, a number of Conservative parliamentarians also voted for the transitional budget.
Bigger problem still lies ahead
President Joe Biden had yet to sign the interim budget – a purely formality. The regular fiscal year in the US always ends on September 30th. In Congress, Biden’s Democrats and the opposition Republicans have so far not been able to agree on a new annual budget, which is why an interim solution became necessary.
A shutdown in the midst of a national crisis situation like the corona pandemic would have been a first in US history. With the shutdown being prevented, only one crisis has been averted for the time being. The much larger problem of the debt ceiling remains for the time being. Without an increase or suspension of this limit by Congress, the US government could default on payments in mid-October, according to Treasury Secretary Janet Yellen.
Millions of jobs threatened
Last week, the House of Representatives approved a regulation for the temporary funding of the government with the votes of the Democrats. In the Senate, however, the Republicans resisted because it also provided for the debt ceiling to be suspended for the time being – which they reject. In the end, the Democrats were forced to separate the two questions in order to avert a shutdown and get the budget law through in the Senate.
The Democrats could use a special procedure (reconciliation) to raise the debt limit through the Senate – but they are blocking this. The chairman of the House of Representatives, Nancy Pelosi, had described this procedure as too “risky”.
If the debt limit fails to be suspended by December 2022, the US is threatened with insolvency for the first time in its history in mid-October. According to the Democrats, it would cost six million jobs and destroy $ 15 trillion in personal wealth.
Unrest among the Democrats
In addition to the fighting between the two parties, intense internal disputes among the Democrats are also making President Biden difficult. With a series of talks and negotiations, he is trying to push through two central projects of his term in office in Congress: a large-scale package for investments in the country’s infrastructure and a second huge package for social investments.
The $ 1.2 trillion infrastructure package and a $ 3.5 trillion social reform package are causing unrest within the Democratic Party. Left-wing MPs only want to vote for the infrastructure package if the social package makes progress at the same time. They fear that the social package in the Senate could peter out once the infrastructure package has been approved and they no longer have any leverage. Some moderate Democrats are critical of the high spending and oppose it.
Feverish search for compromise
Biden and the Democratic leaders in the Senate and House of Representatives have been feverishly looking for a compromise for days. If the attempts fail, it could mean the death knell for Biden’s reform agenda. Since the Republicans do not want to go along with this, the Democrats are planning to bring this second package of the special parliamentary procedure through Congress on their own. But you only have a narrow majority in both chambers,
Republicans accuse Democrats of irresponsible fiscal policies. You don’t want to go along with the trillion dollar investment packages.