Shutdown in the USA: The countdown to insolvency is on

Status: 27.09.2023, 13:00 p.m.

By: Maximilian Kurz

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The Capitol is lit up as lawmakers in the House of Representatives work to pass budget bills. © J. Scott Applewhite/AP

If Democrats and Republicans do not agree on a new budget law, the shutdown threatens. Congress is now proposing a compromise.

Washington – The government in Washington could soon run out of money and a shutdown would be the result. If the two parties do not agree on a budget law, state employees could soon no longer be paid. This is reported by ntv, among others.

USA: Countdown to Shutdown

There are only a few days left for the Democrats and Republicans to avert an imminent budget freeze. The U.S. Congress must pass a new budget bill by September 30 to ensure the continuation of funding for U.S. federal agencies. If no agreement is reached, there would be a budget freeze, a so-called shutdown. According to experts, hundreds of thousands of civil servants would then have to be sent on unpaid forced leave and many public institutions would have to be closed.

US President Joe Biden blames "a small group of extreme Republicans" for the impending shutdown. Over the weekend, he had successful talks with the Republican leader of the House of Representatives, Kevin McCarthy. An agreement was reached, but Biden criticized: "Now a small group of extreme Republicans do not want to honor the agreement." For him, "all Americans" would pay the price for this behavior.

U.S. soon insolvent? Compromise on the budget dispute from the Senate

The senators of the Democrats and Republicans presented a compromise proposal in the budget dispute, which would ensure timely funding of the various federal agencies and avert the threat of insolvency. The compromise also includes an aid package for Ukraine worth around six billion dollars (5.7 billion euros).

On budget issues, the two political parties are regularly critical of each other. This time, an agreement seems particularly difficult to reach because the balance of power is complicated: the majority in the Senate belongs to the Democrats, while the majority in the House of Representatives is Republican. The congressional midterm elections in the fall of 2022 changed the political situation in the USA.

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Ukraine war: point of contention between Democrats and Republicans

The US president wanted to ensure that additional aid to Ukraine be included in the budget law. It is about aid in the amount of 24 billion dollars (about 22.5 billion euros). The project found support in the Senate from both Democrats and Republicans. In the House of Representatives, however, a right wing of the Republicans in particular is skeptical of this support and prefers to see the money invested in US investments.

For President Biden, who is seeking re-election, a shutdown would be politically fatal. Biden stated, "Funding the government is one of the most important tasks of Congress. It's time for Republicans to start doing the work America elected them to do." For the US, it would not be the first shutdown in its history. For years, the budget process has been considered in need of reform and controversial.