Shutdown Nears End As Democrats Agree To Funding Deal

The record-breaking US government shutdown is nearing an end after a group of moderate Senate Democrats agreed to support a deal to reopen the government and fund some departments and agencies for the next year, people familiar with the talks said.

Under the agreement, Congress would pass full-year funding for the departments of Agriculture, Veterans Affairs and Congress itself, while funding other agencies through Jan. 30. The bill would provide pay for furloughed government workers, resume withheld federal payments to states and localities and recall agency employees who were laid off during the shutdown.

The chamber is set to hold a procedural test vote on Sunday. If that vote succeeds, the Senate will need the consent of all members to end the shutdown quickly. Any one senator can force days of delay and votes. The House would then need to pass the bill for the government to reopen and Speaker Mike Johnson has said he will give lawmakers two days notice to return.

"It looks like we're getting closer to the shutdown ending," President Donald Trump told reporters Sunday evening as he returned to the White House.

House passage is not guaranteed. Democratic leaders have spoken out against any deal that doesn't include extending expiring Obamacare subsidies, which this bill does not do. Conservative Republican members want a bill that would fund the entire government until next Sept. 30.

The face-saving accord also falls far short of the goals of House and Senate Democratic leaders, who had demanded an extension of expiring Obamacare premium subsidies and a repeal of Medicaid cuts passed by Republicans earlier this year.

"We will fight the GOP bill in the House of Representatives," House Democratic leader Hakeem Jeffries said in a statement Sunday night.

Instead, the group of Democratic senators accepted the promise of a Senate vote this year on an extension of the Affordable Care Act subsidies — a pledge that was extended weeks ago by Senate Majority Leader John Thune.

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The approaching resolution of the 40-day shutdown mirrors that of past showdowns where the party attempting to leverage a government closure for policy victories ends up without a victory. Trump failed to secure border wall funding through the 2018-2019 shutdown and Republicans failed to repeal Obamacare during the 2013 closure.

Democrats this year voted 14 times to block a no-strings stopgap measure passed by the House on Sept. 19 that would have kept departments and agencies open through Nov. 21. On Wednesday, the shutdown became the longest in US history, exceeding the 35-day closure in 2018 and 2019 under the first Trump administration.

On Friday, Senate Democratic leader Chuck Schumer said Democrats would allow the government to reopen in exchange for a one-year extension of the expiring Obamacare tax credits.

That offer was swiftly rejected by Republicans, many of whom are demanding a wholesale replacement of Obamacare with a yet-to-be unveiled GOP alternative.

Republicans decided to stonewall Democrats on their demands for $1.5 trillion in new spending by keeping the House out of session since Sept. 19. The White House escalated the pressure by firing government employees en masse, threatening not to pay more than 600,000 furloughed federal workers, and working to defy court orders to pay food stamp benefits.

As the busy Thanksgiving travel season neared, Transportation Secretary Sean Duffy ordered airlines to cancel flights, causing major headaches for travelers. On Sunday, he said it would only get worse in the holiday season.

The tactics largely worked in getting enough Senate Democrats to fold under pressure. Republicans, despite controlling both houses of Congress, needed eight Democrats to go along with a stopgap spending bill to shut off debate in the Senate.

Talks among a group of bipartisan senators accelerated after Democratic sweeps in the off-year elections in New York City, New Jersey, Virginia, California and elsewhere. Republicans said that Democrats appeared concerned that backing off their shutdown demands before voters went to the polls would depress turnout.

It's unclear whether Congress will come to a deal on extending the Obamacare subsidies before they expire at the end of December. House Republican leaders say they are opposed to the extension and instead have floated a series of conservative priorities that include expanding short-term health insurance plans to compete with the Obamacare exchange plans and imposing abortion-related restrictions.

Senate Republicans have said any extension would have to include major changes, such as income caps on who can receive subsidies and a requirement that recipients pay at least some premium. Some, however, are demanding a wholesale rewrite of the Affordable Care Act before agreeing to anything.

The shutdown consequences are costing the US economy about $15 billion a week. And the Congressional Budget Office estimates that the shutdown will reduce annualized quarterly growth rate of real GDP by 1.5 percentage points by mid-November. Consumer sentiment hit a three-year low on Friday amid heightened anxiety about the shutdown, prices and the job market.

It has led to a suspension of most government economic data, causing the Federal Reserve to fly blind as it navigates stubbornly high inflation and rising unemployment.

Source: Bloomberg Europe