The US government shutdown is back on track

On August 31, the White House formally asked Congress to pass a short-term measure to fund the federal government and avoid a government shutdown at the end of September.

A spokesman for the Office of Management and Budget (OMB) said a short-term continuing resolution would be needed next month to keep government funding at current levels while negotiations continue on a longer-term funding bill.

Unless Congress acts, the federal government will run out of money on September 30. Currently, with a month to go before the deadline, Congress has yet to approve any of the 12 annual spending bills normally used to keep the government open.

Deep divisions remain between the two parties, with Republicans wanting to enact a bill with massive spending cuts but unlikely to pass the Democratic-controlled Senate.

Earlier this month, President Joe Biden asked Congress to approve a temporary measure to pay for standard government programs and allocate an additional $40 billion. That includes $24 billion for Ukraine and other foreign policy challenges, nearly $4 billion to address border and migration issues, and $12 billion for disaster relief.

During a visit to FEMA headquarters in Washington, D.C., on Thursday, Biden warned that the shutdown would have an impact on agencies.

"It would be a very, very serious problem." "He said.

Goldman Sachs said last month that a possible federal government shutdown sometime after Sept. 30 as funding runs out would be a short-term hit to the economy. Goldman Sachs 'economic team calculates that private sector hits could subtract 0.2 percentage points per week from GDP growth during a shutdown, with the economic damage not recouped until the quarter after the shutdown ends.

Leaders in both parties have signaled a willingness to pursue a short-term continuing resolution. House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer both said earlier this month they were open to the idea.

Senate Minority Leader Mitch McConnell said Wednesday that the current budget negotiations are "pretty messy." However, he also believes that a short-term congressional resolution could eventually be reached, possibly lasting until December.

But the stopgap funding to temporarily fund the government is likely to face opposition from hard-liners in the Republican Party. Hard-liners in the House Freedom Caucus have urged members of Congress to oppose any funding to keep the government open unless the Biden administration accedes to their demands for spending cuts and changes to border policy.

House Speaker Kevin McCarthy risks losing his speakership if he works with Democrats to pass stopgap spending bills without meeting conservative demands.