With shutdown looming, US lawmakers agree on spending levels

WASHINGTON – The top Democrat and Republican in the United States Congress on Jan 7 agreed on a US$1.59 trillion (S$2.11 trillion) spending deal, setting up a race for bitterly divided lawmakers to pass the bills that would appropriate the money before the government begins to shut down this month.

Since early last year, House of Representatives and Senate appropriations committees had been unable to agree on the 12 annual bills needed to fund the government for the fiscal year that began Oct 1 because of disagreements over the total amount of money to be spent.

When lawmakers return on Jan 8 from a holiday break, those panels will launch intensive negotiations over how much various agencies, from the Agriculture and Transportation departments to Homeland Security and Health and Human Services, get to spend in the fiscal year that runs through Sept 30.

They face a Jan 19 deadline for the first set of bills to move through Congress and a Feb 2 deadline for the remainder of them.

There were already some disagreements between the two parties as to what they had agreed to. Republican House Speaker Mike Johnson said in a statement that the top-line figure includes US$886 billion for defence and US$704 billion for non-defence spending. But Democratic Senate Majority Leader Chuck Schumer, in a separate statement, said the non-defence spending figure will be US$772.7 billion.

Last month, Congress authorised US$886 billion for the Department of Defence this fiscal year which Democratic President Joe Biden signed into law. Appropriators will also now fill in the details on how that will be parceled out.

The non-defence discretionary funding will “protect key domestic priorities like veterans benefits, healthcare and nutrition assistance” from cuts sought by some Republicans, Mr Schumer and House Democratic Leader Hakeem Jeffries said in a joint statement.

Last spring, Mr Biden and then-House Speaker Kevin McCarthy reached a deal on the US$1.59 trillion in fiscal 2024 spending, along with an increase in borrowing authority to avoid a historic US debt default.

But immediately after that was enacted, a fight broke out over a separate, private agreement by the two men over additional non-defence spending of around US$69 billion.

One Democratic aide on Jan 7 said that US$69 billion in “adjustments” are part of the deal announced that day.

Another source briefed on the agreement said Republicans won a US$6.1 billion “recission” in unspent Covid aid money.

False dawn?

The agreement on a top line spending number could amount to little more than a false dawn, if hardline House Republicans make good on threats to block spending legislation unless Democrats agree to restrict the flow of migrants across the US-Mexico border – or if they baulk at the deal hammered out by Mr Johnson and Mr Schumer.

Mr Biden said on Jan 7 the deal moved the country one step closer to “preventing a needless government shutdown and protecting important national priorities”.

“It reflects the funding levels that I negotiated with both parties,” he said in a statement after the deal was announced.

Top Senate Republican Mitch McConnell said he was encouraged by the agreement.

“America faces serious national security challenges, and Congress must act quickly to deliver the full-year resources this moment requires,” he said on social media platform X.

Unless both chambers of Congress – the Republican-controlled House and the Democratic-majority Senate – succeed in passing the 12 bills needed to fully fund the government, money will expire on Jan 19 for federal programmes involving transportation, housing, agriculture, energy, veterans and military construction. Funding for other government areas, including defence, will continue through Feb 2.

House Republican hardliner Chip Roy said the top line spending figure agreed on Jan 7 was “terrible”.

In his letter, Mr Johnson said the “final spending levels will not satisfy everyone, and they do not cut as much spending as many of us would like”.

The past year has been chaotic for Congress, where Republicans pushed Washington to the brink of default and then paralysed the body for weeks as they deposed one House speaker and struggled to find a replacement. Congress also came within hours of a government shutdown in September.

Mr Johnson’s narrow 220-213 majority has been reduced by one since No. 2 Republican Steve Scalise will not be casting votes as he undergoes cancer treatment. Mr Johnson’s predecessor, Mr McCarthy, was ousted by his own party after passing a bill averting a government shutdown that required Democratic votes to pass. REUTERS

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