Shutdown looms as US Senate, House take dueling tacks on funding

© Reuters. FILE PHOTO: A general view of the U.S. Capitol, where Congress will return Tuesday to deal with a series of spending bills before funding runs out and triggers a partial U.S. government shutdown, in Washington, U.S. September 25, 2023. REUTERS/Jonathan E

By David Morgan, Richard Cowan and Moira Warburton

WASHINGTON (Reuters) - The U.S. Senate on Tuesday took a step forward on a bipartisan bill meant to stop the government from shutting down in just five days, while the House sought to push ahead with a conflicting measure backed only by Republicans.

The Senate voted 77-19 to begin debate on a measure that would fund the government through Nov. 17, and includes around $6 billion for domestic disaster responses and another roughly $6 billion in aid for Ukraine.

The Republican-controlled House of Representatives, however, planned to push along with its own partisan approach that was unlikely to win support in the Democratic-majority Senate.

The House took a procedural vote to move ahead on four spending bills that reflect conservative priorities and stand no chance of becoming law. Even if enacted, the measures fund only a portion of the government and would not avert a shutdown.

The split between the two chambers suggests the federal government is increasingly likely to enter its fourth shutdown in a decade on Sunday, a pattern of partisan gridlock that has begun to darken Wall Street's view of U.S. government credit.

Senate Majority Leader Chuck Schumer, a Democrat, and Senate Republican Leader Mitch McConnell worked in tandem to win passage of a bipartisan short-term extension of federal funding at current levels.

House Speaker Kevin McCarthy on Tuesday told reporters he would seek approval from his splintered Republicans on a bill that also would temporarily fund the government.

But he intends to attach tough border and immigration restrictions that are unlikely to win support from enough Democrats in the House or Senate to become law.

Democratic President Joe Biden and McCarthy had aimed to head off a shutdown this year when they agreed in May, at the end of a standoff over the federal debt ceiling, to discretionary spending of $1.59 trillion for the fiscal year beginning Oct. 1.

The White House on Tuesday urged Republicans to honor that deal.

"House Republicans should join the Senate in doing their job, stop playing political games with peoples' lives, and abide by the bipartisan deal two-thirds of them voted for in May," said Press Secretary Karine Jean-Pierre in a statement.

But hardliners to the right of McCarthy have rejected that deal, demanding another $120 billion in cuts.

McCarthy's measure would restart construction of the U.S.-Mexico border wall, a signature policy of former President Donald Trump, and tighten immigration policies.

Critics have said it would effectively put an end to U.S. asylum for immigrants.

'SHUTDOWNS ARE BAD NEWS'

McCarthy called on the Biden and congressional Democrats to reconsider their opposition. The top Senate Republican pleaded with his House counterpart to embrace the Senate bill.

"Government shutdowns are bad news, whichever way you'd look at it," McConnell said.

McCarthy countered: "Let's do something on the border, keep the government open and show this nation that we can do it right, and solve the rest of our problems as we go."

Hundreds of thousands of federal workers will be furloughed and a wide range of services, from economic data releases to nutrition benefits, will be suspended beginning on Sunday if the two sides do not reach agreement.

The standoff has caused concern at credit rating agency Moody's (NYSE:MCO), though it is unclear whether it will hurt U.S. creditworthiness, as past shutdowns have not had a significant impact on the world's largest economy.

Trump, the front-runner for the 2024 Republican nomination, has cheered on the shutdown talk.

The cuts that hardliners are pushing for only account for a fraction of the total U.S. budget, which will come to $6.4 trillion for this fiscal year. Lawmakers are not considering cuts to popular benefit programs like Social Security and Medicare, which are projected to grow dramatically as the population ages.

Congress has shut down the government 14 times since 1981, though most of those funding gaps have lasted only a day or two.