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Moody’s Warns As US House Republicans Consider A Plan To Prevent A Government Shutdown

Social Security Benefits
Social Security Benefits; Source-MARCA

Republicans in the US House of Representatives are scheduled to submit a temporary solution on Saturday in an attempt to prevent a government shutdown. This is the most recent in a string of negotiations that has caused Moody’s to downgrade the country’s credit rating.

Country In Debt

The last major credit rating agency to retain a top “AAA” rating on the U.S. government changed its outlook from “stable” to “negative” six months after Congress forced the country to default on $31.4 trillion in debt, and only one week before federal agencies would run out of funding without congressional action.

The senior Republican in Congress, newly appointed House Speaker Mike Johnson, has been debating possibilities with his narrow 221-212 House majority over the past few days. Among them is the length of time to prolong stopgap financing while lawmakers work out a budget for the fiscal year that ends on September 30.

Republicans were singled out by the White House for the outlook change, which mentioned the large deficit and growing interest rates.

Funding Deadline Is Friday

US House Republicans

Source- Yahoo Finance

By November 17, the Democratic-led Senate and the House must agree on a budget plan that President Joe Biden can sign into law. If they can’t, there could be the fourth partial government shutdown in ten years, which would shut down national parks, interfere with the pay of up to 4 million federal employees, and disrupt a number of other activities.

A stopgap bill that would allow federal agencies to continue receiving discretionary funding until mid-January is scheduled for approval by House Republicans on Tuesday.

Hardliners in the House of Representatives have been attempting to lower fiscal 2024 spending below the $1.59 trillion amount that was agreed upon by Johnson’s predecessor and Biden in the May agreement that avoided default. However, even that represents a modest portion of the federal budget, which reached a total of $6.1 trillion in fiscal 2023 and includes mandated spending for Social Security and Medicare.

Less than three weeks after taking office as speaker, Johnson may jeopardize his own electoral prospects if he chooses to move forward with a clean CR that has enough strong bipartisan support to move through Congress swiftly.

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