The provisional further financing of the US administration has been secured for the time being: After the Senate, the House of Representatives also voted for a transitional budget. Yet another problem remains.
The US Congress took the decisive step at the last minute to prevent an impending partial standstill of government business. Both chambers voted in favor of a transitional budget that will ensure funding for the federal authorities until December 3rd. The text now has to be signed by President Joe Biden.
Without an interim solution, the USA would have gone into a so-called shutdown with the expiry of the previous annual budget on Friday night. Hundreds of thousands of federal employees would have been sent on unpaid compulsory leave, and numerous public institutions would have had to close. A shutdown in the midst of a national crisis situation like the corona pandemic would have been a first in US history. According to the Democrats, that would cost six million jobs and destroy $ 15 trillion in personal wealth.
Dispute over debt ceiling
However, there is another danger. Treasury Secretary Janet Yellen has also called for the debt ceiling to be raised soon. If this does not happen by October 18, the US threatens to default in the same month. Then the country could plunge into a financial crisis and recession, she warned.
US President Biden’s Democrats initially tried to link a transitional budget with a suspension of the debt ceiling. But the Republicans were reluctant and rejected the law for the first time this week. The Democrats eventually gave in and gave up the link. According to Majority Leader Chuck Schumer, the law that has now been passed also includes emergency aid for victims of hurricane “Ida” and other disasters, as well as support for Afghan refugees. This has given Congress time to take care of raising the debt ceiling, which is currently at $ 28.4 trillion (around 24.4 trillion euros). Republicans minority leader Mitch McConnell insists that the Democrats should raise the debt cap at their own risk. Finally, they tried to get an infrastructure and climate protection program worth $ 3.5 trillion on their own, explained McConnell. The gigantic initiative is considered a prestige domestic political project by Biden. The $ 1.2 trillion infrastructure package and a social policy reform package worth $ 3.5 trillion are also causing bitter disputes within the Democratic Party. The chairman of the House of Representatives, the Democrat Nancy Pelosi, wanted to have the infrastructure package already approved in the Senate passed today. The progressive wing of the party threatened to let the vote fail.