House Speaker Mike Johnson expressed confidence on Tuesday on securing passage of a stopgap funding measure that would prevent a partial government shutdown. Johnson, a Louisiana Republican who recently took over as speaker, stated in an interview on CNBC that he believes the measure will pass. He also mentioned the possibility of "bipartisan agreement" on the measure, which is scheduled for a House vote later on Tuesday.
Johnson acknowledged that he is unsure about the exact level of support from both Republicans and Democrats, but he emphasized that he and his colleagues will work together to determine the final numbers.
The potential government shutdown is set to occur after midnight Eastern on Friday if U.S. lawmakers fail to pass a funding package. However, analysts have remained optimistic this week, predicting that the Republican-run House and Democratic-controlled Senate will be able to reach an agreement on a stopgap funding measure to prevent a shutdown.
Analysts Predict 40% Chance of Government Shutdown
Industry analysts have assessed the situation and determined that there is a 40% chance of a government shutdown taking place over the weekend.
To address this issue, Johnson unveiled a two-step measure aimed at averting a shutdown. His proposed continuing resolution seeks to extend government funding for certain agencies and programs until Jan. 19, and for others until Feb. 2.
Johnson's CR Advancement Faces Opposition from Republicans
The House Rules Committee was expected to discuss Johnson's Continuing Resolution (CR) in the late afternoon on Monday. However, due to some dissent from fellow Republicans, Johnson is now planning to move forward with the measure using a strategy called "suspension of the rules." This approach bypasses the committee but requires the support of a two-thirds majority in the narrowly divided chamber, meaning that many Democrats will need to back the resolution.
Former Speaker McCarthy's Controversial Move
Former Speaker Kevin McCarthy collaborated with House Democrats to pass a funding bridge on September 30, which upset some hardline Republicans. As a result, they spearheaded an effort to remove him from his position. Johnson is now following a similar path. He argues that his approach is crucial to bolster House Republicans, as it will put an end to the Senate's habit of introducing massive spending bills just before the holiday season, thereby pressuring the House to act swiftly.
Johnson's New Approach
According to CNBC, Johnson explained the motivation behind his approach, stating, "This has been the habit here for decades now, for a long time, as long as I’ve been in Congress and before, where the Senate jams the House right before the Christmas holiday with a giant bill that’s thousands of pages long." He continued, "What we’re doing now is a little bit different than what Kevin was presented with. He was in a jam as well, but by breaking this up and doing the CR the way that we are, it’s a new shift."
Economic Outlook: U.S. Credit Rating Cut to Negative
This week, negotiations among U.S. lawmakers are taking place against the backdrop of Moody's, the ratings agency, downgrading the nation's credit rating from stable to negative. This decision was based on concerns about the federal government's ability to implement effective fiscal policies.
Positive Reactions in the Stock Market
Despite this news, U.S. stock futures are showing signs of resilience. Early on Tuesday, traders responded positively to an encouraging reading on inflation. The optimism can be seen in the upward trajectory of stock futures ES00 (+1.37%) and YM00 (+1.06%).
Stay updated as we monitor economic developments in the coming days.
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