The US House of Representatives and the Senate have approved an emergency budget. This averted a threatened partial shutdown of the federal government at the last minute. The emergency budget is valid until December 3.
Parts of the US government would be shut down if the budget were not agreed in time. The deal will allow the salaries of hundreds of thousands of civil servants to be paid and national parks and federal museums to remain open.
In addition, more than $28 billion will be made available for emergency aid after natural disasters, such as Hurricane Ida, and about $6 billion will be provided for aid to Afghan refugees. President Biden has now signed the agreement.
Problems not over
In the Senate, there were mainly objections from the Republicans, because the proposal also included a provision in which the so-called debt ceiling would be raised. That is the maximum amount that the US government can borrow.
Republicans say Democrats must cut spending before raising the debt ceiling ($28.4 trillion).
In the end, the emergency budget and the debt ceiling are separated, but the problems are not over. Finance Minister Yellen said this week that the US will reach that debt ceiling on October 18. The federal government is expected to be unable to pay its bills after that. Republicans and Democrats must now reach an agreement on raising that ceiling.
Yellen said he feared disaster if the government stopped paying its bills. Confidence in the country’s creditworthiness would be damaged, she said, leading to a financial crisis or recession.
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