Government Shutdown On The Horizon? White House Prepares For Congressional Budget Impasse

The White House on Friday alerted various federal agencies to brace themselves for a potential government shutdown.

This precautionary move comes as House Republicans are deeply divided over a spending agreement in Congress. The Office of Management and Budget instructed the agencies to formulate contingency plans in case a lapse in government funding leads to a shutdown, which would potentially furlough thousands of federal employees and require them to work without pay, as well as disrupt certain government services, reported Bloomberg. 

The agencies that could be affected by this possible partial shutdown are the Department of Veterans Affairs, the Department of Agriculture, Housing and Urban Development, the Department of Transportation and the Department of Energy.

This situation arises amid a conflict over a budget deal between House Speaker Mike Johnson and Senate Majority Leader Chuck Schumer.

Despite their agreement on a $1.66 trillion spending cap for the current fiscal year, hardline conservatives in the House are pushing for a reduction of at least $70 billion.

Also Read: Countdown To US Government Shutdown: How Could It Impact The Stock Market?

Conservative members of the Republican Party have been causing disruptions in the House, insisting that Johnson pursue more substantial cuts in government spending.

This has escalated the chances of a partial government shutdown beginning on Jan. 20. Johnson, however, expressed his commitment to uphold his agreement with the Democrats, the outlet reported. 

Should a spending bill fail to be enacted by Feb. 2, additional agencies, including the Department of Defense, would experience funding shortfalls.

The ongoing budget dispute also threatens Johnson's negotiations with President Joe Biden on key issues like border security and immigration policy, which are essential to garner Republican support for the $61 billion aid package proposed for Ukraine.

The budgetary standoff has even led to discussions within Johnson's caucus about potentially removing him from his position as speaker, reminiscent of the fate that befell his predecessor, Kevin McCarthy, who lost his leadership role last year due to similar spending conflicts.

Now Read: US Banks Are Abruptly Freezing Accounts — Here's How You Can Save Yours

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock