A last-second deal averts a government shutdown with 45 minutes to spare

In a surprise turnabout following several days when a shutdown seemed all but inevitable, Congress acted swiftly Saturday to avert a government funding gap and push Washington’s spending fights until later this fall.

After one last delay Saturday evening over the issue of funding for Ukraine, the final vote came in the Senate with an overwhelmingly bipartisan tally of 88-9.

"I have very good news for the country," said Senate Majority Leader Chuck Schumer, "The government will remain open."

The White House soon announced that President Biden had signed the bill with an alert going out at 11:15 pm ET, just 45 minutes before the midnight deadline.

Business leaders and economists have worried for weeks about the economic damage that could follow a protracted shutdown with some quickly celebrating the news but warning that the economy isn't yet out of the woods.

Business Roundtable CEO Joshua Bolten issued a statement Saturday quickly after the final vote saying "we thank Members of Congress for working together to prevent a shutdown and encourage the House and Senate to pass a long-term spending measure as soon as possible.”

Lawmakers now have about 6 weeks to search for another compromise with a new shutdown deadline of November 17. Then an even steeper fiscal deadline awaits Washington on Jan. 1, 2024 when this summer's debt ceiling deal stipulates that discretionary government spending will be cut by 1% if no overall budget deal in place.

The breakthrough this weekend came on Saturday morning when House Speaker Kevin McCarthy abruptly changed course and offered a bill with bipartisan appeal. The 71-page measure passed the House by an overwhelming 335-91 vote with 90 Republicans and 1 Democrat voting no.

“I tried every possible way” to negotiate with far-right Republicans, McCarthy said during a press conference Saturday adding that in the end “I wanted to be part of a conservative group that gets things done.”

A view of the U.S. Capitol as the deadline to avert a partial government shutdown approaches at the end of the day on Capitol Hill in Washington, U.S., September 30, 2023. REUTERS/Ken Cedeno
A view of the U.S. Capitol, September 30, 2023. REUTERS/Ken Cedeno (Ken Cedeno / reuters)

"It’s a relief and good news that we will not have a government shutdown; it shouldn’t have been this complicated," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

"The challenge now is to ensure that we don’t do this all over again in six weeks," she added.

Margaret Spellings, the president and CEO of the Bipartisan Policy Center, added in her own statement that "we cannot keep kicking the can down the road on our fiscal health and negotiating on the brink of government shutdowns and debt defaults."

The last second bill also heads off what could have been a potential double whammy for the aviation industry. It will stop both a shutdown – which could have led to longer security lines by forcing TSA agents to work without pay – as well as avoiding a lapse in authorization for the Federal Aviation Administration (FAA) that was also looming this weekend.

The bill includes text to delay a shutdown and also temporarily re-authorizes the FAA through the end of the year, to allow lawmakers more time to work on both issues.

Sen. Maria Cantwell (D-Wash.) is the chair of the Senate's Commerce Committee. She noted late Saturday that the new law "will ensure continuity at the FAA and avoid pointless disruptions for the traveling public."

The bill also includes $16 billion for disaster relief efforts. FEMA’s Disaster Relief Fund had been running low but will now be replenished to fund ongoing efforts in places like Florida (following a recent hurricane) and Maui (following wildfires).

Additional money for Ukraine — an important sticking point in recent weeks for House Republicans — didn't make it into a final bill but a bipartisan group of Senators announced plans to return to the Ukraine issue in the coming weeks.

"Senate Republicans remain committed to helping our friends on the front lines," House Minority Leader Mitch McConnell said Saturday evening adding “I am confident the Senate will pass further urgent assistance to Ukraine later this year."

Speaker McCarthy also said he hopes to return to issues like cutting government spending— with Saturday's measure continuing funding at current levels —as well as efforts to enact border provisions in coming weeks. McCarthy said for weeks that both issues needed to be addressed as part of this weekend's deadline but ended up dropping them.

Even as economic observers breathed a sigh of relief that one threat to the economy is now off the table, early signs are that the spending battles are all but certain to rear up again near Thanksgiving when a government shutdown again becomes a threat.

Before then McCarthy also appears likely to face a challenge to his speakership from some of the Republicans who voted against his last-second move to bipartisanship.

One of the no votes on the bill was Rep. Andy Biggs (R-Ariz.) who accused McCarthy of caving to Democrats, adding "Should he remain Speaker of the House?"

"Are we sure Hakeem Jeffries is not the speaker?" added another GOP no vote, Rep. Matt Rosendale (R.-Mont.) in reference to the Democratic leader.

"If somebody wants to remove [me] because I want to be the adult in the room, go ahead and try," McCarthy shot back.

This post has been updated with additional developments.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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