The Senate voted 87-11 on Thursday to advance a short-term government funding bill, preventing a shutdown ahead of Friday's deadline. The bill finances various federal operations into January and the rest of the government into February, buying Congress time for long-term appropriations. Lawmakers must still negotiate a long-term budget deal in the coming months.
Yahoo Finance's Seana Smith and Brad Smith broke down details of the stopgap legislation, discussing implications for financial markets and the issues brought up by more conservative Republican members of the House.
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BRAD SMITH: The new government funding bill is officially heading to President Biden's desk. The Senate voted 87 to 11 to move the bill forward ahead of Friday's deadline. The short-term agreement, however, only gives Congress a few months to come to a longer-term solution here. And so now as we continue to march towards January and then again once in this latter continuing resolution February, we'll see exactly where some of the more kind of contentious elements of this debate will continue to move forward as well.
SEANA SMITH: Yeah, this essentially just kicks the can down the road, and in two months from now, we're going to be having the same sort of discussion in terms of what the GOP wants. They obviously want more extensive cuts in terms of the funding and spending plans compared to what the Biden administration laid out earlier this year.
But I think this really shows that the GOP felt some pressure. They didn't want to be blamed for a shutdown ahead of 2024. They were able to kind of come to an agreement here, agree on this short-term plan in order to keep the government funded, and look ahead to maybe some of the negotiations or some of the hopefully, at least from their point of view, some of the things that the Democrats would maybe be able to come to some sort of an agreement on in terms of when they see, what they would be able willing to give into versus not.
But again, more of the sticking points when it comes to funding going forward, when it comes to building a wall, when it comes to immigration. Those are the sticking points that many of the far-right-leaning members of the conservative party were taking issue with when you take a look at the plans that were put forward by McCarthy several weeks ago and then still not included, obviously, in the plan that was just passed this week.
So looking ahead, we're going to be having a very similar sort of conversation. Whether or not the GOP is able to get any sort of restrictions in place for spending that they want will be tough given the fact that they have such a narrow leadership in the House, and the Senate, obviously, is still controlled by Democrats. But we'll see whether or not they're able to make some sort of negotiation agreement.
BRAD SMITH: Yeah, just trying to kind of pass this through to what the markets might think of this as well here, the markets perhaps could look at this as-- this attempt and ultimately being able to get this to the president's desk, get it signed, and then ultimately, even if we are just kicking the can down the road, still looking at this as the potential in the future for this to perhaps be a sideline type of issue that doesn't drive the VIX back to the high teens like we were at when we were getting towards the deadline back in October now.
And so all of that considered, perhaps the markets can look at this and find at least some sigh of relief that maybe it won't be as much of a continued-- and these things continue to always come up again and again and again, regardless of who is in the office, who controls the balance of power. But at the end of the day, if the markets can sideline this as a headwind risk, potentially we'll see a little bit less volatility on any continuing negotiations that need to take place.
SEANA SMITH: Yeah, and it seems like at least this time around, many investors were looking past this potential deadline, right?
BRAD SMITH: Yeah.
SEANA SMITH: We talked about the fact that this is a subject that has come up time and time again. Markets almost seemed used to it. They weren't too worried about the fact that maybe we wouldn't be able to get an agreement before the deadline tomorrow. But certainly we have gotten an agreement, but we're going to be having the same discussion before January 19.