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The White House warns of possible government shutdown

Yahoo Finance's Jessica Smith breaks down the latest from Capitol Hill on the potential government shutdown.

Video Transcript

BRIAN SOZZI: Now, the government shutdown debate is only gaining steam at this moment. Yahoo Finance DC correspondent Jessica Smith is here with the latest. Jessica.

JESSICA SMITH: Hey, Brian. Yeah, we are less than a week away from a government shutdown at this point. Yesterday, the Office of Management and Budget started warning agencies to prepare for a shutdown, get their plans ready. Now, that is standard any time you are seven days out for a shutdown. It does not indicate that a shutdown is more or less likely, but it shows that it is getting close. And Congress is running out of time to get this done.

Of course, the House has already passed a bill that would fund the government through early December, and it would also raise the debt ceiling through next year. And the debt ceiling is really what's causing all the problems here, not necessarily the debate over shutting down the government. Republicans say they are not going to support that House-passed bill, they are not going to support lifting or suspending the debt limit. They are-- the Senate is set to vote on a procedural motion regarding that House-passed bill on Monday.

Majority Leader Schumer says he wants to put every senator on record, showing how they'll vote to fund the government or raise the debt limit. But Minority Leader Mitch McConnell is holding firm. He says he is not going to support that. He won't vote to raise the debt limit. So that would mean that he's also not voting to fund the government. Here are the Senate leaders.

MITCH MCCONNELL: We have a unified Democratic government that has decided to govern alone. They cannot put partisan ambitions ahead of basic duties. The party line authors of this reckless taxing and spending spree will be the party line owners of raising the debt limit.

CHUCK SCHUMER: You voted to spend these monies because of COVID. It was a valid reason. And now you don't want to pay for it. And you come up with some lame political sophistry as to trying to justify it, but everyone sees through that. Everyone.

JESSICA SMITH: Now, at this point, it looks like just a bill to fund the government would pass. So after the Senate votes-- and we presume rejects-- the House-passed bill, they could go ahead and move forward with a clean bill to fund the government. And then move the debt ceiling conversation on until later, put that off. Speaker Pelosi seemed to indicate yesterday that she thinks that would pass. She said she's confident that at least a short-term CR in some form will pass both chambers before September 30.

But the debt ceiling debate does not have much time either. The government could run out of money to pay its bills by mid-October, so it's really crunch time on multiple fronts here in Washington, guys.