Parliament approves financing law to avoid government shutdown, but battle over debt ceiling looms

The Republican-led US House of Representatives passed legislation on Friday to prevent a government shutdown, rejecting President-elect Donald Trump’s calls to include billions of dollars in new funding. The bill, which now moves to the Democratic-controlled Senate, must be approved and signed into law by President Joe Biden before current funding expires at midnight Saturday.

The bill passed the House with broad bipartisan support in a 366-34 vote, extending federal funding through March 14. The bill allocates $100 billion for disaster relief and $10 billion for farmers, but excludes controversial provisions, including raising the debt ceiling, a controversial Trump issue. he urged Congress to act before he takes office on January 20.

Without action, a government shutdown could disrupt essential services from law enforcement to national parks, while stranding the salaries of millions of federal workers.

A government shutdown would also have significant economic consequences. A leading travel industry group has warned that such a scenario could cost airlines, hotels and other businesses up to $1 billion a week, with widespread disruptions expected during the holiday travel season. Authorities have warned that travelers could face long airport lines if federal operations are disrupted.

A bipartisan compromise amid political tensions

The funding package represents a bipartisan attempt to keep the government open, though it faced significant challenges earlier in the week after President-elect Trump and his adviser, billionaire Elon Musk, criticized the initial version of the bill . Both argued that it included too many unrelated provisions.

In response to the backlash, lawmakers removed several controversial items, including a measure limiting some investments in China, which Democrats said could conflict with Musk’s business interests.

“He clearly doesn’t want to answer questions about how he’s expanding operations in China or how much local technology he’s sharing,” Democratic Rep. Rosa DeLauro said during the House debate.

Despite his public criticism, Musk holds no formal role in Washington. Trump, however, encouraged Musk to lead a working group to address economic challenges, a move that has sparked debate over the billionaire’s influence in political discussions.

The debate on the debt ceiling has been postponed

One of the bill’s most notable omissions is Trump’s call to address the national debt ceiling. The House previously increased the loan limit with bipartisan support, including votes from 38 Republicans. However, the issue remains unresolved, with lawmakers choosing to delay the controversial debate until next year.

House Majority Leader Steve Scalise confirmed ongoing communication with Trump, but suggested the new funding deal would move forward regardless of the president-elect’s objections.

The White House has reportedly instructed federal agencies to prepare for a potential shutdown, underscoring the urgency of the situation. The last government shutdown, which lasted 35 days during Trump’s first term, was triggered by a dispute over funding for border security.

Economic and financial risks

While the immediate focus is on avoiding a government lockdown, the unresolved debt ceiling issue poses a significant risk to financial markets. Past standoffs over the borrowing limit have rattled global markets, as a default on US government bonds could trigger a credit crisis across the world.

The current debt ceiling suspension technically expires on January 1, but lawmakers are unlikely to address the issue before the spring, leaving little time to negotiate a long-term solution.

As Congress races to finalize the funding package, the political and economic stakes remain high. The bipartisan effort to keep the government running provides a temporary reprieve, but the looming battle over the debt ceiling ensures that fiscal tensions will dominate Washington’s agenda in the coming months.