U.S. government averts shutdown, greater crisis lies ahead

The U.S. Republican-led House of Representatives on Tuesday approved a motion to oust Speaker Kevin McCarthy in an unprecedented move amid Republican infighting, days after McCarthy relied on Democratic votes to pass a stopgap funding bill to avert a federal government shutdown.

The short-term funding bill will only keep the government operating until November 17. The House and Democratic-led Senate need to reach consensus on government spending to prevent another government shutdown.

Progress could be stalled with the vacancy of the House leader. McCarthy told reporters on Tuesday night that he will not run for the position. The House will now need to elect a new speaker, but there is no consensus yet on who might be able to lead the House. 

Conflicts unresolved

The bill passed earlier dropped steep spending cuts and border security provisions sought by conservative Republicans, and does not include additional aid for Ukraine sought by Democrats, raising concerns from both parties.

Hard-line Republican Representative Matt Gaetz and allies criticized McCarthy for relying on Democratic votes to pass temporary funding that headed off a partial government shutdown and promoted the removal of McCarthy from his position.

In a statement released shortly after the Senate vote to pass the bill, U.S. President Joe Biden said "extreme House Republicans" had sought to create a "manufactured crisis," and urged the House for a further funding deal for Ukraine to pass without delay.

Sarah Binder, professor of Political Science at George Washington University, said that the general dynamic facing in the U.S. Congress is raising partisan polarization.

"I think the bigger questions are still out there, like healthcare, immigration, climate change… Those problems are not being solved by a last-minute expedient to keep the government open," she added.

Debt crisis

The U.S. debt keeps rising as annual budget shortfalls pile up. As of this month, the total exceeded a record high $33 trillion.

The U.S. government's credit rating has been downgraded following concerns over the state of the country's finances and its debt burden.

Fitch, one of three major independent agencies that assess creditworthiness, cut the rating from the top level of AAA to AA+ in August.

"The lack of a fundamental mechanism for fiscal balance to address the U.S. debt problem is a major systemic risk to the world economy," said Wang Jinbin, deputy dean of the School of Economics at Renmin University of China.

The U.S. deficit reached $1.5 trillion in the first 11 months of fiscal year 2023, according to data from the U.S. Department of the Treasury.

"If there is not an effective fiscal policy response to try to offset those pressures ... then the likelihood of that having an increasingly negative impact on the credit profile will be there," said rating agency Moody's analyst William Foster. "And that could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren't addressed."

(With input from agencies)

(Cover: The dome of the U.S. Capitol building in Washington D.C., U.S., October 3, 2023. /CFP)

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