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Biden gets what he wants, dodges US government shutdown

Biden gets what he wants, dodges US government shutdown

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TL;DR

  • The U.S. Senate and House passed a short-term bill to prevent a government shutdown with hours to spare.
  • The bill requires President Biden’s signature to become law, funding parts of the government until mid-March.
  • Biden praised the bill as a temporary fix but not a long-term solution.

Joe Biden is about to sign a law that just scraped through both houses of Congress, stopping the U.S. government from shutting down partially. With barely a day and a half to spare, this bill got the thumbs up from both the Senate, where Democrats have the majority, and the House, run by Republicans. It’s a band-aid solution, really, setting up two deadlines in March to keep parts of the government funded.

Biden himself said this move was a win because it dodged a shutdown that could have hurt a lot of people. But he was quick to add it’s just a quick fix, not something that solves the bigger problem of how the government spends its money.

The House’s vote showed a rare moment of both parties coming together – 320 to 99 in favor of this temporary solution. This was after Biden, and the big guns in Congress, Mike Johnson for the Republicans and Chuck Schumer for the Democrats, had already agreed on how much money the government can spend this year.

But Johnson, the guy with the speaker’s gavel since late October, had to lean on Democrats to get this through. That move might ruffle some feathers among the more conservative Republicans, especially as he’s trying to get more spending bills and aid for Ukraine sorted out in the coming weeks.

Speaking of Ukraine, a few Republicans are betting Johnson will push for aid to Ukraine and other allies soon. They’re thinking about ways to fund this without just handing over cash, like maybe using a loan program or even seizing Russian assets to pay for it.

Biden’s pushing for this too, saying it’s crucial for national security. And there are other ideas floating around, like bringing back some immigration policies and tweaking the aid given to allies.

But even with this stopgap bill passed, there’s still a lot of arguing to come over how much money goes where. Some Republicans, pushed by the more extreme among them, wanted to use the threat of a shutdown to force Democrats to cut spending on certain things and tighten up immigration.

Chip Roy, one of those Republicans, thinks they can convince Johnson to go for a new spending plan that trims the fat but keeps the money flowing for defense and veterans.

Patrick McHenry, another Republican, doesn’t think Johnson’s in any danger over this. He believes the party’s finally facing reality – that this was the only way forward after months of deadlock.

All this back and forth isn’t great for the country’s credit rating, especially with the national debt over $34 trillion now.

2024 was supposed to be the year things got easier for everyone, with lower inflation and the Federal Reserve cutting interest rates. But those hopes are fading fast. Jerome Powell, the Fed’s boss, pretty much said don’t hold your breath for rate cuts anytime soon.

Economists, like Torsten Slok from Apollo Global Management, are saying the same. With the economy still going strong and inflation not budging, it looks like high interest rates are here to stay for a while.

Even Tom Barkin from the Richmond Federal Reserve is saying it all depends on inflation. If it doesn’t go down, neither will interest rates.

This is tough for people already struggling with high prices for things like rent, food, and gas. And while some were hoping for a break on interest rates, it seems those hopes might be dashed.

Investors were initially thinking the Fed might start cutting rates this year, but now it’s looking less likely. The economy’s doing better than expected, which is good, but it also means inflation might stick around.

The Fed’s trying to get inflation under control, but it’s a tough fight. Everything from small business prices to the cost of manufacturing and services is going up.

So, while some investors are still holding out hope for rate cuts by the middle of the year, the Fed’s got its work cut out trying to balance everything.

Next week, all eyes will be on Powell again as he talks to Congress. Everyone’s looking for any hint of what the Fed might do about interest rates. But for now, it’s a waiting game, with the government just avoiding a shutdown and the economy still on everyone’s mind.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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