(Bloomberg) — The record U.S. government shutdown is nearing an end after a group of moderate Democratic senators agreed to support a deal to reopen the government and fund some departments and agencies for the next year, people familiar with the negotiations said.
Under the agreement, Congress would approve full funding for the departments of Agriculture, Veterans Affairs and Congress itself, in addition to funding other agencies through January 30. The bill would guarantee pay for public employees on unpaid leave, resume withheld federal payments to states and municipalities, and reinstate agency employees who were laid off during the shutdown.
The House will hold a procedural vote on Sunday. If this vote is successful, the Senate will need the consent of all its members to end the shutdown quickly. Any senator can cause delays and multi-day votes. The House of Representatives would then need to pass the bill for the government to reopen, and House Speaker Mike Johnson has said he will give lawmakers two days’ notice to return.
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“It looks like we’re getting closer and closer to the end of the shutdown,” President Donald Trump told reporters Sunday night upon returning to the White House.
Approval in the Chamber is not guaranteed. Democratic leaders have spoken out against any deal that does not include extending expiring Obamacare subsidies, which this bill does not do. Conservative Republican members want a bill that would fund the entire government by September 30 of next year.
The face-saving deal also falls far short of the goals of House and Senate Democratic leaders, who called for an extension of expiring subsidies for Obamacare health plans and the repeal of Medicaid cuts passed by Republicans earlier this year.
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“We will fight the Republican bill in the House of Representatives,” House Democratic leader Hakeem Jeffries said in a statement Sunday night.
Instead, the group of Democratic senators accepted the promise of a Senate vote later this year on extending Affordable Care Act subsidies — a promise made weeks ago by Senate Majority Leader John Thune.
The imminent resolution of the 40-day shutdown mirrors previous confrontations, in which the party trying to use the government shutdown to achieve political victories ends up unsuccessful. Trump failed to secure border wall funding during the 2018-2019 shutdown, and Republicans failed to repeal Obamacare during the 2013 shutdown.
This year, Democrats voted 14 times to block an unconditionally stopgap measure passed by the House on Sept. 19 that would have kept departments and agencies operating until Nov. 21. On Wednesday, the shutdown became the longest in US history, surpassing the 35 days of closures recorded in 2018 and 2019, during the first Trump administration.
On Friday, Senate Democratic leader Chuck Schumer said Democrats would allow the government to reopen in exchange for a one-year extension of expiring Obamacare tax credits.
That offer was promptly rejected by Republicans, many of whom demand the complete replacement of Obamacare with a yet-to-be-presented Republican alternative.
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Republicans decided to obstruct Democrats’ demands for $1.5 trillion in new spending by keeping the House of Representatives out of session since September 19. The White House increased the pressure by firing civil servants en masse, threatening not to pay more than 600,000 furloughed federal workers and trying to disobey court orders to pay benefits from the food assistance program (food stamps).
As the busy Thanksgiving travel season approaches, Transportation Secretary Sean Duffy has ordered airlines to cancel flights, causing major inconvenience to travelers. On Sunday, he said the situation would only get worse during the holiday season.
The tactics largely worked to get enough Democratic senators to give in to the pressure. Republicans, despite controlling both houses of Congress, needed eight Democrats to agree on a stopgap spending bill to end debate in the Senate.
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Negotiations between a bipartisan group of senators intensified after Democrats’ strong victories in midterm elections in New York City, New Jersey, Virginia, California and other states. Republicans said Democrats appeared concerned that backing off their demands for a government shutdown before the vote could reduce voter turnout.
It’s unclear whether Congress will reach an agreement on extending Obamacare subsidies before they expire at the end of December. House Republican leaders say they oppose the extension and have instead laid out a series of conservative priorities that include expanding short-term health plans to compete with plans offered by Obamacare and imposing restrictions related to abortion.
Republican senators said any extension would have to include significant changes, such as income limits on who can receive subsidies and a requirement that recipients pay at least part of the premium. Some, however, demand a complete overhaul of the Affordable Care Act before agreeing to anything.
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The fallout from the government shutdown is costing the American economy about $15 billion a week. And the Congressional Budget Office estimates the shutdown will reduce the quarterly annualized growth rate of real GDP by 1.5 percentage points through mid-November. Consumer confidence hit a three-year low on Friday amid growing anxiety about the shutdown, prices and the job market.
This has led to the suspension of most government economic data, leaving the Federal Reserve acting blindly as it deals with persistently high inflation and rising unemployment.
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