Spending Clash Looms As Congress Returns This Week

Lawmakers return to Washington this week for a three-week session focused on passing the 12 annual spending bills before a government shutdown on September 30.

• The deadline is three months away but timing is tight as, after Labor Day, Congress is only in session for four more weeks before Sept 30.
• As with the debt ceiling showdown, markets will assume that Congress will get the job done but stakes are higher than usual as the debt ceiling bill negotiated by President Biden and House Speaker Kevin McCarthy (R-CA) includes a mechanism to impose an automatic 1% budget cut across government agencies at years-end should Congress fail to pass spending bills.
• Conservatives in the House have marked up their spending bills at lower levels than agreed in the debt ceiling deal, a move which the Senate has rejected.
• Senate Majority Leader Chuck Schumer (D-NY) said in aletter to colleagues that the upper chamber will prioritise appropriations but conceded that, “Passing these bills will not be easy," and depend on GOP cooperation, a challenging prospect considering the rigid fiscal position of House conservatives.