Trump warns of September shutdown after House passes 220-205 funding bill

President Donald Trump predicted a federal government shutdown in September as Republicans and Democrats clash over spending, hours after the House passed a stopgap funding bill on a 220-205 vote to keep agencies open through Dec. 4.

"Then they alone are going to own the chaos that ensues if the government shuts down after September 30," House Speaker Mike Johnson, a Louisiana Republican, said, daring Democrats to vote against the measure.

The bill now heads to the Senate, where Majority Leader John Thune said Appropriations Chair Susan Collins is working with Democrats to "find a path forward." Spending bills require 60 votes to advance, meaning at least seven Democrats would need to support the measure in the 100-member chamber. The House is scheduled to be in session for only 16 more days before the Sept. 30 funding deadline.

A shutdown would disrupt government services, delay economic data releases and inject fresh uncertainty into financial markets weeks before the Nov. 4 midterm elections. The last shutdown, which stretched 35 days from December 2018 into January 2019, cost the economy an estimated $11 billion, according to the Congressional Budget Office, and reduced gross domestic product by 0.2 percentage points in the first quarter of 2019.

The stopgap measure, known as a continuing resolution, generally funds agencies at current spending levels. Democrats overwhelmingly opposed it, with Rep. Rosa DeLauro, the ranking Democrat on the House Appropriations Committee, saying the legislation was dropped on her party without bipartisan negotiations. She said Democrats would have pushed for provisions to reverse a proposed federal rule allowing agency heads to block or terminate grants that don't match the president's priorities.

The early passage — more than two months before the Sept. 30 deadline — is highly unusual. Lawmakers normally act days or even hours before funding expires. GOP leadership is laying the groundwork to spend most of the remaining session days on another priority: a long-shot, party-line bill that spends $95 billion to boost defense, aid farmers and enact portions of Trump's election overhaul legislation.

Shutdown Risk Meets Midterm Politics

The proximity to the Nov. 4 midterm elections amplifies the stakes. Republicans control the House by a narrow margin, and a shutdown could sour voters on the party in power. Rep. Austin Scott, a Georgia Republican, said a shutdown "probably works to the advantage of Democrats politically."

Trump, speaking at Wheeler High School in Marietta, Georgia, also renewed his call to eliminate the Senate filibuster, arguing Democrats would do so if given the chance. "The Democrats are going to terminate the filibuster as soon as they have the chance," he told the crowd. Eliminating the 60-vote threshold would make it easier to pass spending bills but would also remove a key procedural check in the chamber.

Historical Precedent Weighs on Markets

The 2018-2019 shutdown, the longest in US history, dragged on for 35 days as Trump refused to sign funding bills that didn't include money for a border wall. During that period, the S&P 500 fell about 7 percent before recovering after the shutdown ended. The CBO estimated the shutdown delayed about $18 billion in federal spending and reduced GDP by $3 billion in the first quarter of 2019.

A similar disruption this year could delay the release of key economic data from the Bureau of Labor Statistics and the Commerce Department, clouding the economic picture for investors and policymakers. The uncertainty could also weigh on consumer and business confidence, with the University of Michigan's consumer sentiment index already under pressure from elevated living costs.

The path forward in the Senate remains uncertain. Collins is working on a bipartisan alternative, but with the House already in recess after this week, lawmakers have limited time to reach a deal before the Sept. 30 deadline. If no agreement is reached, the government would face its first shutdown since the 35-day closure of 2018-2019 — this time with control of Congress hanging in the balance.

This article is for informational purposes only and does not constitute investment advice.