President Biden Urges Congress to Fund Government, Warns of Impact on Credit Rating and Dollar
Washington, D.C. – In a recent social media post, President Joe Biden called on Congress to fund the government amid growing concerns that a looming shutdown could harm the U.S. credit rating and the value of the dollar. Biden reminded Americans of the budget deal he reached with congressional Republicans earlier this year, which aimed to keep government programs operating while reducing the deficit by over $1 trillion in the next decade.
“There’s a small group of extreme House Republicans who don’t want to live up to that deal,” Biden stated in a video message posted on Tuesday. “So they’re determined to shut down the government, shut it down now, and it makes no sense. I’m prepared to do my part, but the Republicans in the House of Representatives refuse.”
Biden emphasized that failure to reach a funding agreement before Saturday would result in federal workers being furloughed, agencies shutting down, and critical programs being placed in jeopardy. The Republican-led House has thus far managed to pass only one of the 12 appropriations bills needed to keep the government operating.
To avoid a shutdown, the White House has requested that Congress pass a continuing resolution, keeping the budget at current levels and allowing negotiations to continue. Leaders from both parties in the Senate have expressed support for this plan, but extremist factions in the House have rejected the idea.
Economists from Moody’s and Wells Fargo have warned that a government shutdown would negatively impact the U.S. economy. Moody’s, the sole major credit rating agency to still assign a top AAA rating to U.S. sovereign credit, stated on Monday that a shutdown could affect this rating. Fitch, another credit agency, had previously downgraded the U.S. long-term foreign-currency issuer default rating.
“A shutdown would be credit negative for the U.S. sovereign,” noted analysts from Moody’s. “While government debt service payments would not be impacted and a short-lived shutdown would unlikely disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other AAA-rated sovereigns that we have highlighted in recent years.”
Wells Fargo analysts added that a shutdown could result in a decline of approximately 1% to 1.5% in the U.S. dollar index over the next few weeks. They acknowledged that the possibility of a shutdown starting on October 1st is currently considered a coin flip, but cautioned that even a short-lived shutdown could have a modest and temporary negative impact on the U.S. dollar.
As the deadline approaches, President Biden and lawmakers will need to work swiftly to secure funding for the government and avert potential economic consequences. The implications of a government shutdown on the U.S. credit rating and the dollar remain a significant concern, further emphasizing the importance of reaching a resolution in a timely manner.