Goldman Sachs Warns of Rising Risk of US Government Shutdown After Spending Package Rejection
Goldman Sachs has alerted that the risk of a US government shutdown has increased after the House of Representatives rejected a revised spending package and two-year debt limit suspension. The bill failed to pass in a 174-235 vote, with 38 Republicans opposing it and only two Democrats supporting it.
The package, which would have suspended the debt limit until January 30, 2027, is seen as the main reason for the bill’s failure. Goldman Sachs notes that without a debt-limit suspension, President-elect Donald Trump’s stance on the issue could complicate efforts to avoid a shutdown.
Despite the setback, the bank remains cautiously optimistic, citing Congress’s ability to pass last-minute extensions in the past. Two potential paths forward include passing a short-term spending extension to delay the debt-limit debate until a later date or negotiating a debt-limit increase tied to policy concessions with Democrats.
Even though the debt limit will be reinstated on January 2, 2025, Goldman Sachs estimates that the Treasury will have sufficient resources to meet its obligations until the third quarter of next year. The bank still believes that a protracted shutdown is unlikely to occur.