House Passes Bill to Avoid Shutdown, Ditching Trump Demand
With just hours to go before a midnight shutdown deadline, the House on Friday evening overwhelmingly passed a stopgap plan to keep federal agencies open until the middle of March, provide disaster relief for hurricane victims and deliver financial aid to farmers.
The vote was 366-34, with one Democrat voting “present.” More Democrats supported the bill than Republicans, 196 to 170, while all 34 “no” votes came from Republicans.
As has happened before in the 118th Congress, Democrats helped carry fractious Republicans across the finish line. The Senate is expected to pass the legislation late tonight.
The approved plan came together after House Speaker Mike Johnson and his Republican conference again scrambled on Friday to find consensus on a way to keep federal agencies open despite deep divisions within their ranks and pressure from President-elect Donald Trump and his billionaire buddy, Elon Musk.
Trump and Musk had torpedoed a bipartisan Plan A earlier in the week. A slimmed-down Plan B was rejected in a bipartisan vote Thursday night. A potential Plan C — voting on three separate bills to fund the government, provide disaster relief and aid to farmers — faced significant hurdles in the Republican conference.
So House Republicans reportedly opted in a closed-door meeting to pursue Plan D, one vote on one package, under a process that required a two-thirds majority, meaning that Johnson was relying on significant Democratic help.
The package that passed this evening runs 118 pages, similar to the plan that failed yesterday and much shorter than the bipartisan 1,547-page bill that Trump derailed. It would extend federal funding through March 14, extend the current farm bill for a year, provide $100 billion in disaster aid and deliver a reported $30 billion financial assistance for farmers.
Critically, though, the latest plan does not extend or eliminate the debt limit, as Trump had demanded ahead of his return to office. Democrats said that demand was meant to clear a path for a costly round of renewed tax cuts in 2025. In his intraparty discussions, Johnson reportedly promised his conference that Republicans would lift the debt limit by $1.5 trillion as part of their first budget reconciliation bill — and cut $2.5 trillion in mandatory spending. By law, Social Security can’t be touched in a reconciliation bill, but other entitlement programs including Medicare and Medicaid could be.
Jeffries and House Democratic leaders did not whip their members to vote for or against the plan after coming out against Thursday’s bill. The White House announced that President Joe Biden, who has stayed out of the public debate over the stopgap funding plan, supports the latest bill, as it would avoid the disruption and economic pain of a shutdown. The Biden administration on Friday had begun preparations for a shutdown, notifying federal workers that could face furloughs.
“While it does not include everything we sought, it includes disaster relief that the President requested for the communities recovering from the storm, eliminates the accelerated pathway to a tax cut for billionaires, and would ensure that the government can continue to operate at full capacity,” White House Press Secretary Karine Jean-Pierre said in a statement.
Musk, on the other hand, continued to apply pressure, though he also said that Johnson had done “a good job here, given the circumstances” and noted that the latest bill cut much of what was in the bipartisan deal. “It went from a bill that weighed pounds to a bill that weighed ounces,” Musk posted on social media.
Trump earlier had sought to place any blame for a shutdown on Democrats. He posted: “If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under “TRUMP.” This is a Biden problem to solve, but if Republicans can help solve it, they will!”
Why it matters: The chaotic process delivered a loss for Trump, who inserted himself — and massive amounts of uncertainty — into the debate but saw his main demand rebuffed by fiscal hardliners. Those conservatives may have helped block an increase of the debt limit, but they were not able to block $130 billion in emergency spending without offsets. Even so, the right-wing resistance raises questions about Trump’s sway as he enters a second term, and the frustrations that came to the fore this week leave Johnson under a cloud as he heads for a January 3 vote to pick the speaker.
The bottom line: Congress looks set to avoid a shutdown, and lawmakers will get to head home for the holidays, but nobody really won here. Trump, Johnson, Musk and Republicans all took some lumps, while Democrats watched a bipartisan deal with many of their priorities get blown up.
Biden Administration Scraps Student Loan Forgiveness Plan
The Biden administration indicated Friday that it is withdrawing its proposed plan to provide student loan forgiveness for upwards of 25 million borrowers. Education Secretary Miguel Cardona said that given the limited time and resources available in the final weeks of the administration, and the legal challenges facing the proposal, the department would focus instead on “helping at-risk borrowers return to repayment successfully.”
President Joe Biden had big plans for student loan debt forgiveness when he entered the White House, but his initial effort to provide roughly $400 billion in debt forgiveness to as many as 45 million people was rejected by the Supreme Court in 2023. A second, revised effort has been hung up in the courts by legal challenges from Republican officials in several states, and the incoming Trump administration was expected to bring it swiftly to an end.
Still, the administration has pushed ahead by providing debt relief to specific groups of people, including public service workers and those who were involved in fraudulent for-profit schools.
On Friday, the Biden administration announced that it was forgiving student loans for another 54,900 borrowers who work in public service, at a cost of $4.28 billion. “This relief—which is the result of significant fixes that the Administration has made to the Public Service Loan Forgiveness (PSLF) Program—brings the total loan forgiveness by the Administration to approximately $180 billion for nearly five million Americans, including $78 billion for 1,062,870 borrowers through PSLF,” the Department of Education said in a press release.
Republican lawmakers, who have fought the student loan relief effort every step of the way, applauded the demise of the Biden plan. “The Biden-Harris administration’s student loan schemes were always a lie,” Sen. Bill Cassidy, a Republican from Louisiana, said in a statement. “With today’s latest withdrawal, they are admitting these schemes were nothing more than a dishonest attempt to buy votes by transferring debt onto taxpayers who never went to college or worked to pay off their loans.”
Prices Barely Rise in November
The personal consumption expenditures price index, a measure of inflation closely watched by the Federal Reserve, rose just 0.1% on a monthly basis in November, the Department of Commerce reported Friday. The monthly reading dropped from the 0.2% rate recorded in October and September.
The annual rate came in at 2.4%, higher than the Fed’s target of 2% but a tenth of a point below expectations. The core PCE rate, which excludes volatile food and fuel prices, was a bit higher at 2.8% on an annual basis, unchanged from October but also below expectations. On a monthly basis, the core rate was 0.1%, also below expectations.
“Sticky inflation appeared to be a little less stuck this morning,” Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley, told CNBC. “The Fed’s preferred inflation gauge came in lower than expected, which may take some of the sting out of the market’s disappointment with the Fed’s interest rate announcement on Wednesday.”
Fiscal News Roundup
- House Passes Government Spending Package After Trump, Musk Fueled Chaos – Politico
- GOP Spending Hawks Defy Trump on the Debt Limit, Previewing More Clashes – New York Times
- Trump’s Wake-Up Call: Republicans Are Willing to Defy Him – Politico
- Meet the 38 Republicans Who Defied Trump on the Spending and Debt Deal – New York Times
- Johnson Says Funding Bill Was "Necessary Step" Until GOP Takes Full Control of Congress – CNN
- McConnell Calls Out Holdouts on Government Funding, Warns of “Harmful” Shutdown – Politico
- Republicans Are Plotting $2.5 Trillion in Spending Cuts. Yes, Including Entitlements – Notus
- Musk Helped Kill a Congressional Spending Bill. But Much of What He Spread Was Misinformation – Associated Press
- White House Starts Scrapping Pending Regulations, Including Student Debt Cancellation – Associated Press
- Fed’s Favored Inflation Gauge Cools to Slowest Pace Since May—Bloomberg
- Employers Press Congress to Cement Health Price Transparency Before Trump’s Return – KFF Health News
- The Bald Eagle Will Soon Become the National Bird Thanks to One Man – Washington Post
Views and Analysis
- Trump and Musk Have ‘Art of the Deal’-ed Themselves – Catherine Rampell, Washington Post
- Democrats Warn of ‘President Elon’ – and Republicans Welcome Him – David Weigel, Semafor
- The Budget Fight and Trump’s Nihilistic Style – Katherine Miller, New York Times
- Trump's Coming House Headaches – Stef W. Kight, Axios
- Elon Musk Declares Himself President, Shuts Down Government – Ryan Cooper, American Prospect
- Musk Pauses Torment of GOP to Praise German Extremists – Nia Prater, New York
- The Wrath of DOGE Is Coming for Federal Workers – Kathryn Anne Edwards, Bloomberg
- DOGE Can’t Do It All. Here’s What It Can Do – Victoria Guida, Politico
- The Fate of This Federal Program Helps Explain Trump’s Win – Peter Coy, New York Times
- Trump Was Poised to Inherit a Strong Economy. Then Things Got Rocky and He Added to the Uncertainty – Josh Boak, Associated Press
- The Economy Returns to a New (Old) Normal, Leaving Trump Fewer Options – Washington Post Editorial Board
- Seven Things We Learned From the 2024 Presidential Election – Amy Walter, Cook Political Report
- He Was Surgeon General — and He’s Got Thoughts About the Reaction to the United Healthcare Killing – Joanne Kenen, Politico