The looming government shutdown may affect the US economy and potentially the nation’s credit ratings, according to credit rating agency Moody’s Monday forecast.
However, it added that if the shutdown ends quickly, its effects would likely be short-lived.
“A shutdown would be credit negative for the US sovereign,” Moody’s said, which currently lists a "Triple-A" rating for the US government. “In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability."
Lower government spending would be the largest factor affecting the economy in the short-term, Moody’s said, but added that “a prolonged shutdown would likely be disruptive to both the US economy and financial markets.”
That could hurt the US government’s credit rating with the agency, which was already downgraded by the Fitch credit rating agency during the debt ceiling debate that occurred earlier this year.
A small but influential group of Republicans in both the US House and Senate have been promising to block any spending bill unless their demands are met. Among the most visible demands is that any additional funding to Ukraine be removed from the bills.
Multiple Republicans in the House have said they will not support any bills that provide further funding to Kiev, among the most vocal are Reps. Matt Gaetz (R-FL) and Marjorie Taylor-Greene (R-GA).
Meanwhile, in the Democrat-controlled Senate, several Republican lawmakers, including Sens. Josh Hawley (R-MO) and Rand Paul (R-KY) have been vocal about their opposition to continued funding for Ukraine and have promised to block any fast-tracking of bills that include additional aid.
“[T]hey are trying to hold the federal government hostage by inserting the $24 billion aid request in a continuing resolution: to force our hand. Either we fund an endless war in Ukraine or the uniparty will shut down the federal government and make the American people suffer,” Paul said in a statement.
Hawley, though he has consistently said he will not vote for more funding of Ukraine, has expressed opposition to a government shutdown.
“I'm just not a shutdown guy,” Hawley told US media. “I don't think we ought to be using that as leverage. ... I'm probably in a different place on this than a lot of my colleagues.”
Sens. J.D. Vance (R-VA) and Roger Marshall (R-KS) have also expressed a willingness to shutdown the government and were two of 29 lawmakers, including Paul, who signed a letter demanding more transparency about how much is being spent in Ukraine and the goals of the Biden administration.
"[The Biden administration's request implies] an open-ended commitment to supporting the war in Ukraine of an indeterminate nature, based on a strategy that is unclear, to achieve a goal yet to be articulated to the public or the Congress," the letter read. It added that until their concerns are met the lawmakers will "oppose" additional expenditures to support the Kiev regime.
Other demands from Republicans include increased border controls and other spending cuts not related to Kiev, including the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which is also at risk from the potential shutdown.
More than 7 million Americans depend on WIC benefits, according to US Agriculture Secretary Tom Vilsack. Another food program Supplemental Nutrition Assistance Program (SNAP), sometimes called “food-stamps,” would continue as normal in October but could be affected if the shutdown lasts longer.
In contrast, the US Department of Defense announced last week that its activities related to Operation Atlantic Resolve, the name given to the Pentagon’s actions in propping up the Kiev regime, will continue with its already appropriated funding even if the shutdown occurs.
The Pentagon has that ability because it can classify expenditures as vital for national defense, whereas the WIC program is not considered “mandatory spending” by the US government.
US military troops would also be at risk of losing their paychecks, while still being required to serve, during the looming shutdown. Their pay is also not considered "mandatory spending."
Further complicating the matter for House Speaker Kevin McCarthy (R-CA), who is heading the passage of the spending bills in the House, is former US President and current odds-on-favorite to win the 2024 GOP ticket Donald Trump, who has come out against compromising on the spending bills.
“The Republicans lost big on Debt Ceiling [debate earlier this year], got NOTHING, and now are worried that they will be BLAMED for the Budget Shutdown. Wrong!!! Whoever is President will be blamed,” Trump wrote in a post on Truth Social, adding: “UNLESS YOU GET EVERYTHING, SHUT IT DOWN! Close the Border, stop the Weaponization of ‘Justice,’ and End Election Interference.”
Trump also called Senate Minority Leader Mitch McConnell “the weakest, dumbest, and most conflicted 'Leader' in US Senate history,” in the post.
While Trump did not mention Ukraine specifically in his post, he has previously pledged to end the conflict “within 24 hours” if he becomes president again.