Volkswacht Bodensee - US government hours from shutdown, as lawmakers scrabble for solutions

The freeze of all but critical government services, set to start after midnight Saturday (0400 GMT Sunday) if lawmakers fail to reach a deal, would be the first since 2019 -- immediately delaying salaries for millions of federal employees and military personnel.

Congress has been unable to break the deadlock, largely due to a small group of hard-line Republicans in the House of Representatives pushing back against temporary funding proposals that would at least keep the lights on.

Speaker McCarthy called a vote Saturday on a fresh measure that would keep the government open for another 45 days at current spending levels, but without any aid for Ukraine -- a point of major contention for Democrats.

"I am asking Republicans and Democrats alike. Put your partisanship away," McCarthy said Saturday.

If the bill receives the significant Democratic support it would need to pass and overcome hardline Republican opposition in the House, the right-wingers have threatened to remove the speaker from his post.

"If somebody wants to remove (me) because I want to be the adult in the room, go ahead and try," McCarthy said, as he also sought to shift any blame for a shutdown on President Joe Biden.

If Biden lobbies against the latest stopgap, "then the shutdown is on him," McCarthy said.

The White House insists the real negotiation is between McCarthy and the hardliners who scuppered a similar temporary funding measure on Friday, underlying a growing sense of chaos inside the Republican party ahead of next year's presidential election.

"There are those in Congress right now who are sowing so much division, they're willing to shut down the government tonight," Biden said Saturday morning on X, formerly known as Twitter. "It's unacceptable."

The Democrat-controlled Senate had been expected to vote on its own stopgap bill later Saturday – one that does include funding for Ukraine.

- Big question on Ukraine -

While all critical government services would remain functioning, a shutdown would mean the majority of national parks, for example -- from the iconic Yosemite and Yellowstone in the west to Florida's Everglades swamp -- would be closed to public access beginning Sunday.

With student loan payments resuming in October, officials also said Friday that key activities at the Federal Student Aid office would continue for a couple of weeks.

But a prolonged shutdown could cause bigger disruptions.

A shutdown "unnecessarily" places the world's largest economy at risk, White House National Economic Council Director Lael Brainard told CNBC.

Risks that could percolate through the wider economy include air travel delays, with air traffic controllers asked to work without pay.

Treasury Secretary Janet Yellen warned a closure could also delay infrastructure improvements.

"In the immediate term, a government shutdown will only reduce GDP by 0.2 percentage points each week it lasts," said a report released Friday by the Center for Strategic and International Studies, a think tank, adding that a shutdown would "undermine the United States' overall credibility as a commercial partner."

The mess casts a growing shadow over Biden's policy of arming and funding Ukraine in its desperate war against the Russian invasion. For Republican hardliners behind the derailment of a new budget, stopping aid to Ukraine is a key goal.

Most Republican members of Congress continue to support US backing for Ukraine, but the shutdown will at minimum raise questions over the political viability of renewing the multibillion-dollar flow of assistance.

T.Germann--VB