Policy Backgrounders

Government Shutdown Looms

December 20, 2024

Key Insights

Despite a deadline of December 20 to avert a government shutdown, the process has moved extremely slowly until this week. Other than securing agreement on the National Defense Authorization Act (NDAA) for Fiscal Year 2025, the lame duck session of Congress has been unable to agree on a continuing resolution (CR) to extend current levels of government funding. Having abandoned a tentative bipartisan agreement under pressure from President-Elect Trump, the House then voted down another bill which would also controversially have continued the current suspension of the debt ceiling until January 2027. All this leaves significant policy decisions for the new Congress and Administration in early 2025 regarding the FY2025 Federal Budget, the debt ceiling, and plans for a significant tax bill that would extend the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA).

• The NDAA that Congress passed with strong bipartisan support authorizes almost $895 billion for national defense and includes a significant pay increase for servicemembers.
• After bipartisan negotiations, House Speaker Mike Johnson (R-LA) unveiled an over 1,500-page CR that extended current government funding levels until mid-March and included over $100 billion in disaster relief funding and aid to farmers.
• But many Republicans and President-Elect Trump opposed the bill, which did not receive a vote on the House floor. A second bill was then defeated 174-235, with 38 Republicans voting no.
• On Friday morning, House Republicans were preparing “Plan C,” possibly separating the CR into separate votes, but a shutdown remains a possibility. The level of dissatisfaction with Speaker Johnson also raises the question whether he will be reelected in the new Congress on January 3.