US edges closer to 'dangerous' government shutdown

The odds of a US government shutdown ramped up on Friday after House Republicans' effort to pass short-term funding was curtailed by members within their own party.

Twenty-one Republicans joined all Democrats to defeat the latest measure, which signifies another defeat for House Speaker Kevin McCarthy.

The plan would have extended funding through November, but that would require spending cuts of 30 per cent in most areas. Even if it had passed the House, it stood no chance of being approved in the Senate - let alone the White House.

"It's not the end yet, I've got other ideas," Mr McCarthy told reporters following the defeat of the bill he had backed.

He declined to say what those ideas were.

“They are breaking their word, abandoning the bipartisan deal that two thirds of them voted for just four months ago, and marching our country toward an Extreme Republican Shutdown that will damage our economy and national security,” White House Press Secretary Karine Jean-Pierre said in a statement.

Should a deal not be struck by 12.01am on Sunday, thousands of federal workers will be without pay and federal agencies will be reduced to a bare minimum of staff.

Applications for visas and applications could be snarled by the disruptions, and national parks would also be closed.

A shutdown would also pose a risk to the US economy as signs show that inflation continues to moderate.

“The failure of House Republicans to act responsibly would hurt American families and cause economic headwinds that could undermine the progress we’re making,” Treasury Secretary Janet Yellen said in prepared remarks in Atlanta.

Ms Yellen said it was crucial for House Republicans move quickly to avoid a “dangerous and unnecessary” shutdown.

Mr McCarthy and President Joe Biden agreed to a deal to fund the government with discretionary spending at $1.59 trillion in the 2024 fiscal year.

But Mr McCarthy walked this back after a small group of Republicans demanded further spending cuts and threatened to remove him as speaker.

The same group of Republicans is also opposed to any short-term funding, including the one unveiled by Mr McCarthy earlier on Friday.

The shutdown would be the fourth in a decade and just four months after a similar standoff brought the federal government within days of defaulting on its $31 trillion debt.