Congress flirts with US shutdown after bill fails

Republican leaders were scrambling on Thursday to find the votes to keep the US government funded after the embarrassing defeat of a spending bill threw into question Congress' ability to pass basic laws. The House of Representatives and Senate must pass legislation to keep the government fully functioning beyond October 1 while lawmakers continue to debate a full budget.
Democrats and Tea Party-aligned Republicans united to defeat the spending bill on Wednesday, albeit for opposite reasons. House Speaker John Boehner, the top Republican in Congress, said the dispute would not disrupt government operations. "We'll work our way through this. I've always been confident that we'll be able to come to an agreement and we will," Boehner said at a news conference.
The Republican leadership has vowed to lower the temperature on Capitol Hill after fierce budget battles with Democrats pushed the US government to the brink of a shutdown in April and the edge of default in August. The months of turmoil on Capitol Hill have spooked consumers, rattled investors and led to a cut in the country's top-notch AAA credit rating.
The unexpected failure of the spending bill in the House on Wednesday showed that Congress still has trouble passing normally routine legislation. World stock markets tumbled as a grim outlook from the Federal Reserve renewed fears of a global recession. The turmoil in Washington could add to the uncertainty among nervous investors, traders said. "There is such a lack of belief that we can expect any kind of help to come out of our political leaders," said Mitch Stapley, chief fixed-income trader at Fifth Third Asset Management in Grand Rapids, Michigan.
The bill in question would provide billions of dollars in relief to communities that have been ravaged by tornadoes, floods and other disasters in one of the most extreme years for weather in US history. It also would keep the government running past the end of the month, buying some time for lawmakers to complete the appropriations bills that fund the government for the 2012 fiscal year that starts in little over a week.
Lawmakers had hoped to leave town on Thursday night for a weeklong break but leaders warned that weekend votes may be necessary. Analysts said a government shutdown is unlikely at this point as Congress still has time to resolve its differences. Every spending debate this year has gone down to the wire. "We'll stick with our call that there's only a 25 percent chance of a shutdown, but it's not out of the question after yesterday's posturing," Potomac Research Group analyst Greg Valliere wrote in a research note.
Democrats have objected to a proposed cut to an electric-vehicle program to offset disaster relief funding, while conservative Republicans wanted to cut government spending by billions of dollars more. About 60 Tea Party Republicans have defied Boehner on other high-profile budget bills this year, but he has previously been able to rely on Democratic votes to win a majority.