There is a New Development in the Government Shutdown Crisis in the US

The US Senate has taken a decisive step toward passing a Republican-backed spending bill, effectively ending the threat of a US government shutdown.

But the move has sparked fierce divisions within the Democratic Party over how to counter President Donald Trump's efforts to expand executive power.

The Senate approved the funding package by a 62-38 vote, putting congressional Democrats in a position to give up what they see as their strongest leverage to curb Trump and billionaire entrepreneur Elon Musk’s aggressive cost-cutting measures, which include drastically reducing the federal workforce and abolishing entire government agencies. With legislative options dwindling, opponents are expected to shift their efforts to legal challenges in the courts.

Senate Majority Leader Chuck Schumer played a critical role in the decision-making process. With less than 30 hours left before the shutdown, the veteran lawmaker announced he would drop his party’s hold on the spending bill, prioritizing the continuation of government services over political wrangling.

Schumer’s reversal marks a significant victory for Trump and House Speaker Mike Johnson, paving the way for the spending measure’s final approval. The bill ensures Musk’s newly created Office of Government Efficiency retains the authority to make sweeping budget cuts while securing government funding through the fiscal year-end on Sept. 30.

The political impasse coincides with turmoil in financial markets as Trump’s tariff policies have stoked widespread investor uncertainty. By Thursday, the SP 500 had entered a correction, losing more than 10% in three weeks. But news that the Senate was making progress on the spending bill sparked a 2% recovery on Friday.

Nine Democrats and one independent joined forces with nearly all Senate Republicans to pass the bill with a simple majority later in the day, passing the 60-vote threshold.

*This is not investment advice.