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US Congress rejects Trump-backed spending plan leaving government on brink of shutdown

Previous fights over the debt ceiling have spooked financial markets as a US government default would send credit shocks around the world. (Reuters: Anna Rose Layden)

In short:

A day before a potential government shutdown, the US Congress resoundingly rejected president-elect Donald Trump's new plan to fund operations and suspend the debt ceiling.

Democrats blasted the bill and 38 Republicans voted against it too, with one representative saying he was "sickened" by the package.

What's next?

Speaker of the House Mike Johnson advised the US to "stay tuned" and said "we will come up with another solution".

A spending bill supported by Donald Trump has failed in the US House of Representatives as dozens of Republicans defied the president-elect.

This leaves the US Congress without a clear plan just hours before a potential government shutdown.

Trump had urged Congress to resolve loose ends before his January 20 inauguration, but the Republican Party's right flank refused to support the bill.

The package would have increased spending and cleared the way for a plan that would add trillions more to the federal government's $US36 trillion ($58 trillion) debt.

Republican representative Chip Roy, one of 38 Republicans who voted against the bill, said he was "absolutely sickened" by the package.

It failed by a vote of 174-235 just hours after it was assembled by Republican leaders seeking to comply with Trump's demands.

US Congress rejects Trump-backed spending plan leaving government on brink of shutdown

Speaker of the House Mike Johnson said another solution is needed. (AP Photo: J. Scott Applewhite)

Republican House Speaker Mike Johnson gave no details when asked about next steps after the failed vote.

"We will come up with another solution," he said.

A prior bipartisan deal was scuttled after Trump and the world's richest person Elon Musk came out against it on Wednesday.

Countdown to shutdown

Government funding is due to expire at midnight on Friday, local time.

If politicians fail to extend that deadline, the US government will begin a partial shutdown that would interrupt funding for everything from border enforcement to national parks and cut off pay checks for more than 2 million federal workers.

The bill that failed on Thursday largely resembled the earlier version that Mr Musk and Trump had blasted as a wasteful giveaway to Democrats.

It would have extended government funding into March and provided $100 billion in disaster relief and suspended the debt.

Republicans dropped other elements that had been included in the original package, such as a pay raise for politicians and new rules for pharmacy benefit managers.

At Trump's urging, the new version also would have suspended limits on the national debt for two years.

US Congress rejects Trump-backed spending plan leaving government on brink of shutdown

Trump and JD Vance said the Democrats asked for a shutdown. (AP: Evan Vucci)

Trump said that any one who supported a bill that doesn't take care of the "Democrat quicksand known as the debt ceiling" should be "disposed of as quickly as possible".

"They've asked for a shutdown," JD Vance said of Democrats.

"That's exactly what they're going to get."

Tax cut set up

Democrats blasted the bill as a cover for a budget-busting tax cut that would largely benefit wealthy backers such as Mr Musk.

House Democratic Leader Hakeem Jeffries questioned the bill during the floor debate in Congress.

"How dare you lecture America about fiscal responsibility," he said.

US Congress rejects Trump-backed spending plan leaving government on brink of shutdown

House Democratic Leader Hakeem Jeffries questioned the bill. (AP Photo/J. Scott Applewhite)

Even if the bill had passed the House, it would have faced long odds in the Senate, which is currently controlled by Democrats.

The White House said Democratic President Joe Biden did not support it.

Previous fights over the debt ceiling have spooked financial markets as a US government default would send credit shocks around the world.

The limit has been suspended under an agreement that technically expires on January 1.

When he returns to office, Trump aims to enact tax cuts that could reduce revenues by $8 trillion over 10 years, which would drive the debt higher without offsetting spending cuts.

He has vowed not to reduce retirement and health benefits for seniors that make up a vast chunk of the budget and are projected to grow dramatically in the years to come.

The last government shutdown took place in December 2018 and January 2019 during Trump's first White House term.

Wires

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