McCarthy avoids US government shutdown

This is an audio transcript of the FT News Briefing podcast episode: ‘McCarthy avoids US government shutdown’

Joanna Kao
Good morning from the Financial Times. Today is Monday, October 2nd, and this is your FT News Briefing.

[CLIP OF US HOUSE PLENARY SESSION]

Joanna Kao
The US government is open for business, at least for now. Slovakia has voted for new leadership and it’s a blow for Ukraine. Plus, Brazil is walking a fine line in its environmental policy. I’m Joanna Kao, in for Marc Filippino. And here’s the news you need to start your day.

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Over the weekend, US lawmakers voted to fund the government for at least the next few weeks. The last-minute agreement avoids a costly government shutdown.

Kevin McCarthy
This is fabulous. I thought it would be hard. Now I found there’s a whole new day here.

Joanna Kao
House Speaker Kevin McCarthy got the deal done just hours before a midnight deadline on Saturday.

Kevin McCarthy
We can’t keep doing the same thing to solve the problem. We have to think differently. And we can’t do it with just one party. We are all in this together.

Joanna Kao
But it might be just a temporary win for the speaker. Back with us to explain is the FT’s deputy Washington bureau chief, Lauren Fedor. Hi, Lauren.

Lauren Fedor
Hi, Joanna.

Joanna Kao
So they did it. Congress avoided a shutdown over the weekend. Are you surprised?

Lauren Fedor
Honestly, yes. I am surprised. Friday night, this shutdown looked all but inevitable. But by Saturday afternoon, we saw House Republicans put forward a new proposal, one that would keep government funding at current levels. And the Democrats rallied around it and it went through the House, went through the Senate, was signed by president Joe Biden all before that crucial midnight deadline. Pretty dramatic turn of events.

Joanna Kao
So what’s in this stop-gap measure and what’s not in it?

Lauren Fedor
Mmm. So, you know, House Republicans have been pushing for really steep budget cuts. Ultimately, McCarthy abandoned that and said that he would keep funding at current levels, at least for this temporary 45-day period. The key thing, though, that was absent from this package was additional funding for Ukraine. In this case, there was a critical vocal minority of House Republicans who would have held up a deal had the Ukraine aid been attached and Congress signed off on the compromise as is.

Joanna Kao
Yeah, and that split within the Republicans in the House, it was one of the major issues going into the weekend. So who are some of the most vocal rebels in the group and how are they thinking about moving forward?

Lauren Fedor
Yeah, so it’s pretty remarkable in the sense that 90 Republicans rebelled in this case. They voted against their speaker, Kevin McCarthy, and against what he put forward. The kind of most prominent name I would say is Matt Gaetz. He’s a congressman from Florida, and he’s been a thorn in the side of Kevin McCarthy ever since McCarthy tried to become speaker in the first place back in January of this year. Matt Gaetz now has really upped the ante. On Sunday, he appeared on one of the talk shows here in the US saying that he intended to bring a motion to vacate, which is a jargon-y congressional term for a vote of no confidence in Kevin McCarthy and his speakership.

 [CLIP OF MATT GAETZ INTERVIEW]

Lauren Fedor
So in the coming days, I think we can expect that vote. And, you know, McCarthy knows this is coming on Saturday night after the compromise deal was passed. He told reporters: I’m ready for this challenge. But, you know, it’s uncertain whether or not he’ll actually have the votes to hold on to the speaker’s gavel or whether or not he’ll be out and we’ll have a new speaker of the House in short order.

Joanna Kao
And what about funding the government? Will we be right back here in just a few weeks?

Lauren Fedor
It’s certainly possible. Right? You know, this is a stop-gap measure. It’s a temporary fix of a much bigger problem. The deadline is now mid-November to avoid a shutdown. It’s not outside the realm of possibility that will happen once again.

Joanna Kao
That was Lauren Fedor, the FT’s deputy bureau chief in Washington. Thanks, Lauren.

Lauren Fedor
Thanks, Joanna.

[MUSIC PLAYING]

Joanna Kao
Ukraine has more to worry about after this weekend. Not only did the temporary US budget deal lack funding for its war with Russia, but alarm bells are also ringing over Slovakia. The country held elections on Saturday and the winner is pretty anti-Ukraine.

Robert Fico is a former prime minister and leader of the populist Smer party. He has opposed sanctions on Russia and also claims that Nato’s support for Ukraine undermines national sovereignty. Fico’s win could make it harder for the EU to remain united in supporting Ukraine.

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Brazil’s environmental policy is in kind of a weird spot. President Luiz Inácio Lula da Silva, Lula, has been working to end deforestation in the Amazon by the end of the decade. But at the same time, his energy minister is pushing for more oil drilling at the edge of the rainforest. Here to talk more about this is the FT’s Latin America editor, Michael Scott. Hi, Michael.

Michael Stott
Hi, Joanna.

Joanna Kao
So what can you tell us about this exploratory drilling project?

Michael Stott
So the state-controlled oil company Petrobras has applied for permission to do some exploratory drilling off the coast of the Amazon. And that’s been rejected by the environmental regulator Ibama. Petrobras has appealed and we’re waiting for a final decision. Brazil hopes that if the decision is positive and the drilling goes ahead, this will open up a huge area to offshore oil exploration and potentially some very large additional oil reserves.

Joanna Kao
And how big of a deal is this project for Brazil?

Michael Stott
So Brazil’s a top ten oil producer already. I think a lot of people aren’t aware of that. If they can open up this area off the Amazon, they could become the world’s number four. That’s something the government is very keen on. Their argument is that they need the revenues from oil and gas to fund social programs, to improve health and education, to fight poverty in Brazil. And they don’t see why they should forego that revenue, because, as they put it, the world will need oil and gas for the next 20 years anyway. So why shouldn’t Brazil supply it?

Joanna Kao
Are we seeing this kind of push and pull tension in other Latin American countries as well? Or is this just a Brazil thing?

Michael Stott
It’s not just a Brazil thing. Right across South America, we’re seeing governments almost without exception, trying to step up oil and gas production quite aggressively. So Argentina has started a big program of drilling to increase shale oil and gas production in Patagonia. Guyana is in the process of becoming a significant oil producer with its offshore oil. It’s only Colombia where the government has taken a different line and said that they don’t want more oil drilling and exploration. They want to try to move to other sorts of economic development, not based on oil and gas. But Colombia is very much the exception. The rest of the region is still going headlong to maximise their oil and gas resources.

Joanna Kao
Michael, what does this say more broadly about the fight against climate change and the transition to cleaner fuel sources?

Michael Stott
Yes, I think it means that this transition is going to be probably a longer one and a more complicated one than perhaps some people in Europe or the United States expect. I’ve just come back from some time in Peru. It’s still very much a petrol and diesel-powered economy, and it’s not even beginning the transition. And so clearly, if you’re in a country like that where the government’s also looking for revenue, you’re not going to think twice about developing oil and gas exports. You’re going to see that as something that’s essential for your national development. And you’re going to say that, you know, maybe in 20 or 30 years there will be the time for the transition, but it’s not right now.

Joanna Kao
Michael Stott is the FT’s Latin America editor. Thanks, Michael.

Michael Stott
Thank you.

[MUSIC PLAYING]

Joanna Kao
Before we go, brickmakers in the UK are hitting a wall. A year ago, UK brickmakers couldn’t produce enough to keep up with demand. And now, they have the opposite problem. Brickyards are having trouble finding enough space to store all the unused stock. It’s a story of higher interest rates. As rates have risen, many building projects have been put on hold and that’s forcing some brickmakers to cut jobs. The construction sector is bearing the brunt of a wider labour market slowdown in the UK. The latest data showed overall unemployment has jumped to 4.3 per cent.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.