Zero Hedge Update - Trump Administration Begins Quiet Preparations For Government Shutdown
Published by Tyler Durden on April 21st 2017
Even as Donald Trump is desperate to show to the US population, and especially his voter base, some actual achievement before his first 100 days run out next weekend, prompting him to tell AP that he will unveil a "tremendous" tax ut plan next week (recall he did the same in February), the Trump administration is quietly preparing for the possibility of a government shutdown, even though the president and his staff believe one is unlikely to occur.
With the Senate reconvening on Monday and the House of Representatives on Tuesday after a two-week recess, lawmakers will have only four days to pass a spending package to keep the government open beyond April 28, when funding expires for numerous federal programs. "I think we want to keep the government open," Trump said on Thursday, adding he thinks Congress can pass the funding legislation and perhaps also a revamped healthcare bill.
Trump's wish may be problematic: as a reminder, the government will shut down midnight on April 28 if Congress cannot agree on a spending bill. As reported over the past week, the measure hit various snags over Trump's demands to include funding for Trump’s border wall and a debate over money for an ObamaCare insurer subsidy program, both programs which virtually assure the spending bill will not pass.
As a result, the Office of Management and Budget (OMB) has begun to coordinate with government agencies to plan for a possible shutdown. “While we do not expect a lapse, prudence and common sense require routine assessments will be made,” OMB Director Mick Mulvaney said in a statement.
The office set up a phone call to go over the agencies’ shutdown plans, which could include steps such as furloughs for federal workers. The OMB said the plans were reviewed ahead of a possible shutdown last December and are unlikely to be revised.
As Compass Point analyst Isaac Boltansky, notes, "wall funding is just one of many policy potholes that could disrupt negotiations, including ACA cost-sharing subsidies, coal miner benefits, sanctuary cities."
To be sure, Congress can avoid a full-blown shutdown if it passes a short-term spending measure to keep the government open while negotiations over a broader funding deal continue, but even that process has been put into question.
"I think we're in good shape," President Trump said when asked about the possibility of a shutdown. “We remain confident we’re not going to have a shutdown,” White House press secretary Sean Spicer told reporters at a separate off-camera briefing, calling the preparation “required steps” for the federal agencies and departments.
Some analysts disagree with the optimistic assessment.
According to Cowen's Chris Kruger "shutdown theatrics reach fever pitch next week, with one-week punt most likely outcome" however he focuses on the "White House’s misconception they have any leverage with Democrats when it’s the opposite, as Congressional Democrats have less than zero incentive to compromise with Trump and Trump needs them to keep govt from shutting down."
As such unless Trump concedes to all demands, not only is a full spending bill out of the question, but even a short-term agreement appears precarious.
More ominously, Kruger adds that "until this week, shutdown threat seemed very low as Congressional GOP leadership, appropriators hammered out spending agreements, were on same page as Democrats; that went sideways when White House pushed more confrontational approach on ObamaCare, immigration."
Meanwhile, Height Securities' Peter Cohn has noted the House Democrats taking a hard line against even one-week stopgap continuing resolution (CR) "due to unresolved White House demands on funding wall construction, withholding funds from sanctuary cities."
He sees 25% odds for temporary partial shutdown, with path to deal including boost for border "security" funds (not wall), added military funding. Others, such as Goldman see shutdown odds at one in three (and rising).
As Reuters adds, leading House Democrats were voicing skepticism a deal could be reached by the deadline. In a telephone call for House Democrats, Representative Nita Lowey, the senior Democrat on the House Appropriations Committee, said: "I don't see how we can meet that deadline" and avoid having to pass a short-term extension, according to an aide on the call. The second-ranking House Democrat, Representative Steny Hoyer, told his fellow Democrats that they should only support such a short-term measure if a deal on long-term bill is reached and only finishing touches remained, the aide said.
Republican leaders face a familiar balancing act: satisfying the party's most conservative members while not alienating its moderates.
Rules in the 100-seat Senate mean Trump's party also would need the support of at least eight Democrats even if the Republicans remain unified, giving the opposition party leverage. House Republican leaders would need some Democratic votes if the most conservative lawmakers object to the bill, as they did to the healthcare plan championed by Speaker Paul Ryan. With congressional elections looming next year, Republicans acknowledge the stakes are high.
"Even our most recalcitrant members understand that if you shut down the government while you're running it and you control the House and the Senate, you can't blame anybody but yourself," said Representative Tom Cole, a senior House Appropriations Committee Republican.
White House budget director Mick Mulvaney said the Trump administration was willing to talk to Democrats about funding for Obamacare subsidies in exchange for their agreement to include some Trump priorities such as the wall, the defense hike and more money for immigration enforcement. "It is ripe for some type of negotiated agreement that gives the president some of his priorities and Democrats some of their priorities. So we think we've opened the door for that," Mulvaney said.
Democrats reacted negatively. "Everything had been moving smoothly until the administration moved in with a heavy hand. Not only are Democrats opposed to the wall, there is significant Republican opposition as well,” said Matt House, a spokesman for Senate Democratic leader Chuck Schumer.
Should the Trump and the GOP be unable to concede on some of the controversial demands floated in recent days, we expect the shut down odds to rise substantially, and instead of a "massive" tax cut, the most likely outcome may in fact be a closed government starting next weekend, and lasting for the foreseeable future.
The government was last forced to close in October 2013, when Republican Senator Ted Cruz and some of the most conservative House Republicans engineered a 17-day shutdown in an unsuccessful quest to kill Democratic former President Barack Obama's healthcare law. Meanwhile, the current Congress has passed no major legislation since Trump took office in January. Among his ambitions are hopes for major tax-cut legislation, infrastructure spending and other bills.
A federal closure would shutter National Park Service destinations like the Statue of Liberty, Yellowstone and the Grand Canyon. Government medical research would be suspended. Thousands of federal workers would be furloughed with thousands more working without pay until the shutdown ends, including homeland security personnel. Some veterans benefits could be suspended.
Subscribe to Higher Discernment - Current Situation & Intel Reports by Email