Trump Defies Republicans And Democrats With Shutdown Threats

With the end of the federal government's fiscal year looming, President Trump is once again wielding threats of a "good" government shutdown as a cudgel to batter intransigent Democrats and Republicans who are standing in the way of his plans to build his promised wall along the US's southern border.

Of course, this isn't the first time Trump has threatened a shutdown - and at this point in the game, with the outrageous allegation from Bob Woodward's tell-all vying for dominance in the news cycle and Trump's trade war contributing to the stress in emerging markets - the president might view a shutdown fight as an advantageous distraction ahead of the Nov. 6 midterm vote.

Republicans

But there's also reason to believe the president could be sincere about this threat. After all, even his Republican allies in Congress have done seemingly everything in their power to avoid the issue of funding for the border wall.

Here's Bloomberg:

"On the wall, the House spending panel has backed spending $5 billion next year while the Senate has backed $1.6 billion. The House proposal, worked out in talks with the White House budget office, falls short of the total $23 billion Trump has sought."

While Congressional leaders have been lobbying Trump for months to pass a half-dozen or so spending bills before the Oct. 1 deadline, immigration hardliners in the West Wing have been encouraging Trump to stand his ground, according to Politico. The reasoning, according to the hardliners, is that funding for the wall will be effectively dead in the water if Democrats wrestle back control of Congress after the midterms - so why not press the advantage now?

For months, GOP leaders have been laying the groundwork to avoid a shutdown on Sept. 30, the end of the fiscal year and just five weeks before Election Day. Speaker Paul Ryan (R-Wis.), Senate Majority Leader Mitch McConnell (R-Ky.), House Majority Leader Kevin McCarthy (R-Calif.) and even Vice President Mike Pence are already quietly lobbying Trump to postpone a shutdown fight over his border wall with Mexico until after the election, Hill and Trump administration sources say.

But any carefully laid plans could be for naught, as Trump receives contradictory advice from rival factions in the West Wing. Some White House officials are confident that Trump will sign spending bills keeping the government open.

A smaller subset of immigration hard-liners inside the White House, however, are encouraging Trump to fight on the border wall issue now, while Republicans still control Congress. These officials think the House majority is already gone — and they have encouraged Trump to hold the line for his border wall and secure a win while he can, according to multiple sources on Capitol Hill and in the administration.

Trump, along with Republican congressional leaders, is trying to set up a meeting with the Democrats next week to try and hash out some of these issues. But it's unclear how successful that might be. According to Politico, forcing a shut down would "almost certainly" cost Republicans their majority in the House. However, that analysis is based on the polling data - and as we learned in 2016, polls are sometimes wrong.

But a shutdown now would almost certainly cost Republicans their House majority. Democrats are currently favored to win the lower chamber. And GOP lawmakers are already being dragged down by Trump’s abysmal approval ratings and the criminal cases involving Paul Manafort and Michael Cohen. There’s a sense that a shutdown would be the final nail in the coffin for House Republicans.

"A shutdown’s not good for anybody, whether Republicans or Democrats," Senate Appropriations Chairman Richard Shelby (R-Ala.) said. "I want to do everything I can to avoid a shutdown."

Given Trump's unpredictability GOP leaders have been preparing for the worst-case scenario: That Trump puts his foot down and insists on the shutdown. If he does, lawmakers will have little recourse - unless they could muster the votes to override a presidential veto.

Finally we note that the spread between pre-fiscal-year-end and post-fiscal-year-end Treasury Bill yields is spiking signaling the market is starting to price in some anxiety across that crucial dateline...