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 cut 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.
As a reminder, the government will shut down at 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).
Should the White House 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.
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