Goldman Sachs is now telling their investors that the chances of a government shutdown are fifty-fifty, which is their way of warning that a sharp downturn in the markets could be right over the horizon. But a possible stock market collapse due to a temporarily shuttered government is a fairly small risk compared to the likely result of a default on our sovereign debt if the debt ceiling isn’t raised before the end of September. Another distinction between the two is that there are fallback options if Congress can’t come to a deal on spending. They can pass a continuing resolution that keeps the government operating at current levels and give themselves more time. But they have to raise the borrowing limit or else we won’t be able to pay our bills.
In some sense, we can consider everything optional except the debt ceiling. The Republicans would like to rewrite our tax laws and our health care laws. They have ideas for how to change how the FAA operates and how flood insurance is sold and regulated. They’d like to use the CHIP reauthorization bill to advance some of their agenda. They can, and most likely will, fail at all of these things without it doing much, if any, damage to the economy or the country. Likewise, they’d like to base government spending on their own priorities, not the priorities laid out in President Obama’s last year in office. But if they have to continue the old spending regime to keep the government operating, there’s no real harm in that. They need to reauthorize defense spending, too, and they have some important priorities to advance in that process, too. But they can punt on that if that have to. It’s only the debt ceiling that represents a heart attack-level of seriousness. They can’t fail on that effort.
President Trump is already pre-spinning failure, however.
These would not be Trump tweets without lies attached, and it’s absurd to blame the Democrats for “holding up” debt ceiling approval. The Republicans are to blame for needing Democratic votes, but they have majorities and the vote on the debt ceiling cannot be filibustered. Since they do need Democratic votes, they can’t make demands. Even the Trump administration doesn’t think they should make demands. Trump’s problem is that too many Republican officeholders won’t listen to him.
Yet, the meat of Trump’s complaint here is that the Republican leaders didn’t follow his advice and have now created a mess. If this is an attempt to herd the congressional Republicans into passing a “clean” debt ceiling bill, it might make some sense. But it looks more like preemptive blame-shifting than savvy leadership. It might look better if Trump were offering an updated plan, but he isn’t. And the ironic thing is that Trump is giving a pass to the people who are responsible for creating the mess. He blames the Democrats for obstructing and the GOP leadership for ignoring his strategy, which gives comfort to the rank-and-file Republican lawmakers who are the real problem.
As for the potential for a government shutdown, Trump is now the main culprit because he’s threatening to veto any spending deal that doesn’t have money (that the Mexicans are supposed to provide) for his border wall. The Republicans simply cannot pass such a bill because spending bills can be filibustered. So, Trump asks for the impossible. Worse, even a continuing resolution that keeps spending constant and buys more time would not meet his test. If he wants a fight right now over his wall, he’ll need to veto any continuing resolution and force a shutdown.
It appears to me that all the moves Trump is making are causing both a shutdown and a default to be somewhere between more likely and inevitable.
Nothing he’s doing even touches on children’s health or the FAA or flood insurance or defense spending, so leadership and a strategy on those must-pass bills is completely lacking. And the Republicans have about twelve legislative days in September to accomplish all of these things and supposedly to make progress on tax reform as well.
It’s getting close to the endgame now. The piper has arrived and he’s demanding payment.
Everything that has proceeded this moment was essentially fun and games. Now the shit hits the fan.