Trump Warns of ‘Very Long’ Shutdown Ahead

Plus - Here's what happens if the government shuts down By Yuval Rosenberg and Michael Rainey Trump Warns of ‘Very Long’ Shutdown A partial government shutdown is just a few hours away as President Trump and lawmakers continue to negotiate a deal to fund a portion of government operations through the holidays. If the negotiations fail, the federal government would experience its [third shutdown]( this year. Earlier on Friday, Trump reaffirmed his demand for $5 billion to fund the construction of a border wall in the Southwest. Trump set a combative tone with an early [tweet]( Trump met with GOP lawmakers during the day and the situation was [described]( as “very, very fluid” by Politico’s Jake Sherman. Here’s where things stand on late Friday afternoon: The House passed its own funding bill: House Republicans passed a bill Thursday night that would give Trump $5.7 billion for wall construction, as well as $7.8 billion for disaster relief. The 217-185 party-line vote was hailed by Republicans as a rebuke to Minority Leader Nancy Pelosi (D-CA), who told the president last week that such a bill couldn't pass. Even so, the bill is likely going nowhere in the Senate. Shifting the blame: Although he said earlier that he would take the blame for any shutdown – “I am proud to shut down the government for border security,” Trump told Democratic leaders, “I will take the mantle. I will shut it down, I’m not going to blame you for it.” – President Trump reversed course Friday, tweeting, “The Democrats now own the shutdown!” It could last a while: President Trump warned that “there will be a shutdown that will last for a very long time” if he doesn’t get the $5 billion he has demanded for the border wall. Chris Krueger of Cowen Research Group said Friday that if the government does partially shut down, “it is very hard to see how it would reopen before at least January 3” given the absence of lawmakers during the holiday. And even then, Trump will have to deal with a Democratic-controlled House, which will likely send him a funding bill that lacks money for the wall. “This shutdown could go on for a long time,” Kruger wrote in a note to clients. But a compromise could be in the works: Lawmakers and administration officials were reportedly discussing a compromise bill on Friday afternoon that would fund the government and provide $1.6 billion for border security – which sounds a lot like a [deal]( that was being considered several weeks ago. “So, it looks like this could end up at 1.6 for border security. Which is ..... exactly where it started,” Politico’s Sherman [tweeted](. What Happens if There’s a Shutdown Parts of the federal government were preparing to shut down at midnight on Friday as negotiations between President Trump and lawmakers continued. Much of the government is already funded through the end of the fiscal year in September, thanks to five bills passed earlier this year that cover about $900 billion of the $1.2 trillion in operating expenses for federal agencies. Departments that would be unaffected by a shutdown include Defense, Labor, Energy, Education, Veterans Affairs and Health and Human Services. About two-thirds of the federal workforce is also fully funded. Mandatory spending will be unaffected, so Social Security and Medicare payments should continue without interruption. Here’s a rundown on the parts of the federal government that would be affected: * Nine federal departments and several dozen independent agencies will close up shop, including: - Department of the Treasury - Department of Agriculture - Homeland Security Department - Department of the Interior - Department of State - Department of Housing and Urban Development - Department of Transportation - Department of Commerce - Department of Justice - Peace Corps - General Services Administration - Small Business Administration * More than 420,000 federal employees will work without pay, though they likely will be paid once the government reopens. That includes: - 41,000 federal law enforcement and correctional officers from the FBI, the Drug Enforcement Agency, the Bureau of Alcohol, Tobacco, Firearms and Explosives - 53,000 Transportation Security Administration employees - 42,000 Coast Guard employees - As many as 54,000 Customs and Border Protection employees - 5,000 Forest Service firefighters - 3,600 National Weather Service forecasters * About 380,000 federal employees would be placed on temporary leave without pay, including: - 44,000 Forest and National Park Service employees - 41,000 Department of Commerce employees - 17,000 NASA employees - 52,000 IRS employees - 7,100 Housing and Urban Development employees - 18,300 Transportation Department employees * National Park Service employees likely will be furloughed, resulting in some park shutdowns. During the shutdown in January 2018, the agency asked employees to keep parks accessible as possible while still following the law. About [one third]( of national parks closed completely, while others were open but lacked staff. Arizona Governor Doug Ducey said Friday that he will use state funds to keep the Grand Canyon open. * Thousands of government contractor employees will also miss work, and many will probably not receive back pay. * The shutdown’s effects aren’t limited to furloughs and service delays. According to William G. Resh and Susannah Bruns Ali, academics who study public policy, repeated shutdowns erode the government’s ability to function properly. “The fallout from a shutdown could substantially impact the long-term ability to retain, recruit, and manage the career civil service and contracted employees that comprise our national government,” Resh and Ali write. For more, see their [analysis at Government Executive](. Chart of the Day Deficit spending is “the secret behind growth in Trump’s America,” [says]( Bloomberg’s Ben Holland. Like Ronald Reagan before him, President Trump is goosing economic growth with government spending even as he cuts taxes. Debt has risen sharply, but fortunately the carrying costs have remained relatively low – for now. Here’s a look at how much spending by the federal government has contributed to elevated growth under Trump. Quote of the Day “Higher interest rates, waning fiscal stimulus, and weaker global growth will take the wind out of the labor market’s 10-year uninterrupted run, bringing income growth down considerably lower through 2020 and into 2021.” – [Bernard Yaros, economist at Moody’s Analytics]( We're almost finished with 2018! We'll send an update on how the shutdown showdown turned out, and then take a break until January 2. You can visit [The Fiscal Times website]( for updates until then. Send your tips and feedback to yrosenberg@thefiscaltimes.com. Or connect with us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. GoFundMe Campaign for the Border Wall Iraq War veteran Brian Kolfage has set up a fundraising campaign for the border wall, called “[We The People Will Fund The Wall]( Kolfage says that, “If the 63 million people who voted for Trump each pledge $80, we can build the wall.” As of midday Friday, the campaign had raised more than $12 million from more than 200,000 people, one of whom gave $50,000. The Washington Post’s Philip Bump [notes]( while the fundraising figure is impressive so far, it represents “only about 0.06 percent of the estimated cost of the wall.” Tweet of the Day Josh Brown of Ritholtz Wealth Management [links]( the recent performance of the financial markets to the short-term economic boost provided by the Republican tax cuts. Number of the Day: 1.1 Million Hours The IRS says that the equivalent of 530 employees have spent more than 1.1 million hours working on interpreting the 2017 tax bill to aid tax professionals, Tax Notes [reports](. The work had to be done in a hurry, since the bill became law just days before it went into effect. For their hard work and dedication to the cause, Tax Notes named the IRS regulation writers its 2018 Person of the Year. Your Prize for Making It Through the Week Not that you necessarily want to relive this year, but The Atlantic has nice collection of “[The Most 2018 Photos Ever]( News - [Trump Stuffs Political Grenades in Washington's Christmas Stocking]( – Politico - [‘Confusion’ and ‘Surprise:’ How Agencies and Employees Are Gearing Up for a Shutdown]( – Government Executive - [US Third-Quarter Growth Trimmed; Business Spending Slowing]( – Reuters - [Trump Tariffs Would Make a 'Steel Slat' Border Wall Much More Expensive for Taxpayers]( – CNBC - [Where Government Is a Dirty Word, but Its Checks Pay the Bills]( – New York Times - [The Trump Administration’s Davos 2019 Hotel Bills Have Already Hit $2.9 Million]( – Quartz - [How the Recent Tax Cuts and Budget Deal Jack up the National Debt — in One Chart]( – MarketWatch - [US Air Force’s New Housing Dogged by Construction Flaws, Imperiling Tenants]( – Reuters - [Seattle’s Soda-Tax Collections Top $16 Million in 9 Months, Surpass First-Year Estimate]( – Seattle Times - [Coverage Denied: Medicaid Patients Suffer as Layers of Private Companies Profit]( – California Healthline Views and Analysis - [This Shutdown Might Be Different]( – Ed Rogers, Washington Post - [Trump, the Master Salesman, Is Trying to Sell America a 'Democrat Shutdown' — but He Already Owns It]( – CNBC - [In Budget Brinkmanship, Republicans Once Again Hold Themselves Hostage]( – Paul Kane, Washington Post - [The Border Wall GoFundMe Page Sums Up the Trump Presidency]( – Sally Kohn, CNN - [Ted Cruz Is Right: Make El Chapo Pay for the Wall]( – Daniel John Sobieski, American Thinker - [Has the GOP Tax Cut Delivered? Yes — and the Tooth Fairy Was Here Just Last Night!]( – Catherine Rampell, Washington Post - [The Botched Plan to 'Fix' USDA’s Research Arm]( – Steve Pierson, The Hill - [The 2018 Economy, in 11 Graphs]( – Jared Bernstein and Kathleen Bryant, American Prospect - [Top Charts of 2018]( – Economic Policy Institute - [GOP Climate ‘Truths’ Are a Little Too Convenient]( – Liam Denning, Bloomberg Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](