- The government shutdown is in day 32.
- President Donald Trump has continued to demand $US5.7 billion for a portion of the long-promised wall along the US-Mexico border, but Democrats are not backing down.
- More and more economists are warning that the shutdown could cause major problems for the US economy.
- If Trump does not find an end to the shutdown, the continued strength of the US economy – one of his favourite things to boast about – could be at risk.
- But Trump could also face blowback from hardline conservatives if he does not secure funds for the border wall.
- This leaves Trump in a bit of a pickle.
As the government shutdown enters its second month, the pressure on President Donald Trump to make a deal is growing. But the battle over government funding could put the president in a tight spot.
Trump has long touted the relative strength of the US economy as one of the major successes of his presidency, crowing about better-than-expected GDP numbers and gains for the labour market. But now Trump’s demands for border-wall funding could put the strength of the economy at risk, unless the president can find a way to cut a deal.
According to a growing number of economists, the ongoing government shutdown is taking a bite out of the US economy. Even the White House projects that the shutdown will shave 0.13 percentage points off first-quarter GDP growth for every week the closure continues.
In fact, according to an analysis by S&P Global, the cost of the shutdown will soon eclipse the $US5.7 billion Trump is demanding as a down payment for the wall. Even more stark are warnings from economists that first-quarter GDP could actually go negative if the shutdown continues into March.
Trump could end the economic woes at any time by signalling a willingness to delay the wall fight and sign bills reopening the government that do not include the border-wall money, as Democrats have advocated. The president first sparked shutdown concerns in late December by suddenly changing his mind on a funding extension that did not include border wall funds.
But much like the initial plan to push the wall fight off, any move to open the government without border-wall money would likely draw blowback from hardline conservatives and pundits, the same people who seemed to convince Trump to shut the government down in the first place.
So it would seem Trump has a choice. He could: A) stand firm on the border wall funding, please the most vocal part of his base, and risk hurting the economy, or B) give in on the border wall, anger his base, and ease the pain on the economy.
But it does appear that there is be a third way Trump could go: actually make a deal.
The president seemingly made an attempt at this over the weekend with a plan presented on Saturday. But the idea – $US5.7 billion for the wall in exchange for a three-year extension of protections for people under the Deferred Action for Childhood Arrivals (DACA) immigration program and an extension of other immigration protections – was roundly rejected by Democrats.
As immigration experts and critics said, Trump is offering an extremely limited set of protections in exchange for a permanent wall. Democrats also blasted the idea as grandstanding since Trump had already made a similar offer and was already rejected.
But Rep. James Clyburn, the third-highest-ranking Democrat in the House, seemed to offer some way forward on Sunday. The South Carolina Democrat suggested that “a permanent fix” for the DACA immigration program in exchange for border-wall funding could make the foundation of a deal.
Where the talks go from here is unclear, but the economic concerns and disruptions caused by the shutdown seem to be pushing Trump toward the negotiating table.
But if Trump fails to reach a deal with Democrats, the president faces a choice: continue to play hard ball and risk the short-term economic health of the US or face the wrath of conservative advocates by pushing off the border-wall fight.
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