President Trump will gather lawmakers from both parties in the Oval Office on Monday afternoon to avert a government shutdown, but there’s little clarity about whether the issues that ground talks to a halt are even on the table for discussion.
One issue at the heart of the stalemate is a right that the Trump team has claimed, allowing the president to unilaterally cancel previously approved government spending.
The Democrats’ position in response is that the only shutdown-averting plan they will support (and their support is required in the Senate) is one that also restricts Trump’s ability to cancel such spending, in part to ensure any agreement reached is actually enacted.
The Democratic leaders are also pushing for various healthcare provisions, such as extending COVID-era healthcare subsidies scheduled to lapse in the months ahead.
Republicans have rejected those demands out of hand but — like the Democrats — don’t have the votes at the moment for their own plan, which would simply extend government funding at current levels for about seven weeks.
Read more: How a government shutdown would affect your student loans, Social Security, and more
This dynamic has made perhaps the leading question heading into today’s 3 p.m. ET White House meeting whether any true negotiations will take place — or whether it will simply be an exercise in power politics as each side looks for capitulation from the other.
A series of analyses over the weekend suggested to markets that the latter scenario is more likely, even as the shutdown issue begins to capture economists’ attention because of impacts that could be more immediately noticeable this time.
Capitol Hill chronicler Punchbowl News suggested the meeting will be “more likely than not — a waste of time.” Veda Partners managing partner Henrietta Treyz called the meeting “more an opportunity for grandstanding.”
Even Trump himself is not promising success. When asked recently whether there will be a government shutdown, he responded, “Could be, yeah.”
What could happen if the gridlock continues is a partial government shutdown on Wednesday morning at 12:01 a.m. ET, which could delay Friday’s jobs report, as well as the implementation of an emerging Trump team plan for mass firings of government workers.
That could lead to more unpredictable and immediate economic ripples.
The next question will be how long any shutdown lasts, Goldman Sachs analysts added Sunday in their own report.
If any shutdown lasts more than a couple of weeks, they wrote, that’s when the underlying data itself could be affected, with reports scheduled for publication in November being put at jeopardy. Also, the October unemployment rate could potentially be pushed up by a minimum of 0.1 to 0.2 percentage points, depending on how government employees are categorized.
