Government Shutdown Looms Again
Author: Greg Valliere
September 18, 2024
MITCH McCONNELL got it right yesterday: A government shutdown on October 1 would be “beyond stupid,” he declared, but hard-line conservatives are pressing Speaker Mike Johnson toward a confrontation as the fiscal year ends in less than two weeks.
JOHNSON IS ALMOST CERTAIN TO LOSE A VOTE in the next day or two that would extend government funding for six months while passing restrictions on voting by immigrants.
THIS UPCOMING VOTE WILL SET THE STAGE for still another confrontation among Republicans, who are exasperating the Senate GOP. The press will go into over-drive on a shutdown just ahead of the election, and the Republicans will get the blame, as usual.
THE THREAT OF A SHUTDOWN is more of a public relations story than a serious issue for the economy or the markets for the simple reason that most federal programs — Social Security, Medicare, etc. — will not be affected. What will get shut down? The national parks, of course.
SENATE MAJORITY LEADER Chuck Schumer and his Democratic colleagues cannot believe their good fortune — Republicans will get blamed for this just a month before the election.
SO McCONNELL IS CORRECT: This is beyond stupid for the GOP, especially since Donald Trump will support Speaker Johnson; Trump will join the pro-shutdown forces.
THE BOTTOM LINE IS SIMPLE: The threat of a shutdown will escalate in late September, with a likely extension avoided at the last minute, or perhaps lasting for a day or two.
THIS :”Shutdown lite” will have little or no impact on the markets, but once again the dysfunctional House will be in the limelight, just weeks before the election. A temporary spending deal will last into December, with more maddening posturing likely in the spring, when a debt ceiling dispute erupts.
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