Shutdown Looking More Likely
Author: Greg Valliere
February 10, 2025
A STAGGERING BATCH OF NEW INITIATIVES from Donald Trump and Elon Musk — more firings, steel tariffs, etc. — have finally prompted the Democrats hit back.
DEMOCRATS ARE ASKING — why should we give Republicans the votes they need to pass a debt ceiling extension in mid-March?
ON SEVERAL OCCASIONS LAST YEAR, budget-related bills passed in the House — but only after Democrats provided the necessary votes. At least a dozen hard-liner House Republicans will not support a debt ceiling extension, due on March 14.
A PROLONGED SHUTDOWN WOULD BEG THE OBVIOUS QUESTION — why would Democrats thwart passage of a bill that would slash spending on some of their pet programs?
BUT THE DEMOCRATS are aghast at shuttering entire agencies and alienating countries like Canada and Mexico, which are facing 25 percent steel and aluminum tariffs later this week.
THE FRUSTRATION AMONG ALL DEMOCRATS and some Republicans over Elon Musk is palpable; a shutdown, perhaps for a few weeks, would send a message to House Speaker Mike Johnson that he doesn’t have the votes for many of the Trump-Musk proposals.
OUR BOTTOM LINE is twofold: first, the confusion and litigation will continue, and second, fiscal policy is headed for a deep freeze. It’s increasingly clear that monetary policy will be on hold for months to come; fiscal policy is likely to stay very restrictive for the foreseeable future.
AT SOME POINT, THE TRUMP-MUSK POLICIES will backfire, but that doesn’t look imminent. There’s a new initiative coming every day — no pennies, and now huge layoffs coming to the Pentagon and Health and Human Services.
THIS WILL CONTINUE UNTIL TRUMP’S JOB RATINGS slide; they’re in the low-50 percent range now, a respectable score. So, circle March 14 on the calendar; this battle may intensify then.
AS FOR EXTENDING the 2017 tax cuts — or passing new tax reductions — that may not pass until the second half of 2025, as Democrats vow to slow down the Republican agenda.
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