Shutdown Likely to Be Avoided, Indices Up Prior to Fed Interest Rate Decision

government shutdown

As we speak, U.S. senators are preparing to put forth a continuing resolution or short-term spending bill to help stave off a government shutdown through the new year.

However, that fix is not a done deal, and it has some pretty powerful critics, including the president who just last week said he would be “proud” to shut down the government over border wall funding.

Signals of support from the White House show that Trump is caving on his plan to get $5 billion for the border wall in a concession from Democrats.

More recently, Democrats even rejected a revised plan to get $2.6 billion for the wall.

Now, the pending CR bill would make all of Trump’s threats just so much hot air.

“(A deal) would represent a major defeat for Trump on his signature issue, the US-Mexico border wall he long insisted Mexico would pay for, but has demanded $5 billion in taxpayer money to fund,” write Erica Werner, John Wagner, and Damian Paletta at the Washington Post around noon today. “Trump has often changed his mind or threatened to veto bills at the last minute, so a shutdown is still possible.”

Unsurprisingly, Mitch McConnell is blaming the threat of a shutdown on Democrats – and Democrats are blaming Trump. “The buck stops here” really doesn’t have a place in this merry-go-round anymore, but some lawmakers are challenging others to really buckle down and get a long-term fix done.

“Any shutdown that occurs would be much smaller than what’s been done in the past,” said Oklahoma Senator James Langford on Morning Joe today, pointing out that 75% of the government is already funded. But that 25%, he conceded, is still important. Just the optics of a government shutdown are enough to raise the hackles of many voters.

“I think there will be a continuing resolution soon,” Langford said, suggesting that the legislature will “punt” the issue into next year and explaining why he thinks that’s a bad idea. “I find that extremely frustrating. We have the appropriations bills done at this point … we’ve worked through the process, we’ve had bipartisan support, we’ve conferenced these.”

“I think we should be able to resolve it this year,” Langford told Joe and Mika, re-using the football metaphor, “rather than punting it into next year.”

Part of the challenge, Langford said, is that neither Nancy Pelosi nor the president are in a position to really significantly change their minds on the issue.

“The president is very strong on border security issues,” Langford said.

Whether or not the S&P 500 is tracking the government shutdown issue, the index made a reversal today, climbing a bit after descending from $2,650 down to around $2,530.

The Dow Jones industrial average has likewise risen – some are claiming that stocks are rising ahead of the Federal Reserve’s interest rate decision, where a more moderate spiking of interest rates could send stocks on a rally.