National Post (National Edition)
I would be WILLING to SHUTDOWN government if the Democrats do not GIVE US the votes for BORDER SECURITY, which includes THE WALL!
WHAT IF THIS TIME DONALD TRUMP MEANS IT?
Donald Trump has been threatening to shut down the U.S. government if he doesn’t get what he wants. In a series of tweets over the past few days, as well as in a news conference alongside Italy’s recently minted nationalist prime minister, Giuseppe Conte — no doubt a sympathetic ear — the President has been pushing Congress to address “border security” as it approaches an October deadline for fiscal spending.
And by “border security,” he mostly means funding construction of that big, beautiful wall along the U.S.Mexico divide to keep illegal migrants out. If he doesn’t get it, well, he won’t approve the spending bill, effectively shutting down the government.
Or at least that’s the threat, which might seem a little weird coming from a man whose job description is basically “chief executive of the federal government.” But this is Donald Trump we’re talking about. Confrontationalism seems the general opening approach, whether the matter-at-hand is trade negotiations with long-time allies or influencing congressional budget legislation.
So how seriously should anyone take this particular threat?
Certainly, markets seem to be shrugging it off: The S&P 500 ended July undeterred, recording its fourthstraight monthly gain. That’s despite the fact that a shutdown looks like a pretty big deal — the federal government accounts for almost 20 per cent of U.S. GDP, and a chunk of that might evaporate, at least for a time.
The odds of a congressional capitulation don’t look great, either, as even the Republican-controlled Congress doesn’t have much appetite for spending tens of billions on Trump’s wall, which is unpopular among Americans in general and among those in several border states in particular. So why aren’t investors freaking out about the potential economic impact?
Well, the prevailing wisdom seems to hold that either Trump doesn’t really mean it and won’t go through with the shutdown, or, if he does goes through with it, it won’t be that bad.
Those making the case for “he doesn’t really mean it” (a group that reportedly includes several congressional Republicans) argue that Trump is merely shoring up support in advance of the midterms by playing up to his base, which apparently likes tough-on-illegals talk and doesn’t have much allegiance to Congress-folk, Republican or Democrat, anyway. Another take is that he’s only trying to deflect attention away from the just-started trial of former of campaign chair Paul Manafort or from the lingering controversy over his bromantic Vladimir Putin meeting last month or from the Michael Cohen allegations, or from — well, you name it. In short, the shutdown threat could be a negotiating tactic, or an exercise in distraction, or both.
But what if he means it? Last year about this time, Trump was beating the same shutdown drum over immigration policy and border security funding, and the ensuing congressional dustup carried over into the next year. Without a spending agreement, the government actually did shut down in January — but only for three days, and over the weekend. The impact on the U.S. economy, if there was any, was trivial. Another minishutdown occurred a couple weeks later, and it lasted just a few hours. So, like, who cares?
Of course, another shutdown could last more than a few hours or days, and then a lot of people will care. But maybe not that much. Part of the reason is that when the U.S. government shuts down, it doesn’t do so completely. A host of government agencies, from the armed forces to Customs and Border Protection, are deemed essential and keep on running (even though, historically, many employees have to do so without getting paid for a while). The last time there was a significant impact was in 2013, when the confrontation over Obamacare led to a 16-day government shutdown that cost the U.S. economy an estimated 120,000 private-sector jobs and trimmed 0.2 per cent to 0.6 per cent off GDP growth. Once it was over, though, the economy pretty much got back on track, without any lasting damage, at least on the macro level.
On the micro level, however, the impact of a U.S. government shutdown might be more serious. For instance, an extended shutdown could be a major pain for exporters and importers, including Canadians. That’s because the numerous U.S. government agencies involved in trade would be scaled back or shut down. Getting permits or other paperwork from, for example, the U.S. Food and Drug Administration, the Environmental Protection Agency, or the department of agriculture would take longer, if it happened at all. And even though customs officers would remain on the job, they wouldn’t be getting paid, so anyone moving themselves or their goods across the border can expect a more leisurely pace of service.
In short, a government shutdown would throw sand into the wheels of commerce, and that’s not a good thing. But it would hardly be the apocalypse, at least if history is any guide. In fact, if Trump really wanted to hold Congress and the U.S. economy hostage to pay for his wall, he could get even more extreme. For instance, he could threaten not to agree to raise the ceiling on U.S. government debt when the current limit expires next March. With the U.S. deficit on track to balloon over the next few years thanks to Trump’s tax-cut package, that would throw markets into turmoil and could be a much bigger deal to the economy.
Not, of course, to give him any ideas.…