Happy New Year! There’s now less than a month until the next potential government shutdown
When signing the funding deal back in November, Trump said: "We’re sending a clear message that we will never give in to extortion"—fighting talk indeed with another deadline around the corner.
The turn of a New Year can represent many things: A fresh outlook, healthier habits, and goals to work toward. But entering January also marks a threshold: The looming government shutdown is only a matter of weeks away.
In November, the U.S. government experienced its longest shutdown in history after Republicans and Democrats took 43 days to agree on new funding arrangements for the likes of SNAP food aid, the Department of Agriculture, Congress, and veterans affairs through September next year. Unfortunately, it didn’t get to the rest of government, where coffers will run dry come January 30.
When Congress broke for Christmas a fortnight ago, it had not come close to agreeing on a deal to fund the majority of its federal departments, as well as the imminent expiration of additional programs such as the National Flood Insurance Program Authorization and Medicare and health care extenders.
Optimists might argue that with four weeks to the day until the shutdown, a change of tone has already been observed. For example, Senate Minority Leader Chuck Schumer told reporters before the holidays that he and Senate Majority Leader John Thune were going to “work through the process and get the appropriations bills done.”
Thune echoed the message, though hinted that he’s making contingency plans if the best-case scenario doesn’t materialise. He told reporters: “There’s a lot of thought being given and just to make sure that we don’t end up in a … posture at the end of the month where we’re looking at staring at a shutdown again.”
While the political will to avert another shutdown appears to be strong among some key figures, the question of compromise will become all the more important as a deadline approaches. Here, President Trump has been firm. When signing the funding deal back in November, Trump said: “We’re sending a clear message that we will never give in to extortion”—fighting talk indeed with another deadline around the corner.
Shutdown ramifications
If an economist were to cast their mind back to September last year, they’d recall that overall, the sentiment about a government shutdown wasn’t too ominous. Largely, the sentiment was that while growth or the markets might take a slight knock, they would bounce back without much trouble.
But as the shutdown dragged on, and as threats from the president over the future of federal workers’ careers intensified, that confidence quickly began to fade. For example. late last year that roughly half the U.S. States were in a recession, including the District of Columbia, which had tipped into economic shrinkage because of federal layoffs, then exacerbated by a shutdown that saw remaining staff go weeks without pay. These issues also saw nearby states such as Maryland and Virginia also pulled toward contraction.