Trump Signals Shift on Wall Funding

President Donald Trump may be willing to wait until September or possibly next year to secure federal funding for his controversial border wall, a shift that could make it possible for Congress to finish work on spending legislation in time to avoid a government shutdown.

“Building that wall and having it funded remains an important priority to him but we also know that that can happen later this year and into next year, and in the interim you see other smart technology and other resources and tools being used toward border security,” Trump counselor Kellyanne Conway said on Fox News on Tuesday.

Trump told a group of conservative journalists gathered at the White House on Monday that he could put off until September asking Congress to include the money in the federal budget. That could remove, at least for now, one of the biggest deal-breakers he’s inserted into talks to pass a bill this week that would finance the government through September, the end of the fiscal year.

“On funding the border wall, Trump said he could get it this week or the administration could come back to it in September,” Trey Yingst, a White House correspondent for One America News, reported in a tweet. A White House official who asked for anonymity confirmed what Trump said during the private meeting.

Democrats, whose votes will be needed to help pass the spending plan, hope he’ll blink to avoid an embarrassing milestone for a new president trying to prove he can govern. A partial shutdown would start on Saturday, Trump’s 100th day in office.

“The President’s comments this evening are welcome news given the bipartisan opposition to the wall, and the obstacle it has been to the continuing bipartisan negotiations in the appropriations committees,” House Democratic Leader Nancy Pelosi said in a statement. “It’s time for Congress to act to make it clear that government will remain open for the American people.”

Earlier Stance

Earlier in the day Monday, Trump was still touting the long-promised wall that he’s said Mexico will pay for in the end, according to a White House official.

“The Wall is a very important tool in stopping drugs from pouring into our country and poisoning our youth (and many others)!” Trump wrote Monday on Twitter.

There is another way for both sides to avert a shutdown — a short-term spending plan that would provide another week or so for negotiations after the deadline early Saturday.

“We feel very confident the government’s not going to shut down,” White House press secretary Sean Spicer said Monday, although he said he wouldn’t guarantee it. The spokesman wouldn’t say whether the president was willing to shut the government down over funding for the border wall.

Dug In

Right now, each side is dug in, and as budget talks intensify, Trump also is pushing House Republicans to restart work on an Obamacare repeal-and-replace bill after the last one collapsed in March when conservatives walked away.

Trump is also planning to announce at least the broad parameters of a tax overhaul on Wednesday that has elements already drawing the opposition of Democrats, including likely tax cuts for corporations and high-earning people.

On top of that, Trump insists he won’t go quietly even if Republicans and Democrats cut a deal. His budget director tried to sweeten the pot on Friday by offering Democrats help on their pet cause, Obamacare subsidies.

“The question is, how much of our stuff do we have to get? How much of their stuff are they willing to take?” budget director Mick Mulvaney said on Bloomberg TV. “We’d offer them one dollar” of Obamacare payments, he added, “for one dollar of wall payments right now.”

Democrats called Mulvaney’s Obamacare offer a non-starter, saying they refuse to include any funds for a wall in the spending bill.

It’s a rare moment when the Democrats have leverage in the Republican-controlled House, because it’s likely that Republican leaders would need at least some Democratic votes to offset Republican defections on the budget — as has been the case for a series of budget fights in recent years.

Republicans may not be willing to allow the government to shut down over the wall.

Alternative Ways

“I wouldn’t risk a trillion-dollar funding bill for a $3 billion wall,” Representative Tom Cole, the Oklahoma Republican who sits on the House appropriations and budget committees, told MSNBC Monday. “There’s another way, another time to get this.”

Through it all, Trump has sounded upbeat, saying he thinks negotiations are in good shape to avert a shutdown.

“We don’t know yet” whether Trump would sign a spending bill that doesn’t include money for the border wall, Mulvaney, a former House member from South Carolina and a founding member of the conservative Freedom Caucus, said on “Fox News Sunday.”

Senate Minority Leader Chuck Schumer’s spokesman, Matt House, complained that the White House in recent days brought a “heavy hand” into what he said were smooth-going talks between congressional Republicans and Democrats.

“If the administration would drop their 11th-hour demand for a wall that Democrats, and a good number of Republicans, oppose, congressional leaders could quickly reach a deal,” House said in a statement Friday.

‘Monkey Wrench’

Schumer told MSNBC on Monday that Republican and Democratic leaders were on their way to a resolution when Trump intervened “and he throws a monkey wrench in it.”

One thing is certain: Any spending deal must be a bipartisan one. Even though Republicans control both houses of Congress and the White House, Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan know they’ll both need Democratic votes to pass a government funding measure.

The Senate needs 60 votes to advance legislation, meaning the 52 Republicans will need help from at least eight Democrats. In the House, conservatives led by the Freedom Caucus and other fiscal hawks have regularly bolted on spending bills, and Democrats have provided enough votes for passage.

Attorney General Jeff Sessions said Monday that Democrats should be blamed if the funding legislation doesn’t pass in time to avoid a shutdown.

Targeting Democrats

“We’ll have a bill moving forward with some money in there for the wall,” he said on Fox News. “If the Democrats filibuster that and block it, they’re the ones shutting the whole government down.”

Mulvaney has acknowledged that Democrats “have a certain amount of leverage.”

But giving in to Democrats’ demands to get a bipartisan deal would not only threaten Trump’s wall funding, it also would require dropping Republican priorities such as language to block funding for such women’s health clinics as Planned Parenthood, and to defund so-called sanctuary cities that decline to enforce some immigration laws.

Congressional negotiators have been quietly working for weeks on possible compromises, including an increase in defense spending that would be less than the $30 billion Trump has sought but larger than the $5 billion requested earlier by former President Barack Obama.

Democrats insisted during the Obama administration that any defense increases be matched by higher domestic spending, though they may show some flexibility now.

Trade-Off

One trade-off could pair $9 billion in subsidies for insurance companies under Obamacare — a domestic spending increase — with an equal increase for regular defense operations. Another $5 billion to $10 billion in war funding could be added to that, and Democrats could justify going along with the idea given heightened tensions with Syria and North Korea.

On the border wall, appropriations lobbyist Jim Dyer of the Podesta Group suggested the issue could be solved by having wall money depend on the Homeland Security Department issuing a detailed plan later in the year, subject to bipartisan approval.

Republican appropriators, meanwhile, haven’t emphasized the issue of stopping funding for sanctuary cities. The Justice Department already can restrict some local law enforcement grants to cities and states that don’t provide immigration status updates to the federal government.

Views Unknown

There’s also been little talk lately of the White House’s call for $18 billion in immediate domestic agency cuts as part of the package. This shows bipartisan promise in Congress, but also leaves Trump’s views largely unknown.

Democratic leaders in both chambers have complained of a lack of communication with the president until recent days.

“I don’t think there is a relationship between Trump and congressional Democrats yet,” said Stan Collender, a budget analyst and executive vice president of Qorvis MSLGroup in Washington. “I don’t see them doing anything to help him at all.”

Still, if McConnell and Ryan decide they need to pass a short-term funding plan to provide time for more talks, Democrats will have a strategic decision to make — oppose it to keep pressure on Trump, or go along amid concern about being the party blamed for a shutdown.

Collender said Trump may decide to declare a “win” by making compromises to avoid a shutdown similar to the 16-day partial closing in 2013 under Obama. Yet, he said, the president also might surprise people by pushing hard for his proposals. His supporters might like to see him fight for the border wall and other priorities, Collender said.

Ross Baker, a political scientist at Rutgers University in New Jersey, said, “Government shutdowns seem to have fallen out of fashion even with conservative Republicans” who forced the 2013 shutdown in an unsuccessful attempt to repeal Obamacare.

“The only hitch I see is if Trump gets dogmatic over the wall and passes the word to Ryan that they shouldn’t let the Democrats off the hook with their alternative to a brick-and-mortar wall,” he said.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell