President Trump’s prime-time address at 9:00PM ET tonight is expected to be an attempt to change the narrative on the government shutdown and place the pressure back on Democrats by threatening to invoke emergency powers to provide funding for the border wall with Mexico. Today is the 18th day of the partial government shutdown and no end is in sight as negotiations have stalled, leaving about 800,000 workers furloughed. Historically, we have seen government shutdowns last anywhere from 1 to 3 weeks. The longest shutdown on record occurred between December 5th 1995 and January 6th 1996. The Clinton shutdown focused on which economic forecasts should be used for calculating the White House’s budget. Eventually President Clinton succeeded, and the Congressional Budget Office was selected and they agreed his plan would balance the budget.
Back on December 11th, President Trump, House Minority Leader (at the time) Nancy Pelosi and Senate Minority Leader Charles E. Schumer outlined their key differences on border security. The President is set on achieving border wall funding, while Democrats want to fund the government without providing any money for the wall. By declaring a national emergency, the President could circumvent Congressional approval. If Trump invoked emergency powers, Democrats are expected to protest and take this matter to the courts, thus dragging this out for months.
The government shutdown remains a risk to the economy that should not last much longer. It is unclear how this will play out, but expectations are for some compromise to be reached as many unpaid government workers are feeling great financial pain.
The Mexican peso has been pretty much been unfazed by the recent government shutdown and demands for border wall funding. The peso has been appreciating along with other emerging market currencies on the overall softer dollar.
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