The Shutdown Continues
There have been shutdowns before, but unless you're political freak -- and you really should seek help -- you couldn't remember what they were about. This one, however, is about a wall. Not just any wall: the Trump border wall. And the Trump border wall shutdown is on the verge of setting a record that nobody wants.
• The Trump border wall shutdown – can you name any other shutdown? -- continues.But why did it start in the first place? It started because just as President Trump was about to sign a funding bill in December that included no funds for a border wall, his supporters turned against him:
• “Trump gets nothing and the Democrats get everything." Rush Limbaugh.
• “Trump will just have been a joke presidency who scammed the American people and amused the populists for a while, but he’ll have no legacy whatsoever."Ann Coulter.
• "I’m not going to sugarcoat it. I’m not going to spin it… I wish I could, but I can’t. This is a cave." Michelle Malkin
• With friends like that, right? The reason this matters is that the “wall shutdown” is no longer about a wall, even though both sides will talk about it as if it is. It’s about who’s in charge in Washington, Trump or the Democrats? And while negotiations go on about how to build a cement wall, or one with slats, or fencing with more border patrol agents, or whatever, right now Trump is looking to save face. Because he literally put his face into the issue.
• The president took his case to the American peoplein prime time Tuesday night in a nationally televised speech so that he could try to turn an anti-illegal immigration campaign symbol into support for a policy to deal with a threat to national security. It was billed by the White House as an address “on the humanitarian and national security crisis on our southern border.” Whether you think there’s a crisis may depend on which cable network you tend to watch.
Some takeaways on the speech:
• Trump did not lead with the wall.He led with a discussion of steps that could be taken to fight illegal immigration, citing details in fighting drugs and crime -- as if that’s what the shutdown was about.
• He threw in $5.7 billion for a new wall at the end. Does anybody doubt that’s really what he wants?
• Trump is not as effective on a camera in the Oval Office as he is in front of a loud, supportive crowd.
• “Chuck and Nancy” presented the Democratic response.They proposed signing a bill to end the shutdown and continuing negotiations on border security later.
• Democrats look intractable on a Trump wall. There was no hint of negotiating on it.
• There’s always a risk when you appear on national TV that you will look, well, a little silly. Just ask Marco Rubio about his bottle of water or Bobby Jindal about going from politically hot-to-cold in the span of mere minutes. The “Chuck and Nancy” presentation, standing side by side at a podium, led to more memes than Christopher Walken’s “cowbell.” (HuffPo: https://www.yahoo.com/huffpost/pelosi-schumer-become-instant-memes-041106576.html
Outlook: Trump will visit the Southern border and try to move the needle.Most polls blame him for the shutdown, roughly 50% - 35%. He will also set the stage for declaring a national emergency. Whether he will actual try to do it is still up in the air.
• Trump wants a wall. What do Border Patrol Agents want?
Fact:“A report released in March by Democrats on the SenateHomeland Security Committee found that Border Patrol agents on the front lines said they needed more technology and additional personnel to curb illegal immigration and drug traffic, with less than one half of one percent mentioning a wall.”NY Times, Jan 6, 2019. Link to the report here: https://www.hsgac.senate.gov/media/minority-media/us-senate-report-border-patrol-agents-and-leaders-prioritize-technology-personnelnot-a-wallto-strengthen-border-security-according-to-internal-agency-documents-
• Outlook: When you’ve lived in Washington for much of your life – as both of us have -- you have friends who work for the federal government who enjoy a couple days off while Congress fights over budgets. And there are other workers who have enjoyed the Washington, DC commute over the past couple weeks as hundreds of thousands of federal workers and contractors are at home and not on the roads. But, as the saying goes, this is about to get real. The first missed paychecks are expected this Friday, which will lead to thousands of government employees struggling to pay bills, which the TV networks will tell us all about with personal details; TSA members are reportedly calling in sick; and national park facilities are overflowing with trash and excrement. Every day we’ll get more anecdotes that will turn the battle over government appropriations into something personal and possibly touching your very own life (if you want a government-backed loan, or a visa, etc.).
** Our expectation is that this is settled one way or another before a second paycheck is missed.
WALL STREET WILL NOT IGNORE A LASTING SHUTDOWN.
• Why it matters to investors:Most shutdowns end quickly, and Wall Street pretty much ignores them. But if this lasts goes much longer, there could be measurable effects – and Wall Street will reflect that. Federal loans to small businesses may be put on hold, private loans could be held up since government verification (with W2’s, for instance) won’t be available, import and export licenses will be delayed (affecting foreign trade), and homeowners may not get federally backed loans. According to the Council of Economic Advisors, the 16-day shutdown in 2013 resulted in 120,000 fewer private sector jobs created. And business confidence was badly damaged. (Source: https://obamawhitehouse.archives.gov/blog/2013/11/07/impacts-and-costs-government-shutdown)
Democrats take control of House
“I am not a member of any organized party. I’m a Democrat.” Will Rogers
• So much for regular order: It didn’t take long for Democrats to live up to their century old reputation. No matter how hard Nancy Pelosi wanted to switch the tone of Washington from chaotic to focused, all it took was one day until a brand new Democratic member of Congress was dropping two curse words. Rep. Rashida Tlaib of Detroit: “We’re going to go in there and we’re going to impeach the m-f.” Pelosi condemned the use of the vulgar term, and we assume she meant the m-f word, but she may have been more bothered by the use of the “i” word. Dropping the “i” word too soon and too often could turn the 2018 blue wave into a misty memory for Democrats who lose their House majority in 2020. Pelosi wants to avoid being the answer to a future Jeopardy clue. “This Speaker was the second to play up impeachment and lose seats in the House.” The first, of course, was New Gingrich, who thought he had a clear winner against President Bill Clinton with the Monica Lewinsky scandal.
Fact: The GOP lost 5 House seats in the 1998 midterm.
Fact: Newt Gingrich lost his position as Speaker after the 1998 election.
• Why it matters to investors:Wall Street has been looking for something or someone to bring calmness and clarity back to the political landscape and correspondingly to the business community. With tariffs being put on, then taken off, then threatened again -- rinse and repeat -- and members of Trump’s cabinet staying in their posts just a little longer than you want your family staying with you during the holidays, Wall Street was hoping things would settle down a little and investors could focus on earnings. Instead, Democrats came to town and started cussing out the president at bars and dancing in the Congressional hallway (Alexandria Ocasio-Cortez) to settle scores with “haters” on social media (and going on 60 Minutesto talk about raising taxes).
• Outlook:Look for some Frank Underwood style meetings out of the range of cameras where Pelosi lays down the law for some less-than-disciplined representatives and gives them a history lesson. Of course Will Rogers could tell you how well that will work.
• Tariff talk fading? In case you haven’t noticed, President Trump seems to have tamped down his talk about additional tariffs on China, or ratcheting up current levies to 25%, as he threatened last year. Trump has tied his political fortunes in no small part to stock market performance, and reinventing market volatility seems to have gotten to him. The view now: Trump may be willing to scale back his demands to get a deal with Beijing, and to get it ahead of a March 1st deadline. Keep your eye on this week’s talks in Beijing between U.S. and Chinese negotiators.
• Why it matters to investors: Wall Street doesn’t like tariffs. And Trump’s fellow Republicans don’t like defending them. (Nowhere in the GOP’s platform does it mention or promote tariffs as a solution to trade problems.)
WBP – Data Points
Trump’s popularity—compared with his predecessors? (Day 716)
Trump: 41.4% (FiveThirtyEight.com avg.)
Bush W: 60.4%
Bush HW: 61.2%
• A Polarized Electorate? Perhaps Not.
“For the past 25 years, according to Gallup, over a third of Americans have identified as moderate, and the number of independents reached an all-time in 2013.” -Gallup
• Crime out of control? The data says no.
President Trump says that one reason a border wall is needed is because crime is out of control. Yet statistics shows that rates of violent crime have fallen sharply over the past quarter century—a fact that much of the public has yet to grasp.