Donald Trump threatens US govt shutdown over Mexican wall: The looming threat and its fallout

On Saturday, the US government may shut down. In essence, the US government runs out of money to pay for all its programmes at midnight 28 April, unless Congress, which controls the purse strings, passes a spending bill.

At first glance, this shouldn't be a difficult proposition. No one wants a government shutdown, especially the Republicans, who control every lever of power. A shutdown would reflect poorly on their ability to govern.

US President Donald Trump. AP

US President Donald Trump. AP

As for president Trump, the consequences of a shutdown could be disastrous — 29 April is his 100th day in office — the new president is already battling fierce headwinds with his approval rating at a historic low of 42 percent.

The optics of the government shutdown coinciding with his 100th day in office could be a body blow to his image. And yet, as of Monday, a government shutdown is looking more and more likely. But let's first look at what that entails.

Lights out? More like lights dimmed

Let's assume that Congress is unable to pass a funding bill or even pass a continuing resolution, which temporarily keeps the lights on and kicks the can of passing a funding bill down the road. What then? The government would not, in fact, completely shut down.

Government employees who provide essential services: social security, medicare and the US post office, would continue to work. However, the government would stop providing to the public all services deemed "non-essential".

According to a report in The Guardian, there are between around 800,000 and 1 million government employees who are categorised as "non-essential". These range from people working in the Environmental Protection Agency, civilian employees in the Department of Defence to scientists working at Nasa. These employees would be furloughed, absent pay.

The real trouble would begin when the government begins to reach closer to the debt limit. This is a fixed amount, also set by Congress, which specifies how much the US government can borrow. Think of it as the limit on your credit card. However, the failure to raise the debt limit is no game. The prospect of a US default is unthinkable: it could send markets around the world crashing and even affect the rating of US bonds. Thankfully, this battle is months away.

Why is the government shutdown likely?

The Republicans in Congress are eager to reach an agreement with the Democrats because they can't pass the funding bill through the US House and the Senate themselves. They simply don't have the votes.

However, the White House is causing all sorts of problems. President Trump reportedly wants the funding bill to include a provision to pay for one of the president's signature campaign promises: a border wall with Mexico. Ironically, this would violate Trump's promise that Mexico would pay for the wall. However, the US president still insists that Mexico will "eventually" pay for the wall in "some form or the other".

To get their way, the White House is threatening to withhold Obamacare subsidies to lower income individuals. Paying for the wall is a non-starter for Democrats. Add to that, the White House threat of withholding subsidies has their base enraged. Even if they were inclined to help the president, which they are not, given the president's unpopularity, the Democrats' base won't let them.

What the White House has failed to grasp is that they have absolutely no leverage in this fight and that the fallout from a shutdown would be, politically, much worse for them than the Democrats, who are the opposition. The only way the shutdown can be averted is if the White House stages an orderly retreat and gives in on the demand for funding for the wall.

Has a government shutdown happened before?

On multiple occasions. Most recently, in October 2013, under then president Barack Obama. The reason for the shutdown was a fight over Obamacare. The Republicans, who controlled the House, attempted to defund Obamacare. President Obama and the Democrats, who controlled the Senate, rejected their proposal. No agreement could be reached.

The government shutdown lasted 16 days and ended with a victory for the Democrats after the House and Senate voted to fund the government and extend the debt limit. Only minor changes were made to Obamacare, mandating income verification for those receiving Obamacare subsidies. Obama signed the bill on 17 October, ending the shutdown.  While a different president is in office, it seems that history is likely to repeat itself.

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Updated Date: Apr 24, 2017 16:57:42 IST

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