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Trump Blinks Again, Won’t Shut Down Government Over Wall Funding

Courtesy of ZeroHedge. View original post here.

Last Tuesday, during his rally in Phoenix, Trump promised the fawning public that he will follow through on his biggest campaign promise and “build that wall,” saying that “now the obstructionist Democrats would like us not to do it. But believe me, if we have to close down our government, we're building that wall."

The promise spooked already nervous traders, who saw in Trump's promise the catalyst for either an extended government shutdown, or worse, a technical default as the US breached the debt ceiling in early October. That said, Trump had already flopped once on the border wall funding, and – we wrote last week – it was very likely he would do so again once his economic advisors explained to him the severity and consequences of his latest public boast.

That's precisely what happened as moments ago, the WaPo reported that White House officials quietly notified Congress that the $1.6 billion in wall funding would not need to be in the September continuing resolution that was meant to fund government operations from October until sometime in early December, a senior GOP congressional aide said. In other words, contrary to his vow less than two weeks ago, Trump won't shut down the government over the wall funds after all.

So how will Trump explain this latest flip-flop? The same way he did last time: by kicking the can:

White House officials have signaled to lawmakers, however, that the wall’s eventual construction remains a top priority for Trump. He wants this funding to be included in the December budget bill, GOP congressional aides said.

By then, however, nobody will care what Trump has to say:

Trump could still follow through on a threat to shut down the government in December, but this marks the second time he has pulled back from the wall demand in order to allow lawmakers to pass a budget bill. The first time came in May, when lawmakers voted to authorize government funding through September and refrained from including money that would allow for the construction of a new wall. That law, however, did allow the U.S. government to replace existing border wall with a new barrier where necessary.

What has made the bizarre situation especially "sad" is that Trump has been threatening to shut down the government for months. In May, he said in another tweet that the government needed a “good shutdown” to break the gridlock in Congress. The issue for Trump, is that every time he has the chance to enforce a "good shutdown", he backs out.

While all democrats will be delighted by the latest retreat by the president, so will many republicans:

That’s one reason many Republicans in Congress have told Trump to focus on other parts of his agenda and postpone having a fight about constructing the border wall for now.

So does Trump have any, well, trump cards left? Not really:

If Trump decided to veto a funding bill passed by Congress, it would lead to a partial government shutdown. National parks would close, and many government agencies would send employees home without pay, causing delays at Social Security, the Internal Revenue Service, and at numerous other agencies. The last time there was a government shutdown was in 2013.

Finally, confirming the WaPo's report, this is what a White House aide told Bloomberg:

  • TRUMP WON'T PUSH BORDER WALL MONEY IN GOVT FUNDING BILL: AIDE

Curiously, while 10Y yields have risen modestly on the report, the T-Bill dislocation remains, with the October 5th bills still +9.5bps, indicating that the market remains distinctly nervous about the possibility of a debt ceiling crisis in just one month.


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