Democrats are wrong to think the shutdown gives them leverage

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The writer is the director of economic policy studies at the American Institute of Institutions

There is a simple way out of the closure of the United States. Republicans in the House of Representatives, with the support of President Donald Trump, acknowledged a bill to finance the government at the current levels until November 21. Eight Democrats in the Senate can join their colleagues in the Republican Party and pass this law, making the government open.

They did not. In order to focus the nation’s interest on unrelated health care policies, they prefer to close the government than keeping 750,000 government workers in the job, and airport security lines operate smoothly and in response to external diseases at full capacity. Democrats in the Senate possess this closure.

All this happens at a time when the federal reserve seems to be mainly reading the economy, making the unrest in the launch of government data that will result from closure more harmful.

The labor market report is likely to appear – which should have been released on October 3 – that the unemployment rate remains low and relatively stable, and that wage growth remains strong. This additional evidence of the strength of the labor market at the time of accelerating the inherent inflation above the goal that could help the Federal Reserve to understand that the wrong time of the cut cycle now.

Moreover, the closure of the quality and timing of the job report can be disrupted in October. Worse, the Federal Reserve may not be able to reach the consumer price index data in September at its next meeting to determine the price, which starts on October 28. It may take the government’s statistics two weeks after returning to work to collect data, as was the case after the 2013 operation. In the midst of the unrest and uncertainty policy, it is now a terrible time for the Central Bank, investors and bam flying companies.

Democrats are concerned primarily about the fate of subsidies reinforcing health insurance plans for affordable prices, whose validity will end at the end of 2025. President Joe Biden signed these benefits in the law, and will increase the expiration of external healthcare expenses for more than 20 million people, in many cases. Millions can eventually become unbelievable if the benefits are not extended.

The main issue here is lack of confidence. Democrats do not believe that they will be able to get a deal with Trump to expand these benefits without a real crane. Their mistake is to think that the closure gives them such a leverage.

The reason for the lack of influence is that Trump’s position is shockingly traumatized: he wants to keep the government funded by the Biden era, with no chains. Moreover, previous efforts to use the operation ended, as the financial lever has ended for unrelated and embarrassing policies.

Yes, early voting shows that voters blame Trump more than Democrats. But many respondents have not yet been resolved, and what matters is how this plays locally, not both national.

By closing the government, Democrats in the Senate delivers Trump a lot of power, reducing their influence. He gives him the opportunity to implement spending discounts. Trump’s budget manager has already announced $ 18 billion in federal funds for New York City infrastructure projects and $ 8 billion in climate -related projects. In addition, the White House said it may try to get rid of thousands of federal workers if the closure continues, leading to the progress of the president’s goals. Trump leader and Senate leader John Thun showed in preparation for negotiations with Democrats to extend ACA benefits, which many voters receive in several places that will be closely competed in the renewal elections next year, and in some red states. In fact, two Republican Senators have already expressed their desire to extend the benefits.

Democrats stand a good opportunity to achieve their goal – but only after the government’s reopening. The subsidies are likely to be extended in a timely manner to start the ACA registration period on November 1.

For all these reasons – the need for economic statistics in a timely manner, the lack of Democrats of the leverage, and the possibility of Democrats ultimately the success of the ending ACA benefits – this closure is likely to be short. In fact, three Democratic Senate members have already voted in favor of the House of Representatives Financing Bill. Trump only needs five others to break rows. I will be surprised if it continues after October 15, when the following paid checks for US military service members are due. Because of this potential brevity, the economic effect of the closure is likely to be small. As for the markets, American stock indicators were closed at record levels on Thursday, and the bond market has not been registered with any interest.

After the reopening of the government, the moderate Democrats may attribute themselves by saying that this trick increased the general pressure to expand health care subsidies due to the expiration of its validity at the end of the year. This may be true.

But this episode is another reason for the increasingly concern of foreign investors and leaders about the stability of the US government and another linking to bridge the US -American economic and jius. This dam will carry despite the closure. But it will be weakened more – and the flood that can one day be unleashed and frightening.