Dem
47
GOP
53
By the time you read this, the federal government will be 30-40 hours from shutting down, as the budget is set to run out at 12:01 a.m. Saturday morning. Congress and the White House were both getting their ducks lined up, so as to kick the can down the road until March. But those ducks have now gone the way of the dodo.
What fly got into the ointment (if we may continue our use of animalian metaphors)? A 6-foot-tall fly from South Africa is the answer. Here is a rough approximation of yesterday's episode of As the Budget Turns:
It is not clear, at the moment, what the next steps are for Johnson. He could try to keep moving forward with the current bill, once there's been 10-12 hours of "cooling off," but he probably won't get many Republican votes. And if he passes something with mostly Democratic votes, well, he's already being slammed as a RINO in right-wing circles, and his continued service as speaker is being called into question. Turning his back on (most of) the GOP could very well be the final nail in the coffin.
Alternatively, Johnson could try to renegotiate on the fly, and to come up with something that passes muster with Musk, Trump and Vance, but that is also acceptable to Democrats. Those three men might enjoy waving their... whatever around, and demanding that the Democrats give everything and get nothing, but that's not how this works. It's still a Democratic Senate and it's still a Democratic president for another 32 days, and the blue team is not going to help the Republicans out of their newly created mess, nor take ownership of the latest debt ceiling increase, without getting something out of it. Maybe disaster relief is enough for them, but probably not.
Johnson could also shoot for a clean resolution that merely continues funding at current levels. Whether the Democrats would support that is an excellent question, since they really want disaster funding. If this is the path that Johnson chooses, then Republicans will get to own everything once the can-kicking runs out. If on, say, March 15, the government gets shut down, or the debt ceiling is increased, or some popular program gets cut, or the stock market tanks, then it will happen on the watch of an all-Republican-led government, while the Democrats sit back and watch and enjoy their popcorn.
Finally, Johnson could throw up his arms and let the government shut down. Musk spent much time on eX-Twitter yesterday declaring that would not be such a bad thing, and that the government could just stay shut down for the next month, since essential services would still be paid for. The problem here is that there are still non-essential services that are actually still pretty essential. Many federal employees, including members of the military, would go without paychecks. It would be somewhere between difficult and impossible to get an emergency passport. Consulates and embassies would largely shut down. National parks and museums would be shuttered, which would surely ruin at least some people's holiday plans. And then, the backlog created by people not working would have to be cleared, often by people working overtime. The result is that the government would end up spending all the money it would have spent had it stayed open, plus a bunch more on top of that. During the last lengthy shutdown (also instigated by Donald Trump, incidentally), the cost to the federal government was about $3 billion. And inasmuch as there wasn't likely to be a shutdown, until the GOP Cerberus waded in, then the Republicans would surely get the blame for everything.
That includes not just the governmental impact, but also the broader economic impact, since the markets DO NOT LIKE uncertainty, instability and arbitrariness. In general, whenever anything notable happens in the market, there are a whole bunch of stories pairing the market's behavior with whatever the big news story of the day is. For example:
We're never sure if there's any real basis for the correlations the financial press draws, or if they are just making their best guess. What we do know, however, is that the Dow Jones has been down 10 days in a row; that's the first time that's happened in 50 years. We also know that the daily declines were pretty small until yesterday, when the fed cut rates, but said that might be it for a while, which produced a rather more substantial 1,100 point drop. We think it's a fair supposition that the market's shaky performance (which, mind you, was mostly in Dow Jones companies, and not NASDAQ or S&P 500 companies, at least not until yesterday) is at least partly a response to Trumponomics.
Oh, and speaking of markets, the betting markets have been following recent events with great interest. At the start of the day yesterday, the average "chance of a shutdown," across the books that allow such a bet, was around 10%. By the end of the day yesterday, it was approaching 50%. By the end of the day today, it could be in the 70s or 80s.
In short, there could be a shutdown, there could not be a shutdown... we have no idea. And we would guess that the folks on The Hill don't know much better than we do, since there are now so many moving pieces here. Not only does a spending bill have to placate both chambers of Congress, it also has to be acceptable to two presidents, one current, one future. Oh, and it probably also has to have buy-in from the most powerful man in the land.
Indeed, even once the budgetary issues are resolved, yesterday's revelations about power dynamics will continue to reverberate. It has not escaped anyone's attention that, in effect, Elon Musk said "jump" and Donald Trump said "How high?" Democrats, in particular, had some fun with it, referring to the President-elect as "Vice President Trump."
The thing is, there's definitely something to this. In general, Trump has surrounded himself with people who effectively become powerless and irrelevant the moment they are cut off from the Trump teat. Think of Rudy Giuliani, or Roger Stone, or Steve Bannon, or John Bolton, or Michael Flynn. Exactly how relevant were they (or how relevant would they be) upon being cast out of paradise by the Dear Leader?
By contrast, Trump has never hitched his wagon to someone like Musk, a person who has his own power base. From a financial perspective, the South African leaves the New Yorker in the dust. Trump has to shake down media outlets and petroleum companies for a million here, a million there. He has to hawk cheesy Bibles and golden shoes and phony cryptocurrency, and even then, Musk can outspend him 10-to-1 or 20-to-1 or 50-to-1 without batting an eye. There are something like 60 House seats that are actually competitive; Musk could easily set up a super PAC for each one and endow that PAC with $20 million, and he wouldn't even miss the money.
Meanwhile, by virtue of owning eX-Twitter, Musk commands a media platform that probably grants him a louder voice than even Rupert Murdoch and Fox. First, eX-Twitter reaches far more people than Fox does, and it's not even close. Second, Rupert Murdoch does not go on his own airwaves and create content. Musk, by contrast, does. And he doesn't have to answer to advertisers or stockholders in any meaningful way. He's also considerably less constrained by the laws about defamation.
Add it up, and Musk is in a position to put the screws to a misbehaving representative—or a misbehaving president—in a manner that is simply unparalleled. There was a time when we suspected Trump would get sick of Musk, and would push the South African aside. Now, however, we're not sure that's possible. Trump may have no choice but to kowtow to Musk, for fear of being targeted by the Twitter flamethrower and a fortune that is rapidly approaching $500 billion.
On top of this, there are also the power dynamics of the speakership going forward. Does Mike Johnson now answer to two masters? Or perhaps three? Is it going to be possible to navigate this particular nightmare before Christmas? And even if he does, what happens when it's time to hammer out an actual budget, by which time the Freedom Caucus (and other House factions), Trump, Vance, and Musk will all be feeling their oats? Does the Speaker even want to try to deal with this, or will he throw in the towel in disgust, the way the last three Republican speakers have done? And if he does decide he wants to keep his job, will he be able to do so? Keeping in mind that he can only afford one defection, there is much talk that he doesn't have the votes to be reelected speaker on Jan. 3. We guess it depends on what Elon Musk wants.
So, it was a pretty momentous day yesterday. Oh, and also a pretty good reminder/preview of what another 4 years of Donald Trump as president is going to be like. (Z)