A Faint Glimmer of Hope on the Shutdown?

Plus, 'a self-imposed natural disaster' By Yuval Rosenberg and Michael Rainey A Tiny, Faint Glimmer of Hope for an End to the Shutdown? Day 32 of the partial government shutdown brought a tiny, faint glimmer of hope that the impasse could be resolved, even as Republicans and Democrats prepare for the next round of legislative volleys in their ongoing [blame game](. As the result of a deal reached by Senate Majority Leader Mitch McConnell and his Democratic counterpart, Chuck Schumer, the Senate will vote Thursday on two competing proposals to end the shutdown, now in its second month. One vote will be on President Trump’s proposal, announced over the holiday weekend, which includes $5.7 billion in border wall funding. The other vote will be on legislation passed by the Democratic-led House that would fund the government through February 8. The scheduled votes are a sign of some bipartisan movement to end the impasse — but they appear [unlikely]( to actually break the stalemate. Democrats remain staunchly opposed to Trump’s proposal and they have enough votes to block it. The Democratic plan, meanwhile, would need at least 13 Republicans to break ranks with the president, who has insisted that any deal to reopen the government must include money for a border wall. McConnell reportedly will not support the Democratic bill. “What this does is let politically vulnerable senators like Cory Gardner (R), Susan Collins (R) and Doug Jones (D) cross party lines to make a point,” Bloomberg’s Sahil Kapur [tweeted]( adding that there’s a “non-zero chance” that if the Trump plan fails, “there's a jailbreak among Republicans who decide to vote for #2 and say it's time to end the shutdown.” Trump’s Proposal: ‘The Impression of Flexibility’ Trump, in what he billed a [“major announcement”]( on Saturday, offered [temporary protections]( from deportation for roughly a million immigrants in exchange for the wall funding he’s been seeking. The proposal was quickly met with criticism, from Democrats and conservatives alike. House Speaker Nancy Pelosi called it a [non-starter.]( Sen. James Lankford (R-OK) said it was a [“straw man proposal”]( intended to open up debate, but other conservatives rejected the proposal more vehemently, describing it as “amnesty” for undocumented immigrants. Right-wing firebrand Ann Coulter [tweeted]( Saturday that “Trump proposes amnesty. We voted for Trump and got Jeb!” Bloomberg’s Jonathan Bernstein described it as “an offer intended to give the impression of flexibility without actually moving in the Democrats’ direction.” The Next Round in the Blame Game The [1,301-page legislation]( based on Trump’s outline, released on Monday, would provide funding through September for the parts of the government that are shut down; provide the $5.7 billion Trump is seeking for construction of barriers along the border with Mexico; provide $800 million for humanitarian aid; fund a variety of other immigration security measures; and provide $12.7 billion for hurricane and wildfire disaster relief. But the DACA and TPS provisions in the legislation reportedly [don’t align]( with what Trump had outlined in his speech, and the bill would also require Central American minors to apply for asylum in their home countries rather than at the U.S. border, and it would introduce new caps on asylum claims from those minors. Those hardline provisions give Democrats [more reason]( to reject the proposal. “The asylum changes are a poison pill if there ever was one, and show the lack of good faith that the president and now Leader McConnell have,” Senate Minority Leader Chuck Schumer [said](. Without Democratic support the legislation can’t get the 60 Senate votes necessary to advance. The Supreme Court further undercut Trump’s plan on Tuesday by [not taking action]( on lower court rulings that blocked Trump from ending DACA. The court’s decision likely keeps DACA in place [for several months]( or longer, reducing the appeal of Trump’s offer. Bloomberg’s Bernstein suggested that a Senate vote largely along party lines would likely prolong the standoff — but that if some Republicans who have spoken out against the shutdown vote against it, that would make clear how weak Trump’s position is and could move us closer to quickly ending the shutdown. “[F]or any Republicans who want this shutdown to end, opposing Trump’s plan would be the quickest way to make that happen,” he [wrote](. Now, with a Senate vote planned on simply reopening the government, Republicans have an even faster path there — if they want it. Other Reason for Hope? Even before the Senate’s plans to vote on Thursday were announced, Greg Valliere, chief global strategist at Horizon Investments, suggested that while both parties remain firmly dug in based on their public comments, “in private there's some movement on two key issues – the Democrats could accept funding for a border barrier, and the Republicans could bend further on the issue of protection for the so-called ‘Dreamers.’ To paraphrase a classic Winston Churchill quote, now we're just arguing over the details.” Valliere noted that Trump’s approval ratings are plunging and that some Democrats “are grumbling that the party has not showed sufficient compassion for the 800,000 federal workers who are not getting paychecks.” A group of centrists Democrats is asking Pelosi to agree to hold a vote on funding for Trump’s wall if he signs a bill to reopen the government, [Politico reported]( Monday. (Trump had previously rejected a similar proposal made by Republican Sen. Lindsey Graham.) And House Majority Whip James Clyburn (D-SC) floated what could be seen as the outlines of a deal Sunday. “We would love to have a permanent fix for DACA and TPS just as he wants a permanent wall,” he said on CBS’ “Face the Nation.” The details of such a compromise may be nearly impossible to hammer out, though, with hardliners on both sides already pushing back on key points, which may be why even Valliere says that a negotiated end to the standoff isn’t all that likely — and, at best, would still be weeks away: “After the likely failure of Trump's plan on Capitol Hill this week, it still appears that the best bet would be him declaring a national emergency or using executive authority to pry loose some funding for a border barrier – then lifting the shutdown while his executive action is litigated. The alternative is pushing for a deal that still may take weeks to come into clear focus.” Meanwhile, federal employees affected by the shutdown are set to miss their second paycheck this week. Chart of the Day: Like a Hurricane The partial government shutdown has hit the economy like a hurricane — and not just metaphorically. Analysts at the Committee for a Responsible Federal Budget [said]( Tuesday that the shutdown has now cost the economy about $26 billion, close to the average cost of $27 billion per hurricane calculated by the Congressional Budget Office for storms striking the U.S. between 2000 and 2015. From an economic point of view, it’s basically “a self-imposed natural disaster,” CRFB said. Will Democrats Settle for ‘Medicare for More’? A new wave of progressive Democrats may be pushing hard for universal healthcare under the banner of “Medicare for All,” but the party itself is leaning toward something more like “Medicare for More,” according to [Politico’s Alice Miranda Ollstein and Adam Cancryn](. The authors say that Democrats close to the party establishment are looking for incremental improvements to Obamacare, not a big leap into universal healthcare. Lawmakers have offered eight health care plans that aim to expand coverage, ranging from “modest Medicare reforms to more ambitious restructurings that would extend government-run care to millions of new patients — an array of options that fall short of campaign trail promises for full Medicare for All,” Ollstein and Cancryn write. “If we could make the leap straight to Medicare for All, I would love for us to do that,” said Sen. Jeff Merkley (D-OR). “But it’s important to lay out a route about how we get to that vision. If you tell people the only choice they have is Medicare, that could produce a lot of folks being concerned about, ‘Wait a minute, I like my health care and you’re telling me I have to leave it.'” Although they know they probably can’t succeed against the Democratic Party establishment, let alone against the partisan opposition in a divided Congress, progressives say they will continue to push for universal health care, if only to keep the issue on the agenda for the 2020 election. “We want a floor vote soon because we want it to be part of the presidential conversation,” said Rep. Ro Khanna (D-CA), “so certainly before the Iowa caucuses.” State Tax Revenues Jump Higher Solid economic growth and a rising stock market drove state tax revenues higher in 2018, with 36 states collecting more taxes than they did before the Great Recession, according to an analysis released Tuesday by Pew Trusts. The tax overhaul signed into law just over a year ago also boosted state finances, though the effects are expected to be short-lived as state governments adjust policies in response to the new federal rules. State tax revenue growth had been sluggish in the wake of the recession, Pew’s Barb Rosewicz, Justin Theal and Daniel Newman said, but a surge that began in late 2017 pushed receipts 12.2 percent above the previous peak recorded in 2008. North Dakota fared the best, thanks largely to an increase in the price of oil, with receipts nearly 50 percent higher than its previous peak. Alaska did the worst, with receipts coming in at 86 percent below the 2008 peak. Read the [full analysis here](. Happy Monday! Send your tips and feedback to yrosenberg@thefiscaltimes.com. Or connect with us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( to get their own copy of this newsletter. Shutdown News - [Congress Agitates to End Relentless Shutdown]( – Politico - [Supreme Court Undermines Trump’s Strategy on Government Shutdown with Immigration Decision]( – Washington Post - [Calls Escalate for Trump to End Shutdown and Trade War Amid Fears of Economic Slowdown]( – Washington Post - [Trump Voters Now Blame Him for the Government Shutdown]( – Washington Post - [Warner Asks if Trump Is Following Law Regarding Exceptions from Shutdown]( – Roll Call - [Amid Shutdown, Federal Workers Face Health Struggles: 'We Are the Ones That Are Suffering']( – CNN - [Even Giant Federal Contractors Feeling Shutdown's Bite]( – Politico - [U.S. Agriculture Department to Reopen All Farm Agency Offices]( – Reuters - [GoFundMe Launches Government Shutdown Relief Fund: ‘We Are With You’]( – HuffPost - [KISS Bandmates Offer Free Meals to Unpaid TSA Workers]( – The Hill Other News - [Despite Pelosi Request to Delay, Trump Moves Ahead with SOTU]( – Associated Press - [The Super Rich at Davos Are Scared of Alexandria Ocasio-Cortez's Tax Proposal Targeting the Wealthy]( – CNBC - [Overseas Investment Seen Rebounding as U.S. Firms Repatriate Less Profits]( – Wall Street Journal (paywall) - [Conservative Groups Press Trump to Reduce Capital Gains Taxes]( – The Hill - [Trump Proposals Could Increase Health Costs for Consumers]( – New York Times - [Secretive ‘Rebate Trap’ Keeps Generic Drugs for Diabetes and Other Ills Out of Reach]( – Kaiser Health News - [Grassley to Test GOP on Lowering Drug Prices]( – The Hill - [Pelosi Works Her Health Care Strategy from the Ground Up]( – Associated Press - [In Oversight Inquiry, Key Democrat Seeking 10 Years’ Worth of Pricing, Sales, Research Data from Drug Companies]( – STAT - [In Pursuit of Better Health Care for Less Money, Minnesota Hospitals Show Uneven Results]( – Star Tribune Views and Analysis - [Why Can’t Democrats and Republicans Resolve the Shutdown? Because Their Voters Don’t Want Them To.]( — Colby Itkowitz, Washington Post - [Here Are 6 Scenarios That Could Actually End the Government Shutdown]( – Chris Cillizza, CNN - [Government Shutdown Exposes a Harsh Truth: Most Americans Are Unprepared for the Next Recession]( – Sven Henrich, MarketWatch - [Trump Sees the Wall as a Monument to Himself]( – Gloria Borger, CNN - [Nancy Pelosi Should Negotiate with Ann Coulter]( – Dean Obeidallah, CNN - [IRS Workers Beckoned to Involuntary Servitude]( – Joe Davidson, Washington Post - [Alexandria Ocasio-Cortez’s Tax Hike Idea Is Not About Soaking the Rich]( – Emmanuel Saez and Gabriel Zucman, New York Times - [How Alexandria Ocasio-Cortez’s Tax Plan Would Change the NBA]( – Nick Greene, Slate - [Kamala Harris’s Disappointing Economics]( – Tyler Cowen, Washington Post - [Chilling Davos: A Bleak Warning on Global Division and Debt]( – Andrew Ross Sorkin, New York Times - [Has Business Got the Courage to Drop the Ideological Right?]( – Richard Murphy, Tax Research UK - [The Young Left’s Anti-Capitalist Manifesto]( – Clare Malone, FiveThirtyEight Copyright © 2019 The Fiscal Times, All rights reserved. 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