While a government shutdown was avoided Thursday when the Congress passed, and President Donald Trump signed a Continuing Resolution (CR) extending government funding until December 22nd, this only postpones a problem. It doesn’t resolve any of the crucial issues surrounding the funding of the government for the 2020 fiscal year that began on October 1.

It appears that a final resolution continues to be difficult to achieve due to the political stalemate over funding the President’s southern border wall. At this point it doesn’t appear that either side has an endgame strategy, and it’s possible that the President could use a shutdown crisis as a way to divert attention from impeachment and motivate his base by fighting against illegal immigration and for the wall.

China

While impeachment grabbed the headlines, the D.C. development that might have more policy impact is the passage of legislation putting pressure on mainland China to maintain the political freedom Hong Kong still enjoys. The legislation would require the Secretary of State to annually certify that Hong Kong retains enough autonomy to keep its special trading status with the US.

The bill also grants the US Treasury Department authority to place sanctions on Chinese and Hong Kong officials who are deemed to be violating freedoms guaranteed to the citizens of Hong Kong under the agreement reached when Hong Kong was returned to China by the British.

The President needs to decide whether to sign the legislation which sits on his desk after being approved by an overwhelming Congressional bipartisan vote. If he does sign the bill, it will likely create a new hurdle for the trade negotiators to overcome.
Unsurprisingly, China views the bill as interference in its domestic affairs. The legislation poses new questions about whether an agreement can be reached prior to the December 15 tariff deadline established by the Administration.

Politics

Democratic Presidential candidates conducted their November debate with no clear winners or losers, and one more debate is scheduled for December 19. To date, only six candidates have qualified. The next few weeks will tell if new candidates Duval Patrick and Michael Bloomberg will qualify. As the February 3 Iowa Caucuses draw closer early favorite Vice President Joe Biden has slipped but no clear favorite has emerged. Iowa and New Hampshire traditionally narrow the field and while that may happen it is not clear that among the top candidates a leader will emerge.

Impeachment dominates the DC headlines with a general expectation that when Congress returns after Thanksgiving the House will vote articles on impeachment before Christmas. But like so much under President Trump, it is unlikely to change many votes as the election year of 2020 starts.

Govt Shutdown Postponed; Resolution Appears Difficult
Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You are reading the last free article for this month.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)