In the coming weeks and months, the highest priority for Congress and the Trump Administration will be to find a resolution to the stalemate on the U.S. debt ceiling, which was hit last March. Congress and the Administration must break the impasse by raising the ceiling before about August or September, at which time the government is expected to run out of money.
In addition to scaling that fiscal cliff, they must agree to a budget for the new fiscal year and avoid $120 billion in automatic spending cuts under the sequestration process. Without a budget deal, mandatory cuts will kick in.
Unfortunately, at a meeting last week Congressional leaders and the White House, failed to agree to lift the spending caps for non-defense programs. Moreover, with a divided Congress, it’s highly unlikely that an agreement can be reached without raising the spending caps for both defense and non-defense programs. The general view from D.C. is that the preferred policy would be to lift the caps and suspend the debt ceiling for two years, which would presumably take 2020 election posturing out of the talks.
In a much covered non-meeting, President Trump and Democratic leaders Nancy Pelosi and Chuck Schumer had a long planned follow up conclave on the infrastructure program tentatively agreed to previously, but when the Congressional leaders arrived at the White House the President refused to talk. He walked out of the meeting to hold a press conference insisting there would be no bipartisanship without the Democratic House ending all investigations of him.
This confirms my skepticism of any significant infrastructure program when there is significant Republican opposition to new domestic spending. While the President’s performance was a stunt, there is little likelihood that any infrastructure program will be approved this year.
China trade talks have so far gone nowhere, and US newly instituted restrictions against China’s Huawei only exacerbated the ongoing tensions, which has found expression in a choppy stock market. The President did utter some soothing remarks but attention continues to be focused on the expected meeting between Trump and China’s president Xi Jinping at the G-20 summit in Japan at the end of June.
Congressional representatives leave until June 4 for their Memorial Day break. While Congress did manage to come to an agreement with the White House on a $19 billion disaster relief bill nothing else was agreed to.
