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US government nears shutdown yet again

By Patrick Higgins  |  19/01/2018 13:36
”american

In an altogether harmful course of events, the US government nears total shutdown tonight as Democrats move to reject a Republican budget alleviation bill, while simultaneously yields on 10-year US Treasury bonds have hit their highest levels since Trump's election last November.

The Republican bill, passed by the House last night and sent to the Senate for review, has come under heavy Democratic scrutiny, as it makes no provisions towards finalising the immigration status of the so-called, "Dreamers," or children of the DACA (Deferred Action for Childhood Arrivals) programme who were brought illegally to the US as children. Earmarks for controversial social applications, such as the Children's Health Insurance Programme (CHIP) which provides health insurance for low-income families, were only included to placate the Democrats and secure enough votes for the bill to clear the Senate, where Republicans need at least 12 Democratic votes for the bill's successful passage.

The bill itself, the third such alleviation bill since the fiscal year began for the US government back in October, is constructed to provide funding for a mere four weeks and was conceived for the sole purpose of preventing a total government shutdown tonight. Many Democrats, besides believing that continued cooperation with such prolific usage of alleviation bills to avoid government shutdowns sets a dangerous precedent, refuse to work with the party of Donald Trump on the bases of political, economic, and moral groundworks. Pointedly, the issue of DACA's continuance or non-continuance has been the primary sticking point against bipartisanship recently.

Relatedly, President Trump has actually been a detriment to Republican efforts to secure bipartisan support for a budget. This was evident in Trump's tweeting yesterday expressing his disapproval of the bill, forcing the White House to issue a follow-up statement assuring that the President was in full support of the bill. Additionally, there is the thorn of President Trump's comments this past week towards citizens of, "shithole," countries trying to enter America, causing international embarrassment.

Unsurprisingly, the lack of political will to cooperate on a government spending bill within Congress, as well as President Trump's volatile and unstable style of leadership, has caused damaging economic volatility. 10-year Treasury yields, indicators of faith in the US government, have risen to their highest levels in three years at 2.642% due to lower demand from decreased investor confidence. Additionally, the dollar has continued to dive steeply. Within the dollar index, the dollar fell 0.3% to 90.230 today, on top of the already 2% decline observed from the beginning of January, the lowest value in three years.

The decline of the dollar particularly is worrying but has not come unexpectedly. The reality of American politics, as an American writing this, is that the conduciveness of American bipartisanship is profoundly affected by who is in the White House. Trump, with his penchant for disorder and off-ended comments, has, whether inadvertently or without care, caused so much damage to the US, especially towards its economic standing. Additionally, the continued lackadaisical attempts of both Democratic and Republican legislators to come together as one government in recent years has done nothing to reassure investors that the US government can conduct business as usual. On top of all of this, the economies of Europe continually move towards total recovery, and there is increasing belief that the euro constitutes a more stable investment portfolio than the dollar. Within the last year especially, the euro has climbed almost ten cents against the dollar and is backed by the decreasingly volatility of the European political environment. The defeat of right-wing parties in France, Holland, and Germany pumped hope into the future of the European project and the respective eurozone economy. Additionally, though Germany has struggled to form a government since last year, a deal between the two major parties seems near, again providing a boost to the perceived strength of Europe.

In this current climate, both political and economical, I see much uncertainty on America's horizon. The American public's opinion of Trump's performance thus far, and lack thereof of Congress, will be made evident later this year during November's midterm elections, and the Republicans may very well lose control of the Senate and possibly even the House if Trump continues to lead the Republicans towards oblivion.

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