If the partial government shutdown were a horror movie, it could now be called “28 Days Later.”We’re rapidly closing in on the one-month mark for the partial government shutdown, and developments have slowed to a virtual crawl. The Trump administration has taken steps to minimize the pain and disruption caused by the shutdown, but there are no signs of real progress in getting the government reopened. Congress is gone for the long holiday weekend and there are no known talks scheduled between President Trump and Democratic leaders.“President Donald Trump and House Speaker Nancy Pelosi are engaged in the bitter opposite of negotiations over the partial government shutdown,” Bloomberg reported Friday morning, “as they seek to cow one another into an embarrassing capitulation.”Pelosi’s office said Friday that she is postponing her planned trip to Brussels and Afghanistan, claiming that the Trump administration had leaked the delegation’s commercial travel plans after revoking their use of military aircraft Thursday. “In light of the grave threats caused by the President’s action, the delegation has decided to postpone the trip so as not to further endanger our troops and security personnel, or the other travelers on the flights,” Pelosi’s spokesperson said. The Trump administration reportedly has yet to respond to Pelosi’s accusation.This week’s tit-for-tat between the two leaders did nothing to move the shutdown toward a resolution. Amanda Carpenter, a former adviser to Sen. Ted Cruz (R-TX), told CNN that Trump’s grounding Pelosi’s scheduled congressional delegation might have excited his supporters, but didn’t accomplish much else: “This is a move that will be effective at convincing the base that they are yet again owning the libs, but show me how it gets you to a deal,” she said.The bottom line: It ain’t pretty. “Right now, there is zero trust between the two sides. … The well isn’t just poisoned. It’s poisoned, set on fire and collapsed. Which is bad news for the 800,000 federal workers who have been either furloughed or working without pay for a month now. And for the rest of us too, who are watching our government’s slow-motion failure right in front of our eyes,” CNN’s Chris Cillizza said.
Other Shutdown DevelopmentsChamber of Commerce Again Presses for End to Shutdown: The U.S. Chamber of Commerce is again pushing the president and Congress to end the shutdown. In a letter to President Trump and Congress signed by 385 business groups, trade associations and local chambers of commerce from all 50 states, it said that the shutdown “is causing significant and in some cases lasting damage to families, businesses, and the economy as a whole. The harm is well documented and continues to compound with each passing day.” The letter added: “There are numerous paths forward that would allow for the government to be reopened that should be acceptable to all parties. Failing to seize on one of those compromises that can pass Congress and be signed into law is unacceptable.”Does the Path to Ending the Shutdown Run Through the TSA? The Transportation Security Administration continues to face high rates of absenteeism, as workers required to work without pay continue to call in sick. The TSA said Friday that 6.4 percent of airport security officers had unscheduled absences on Thursday, up from a 3.8 percent rate on the same date a year ago. It said that “many employees are reporting that they are not able to report to work due to financial limitations.”Echoing what some other analysts and pundits have said, Tim Chapman, the executive director of Heritage Action, the political arm of the Heritage Foundation, told C-SPAN on Friday that if TSA agents walked off the job tomorrow, “the shutdown would be done in two days.”The Shutdown Hits Home for Trump, Sort Of: “Just 21 of the roughly 80 people who help care for the White House — from butlers to electricians to chefs — are reporting to work. The rest have been furloughed,” the Associated Press reports. “The pared-down White House residence staff typically still includes a butler and a chef. Basic housekeeping continues.”Wall Street Is Shrugging Off the Shutdown: “The S&P 500 is up more than 10 percent since the beginning of the shutdown. That’s only the fourth time this decade in which the index has gained that much in any 18 trading day period,” Bloomberg reports. “That’s not to imply the shutdown has stoked the market … but it does go to show how relevant, or irrelevant, Washington beltway brinksmanship is to capital markets.” Markets are having their best January in 30 years, The Washington Post notes.
Shutdown Fight Could Be a Hint of Things to ComeAs long as the current government shutdown ends within the next few weeks, the cost to the overall economy should be relatively modest, says Andrew Hunter of Capital Economics. Much of the lost economic activity would likely be made up in the following weeks, as was the case with the 16-day shutdown in 2013. However, “the damage to the economy will begin to rise exponentially the longer the shutdown drags on,” Hunter wrote in a note to clients Friday.If the shutdown lasts through March, Hunter estimates that economic growth in the first quarter would fall by between 0.5 and 1.0 percentage point on an annualized basis. About half of that loss would be from direct costs associated with 800,000 federal employees not being paid, while the other half would come from indirect costs driven by things like “suppliers going unpaid, cancellations of contractor work and even missed rental payments on Federal buildings.” Other potential costs that could emerge toward the end of the quarter include delays in tax refunds, the loss of food stamp payments and disruptions to travel.Given Capital Economics’ projection of 2.0 percent GDP growth for the first quarter, the analysis suggests that a shutdown of three months could cut economic growth in half to start the year — not a disaster, Hunter says, since much of the growth could be recaptured in the following quarters.More troubling, though, is the possibility that the shutdown is just a hint of what’s to come. “The bigger risk to the economy,” Hunter writes, “is probably still that the current stand-off is just a prelude to a full-blown crisis over the Federal debt ceiling later this year.”
Chart of the Week: Lowering Medicare Drug PricesThe U.S. could save billions of dollars a year if Medicare were empowered to negotiate drug prices directly with pharmaceutical companies, according to a paper published by JAMA Internal Medicine earlier this week.Researchers compared the prices of the top 50 oral drugs in Medicare Part D to the prices for the same drugs at the Department of Veterans Affairs, which negotiates its own prices and uses a national formulary. They found that Medicare’s total spending was much higher than it would have been with VA pricing.In 2016, for example, Medicare Part D spent $32.5 billion on the top 50 drugs but would have spent $18 billion if VA prices were in effect — or roughly 45 percent less. And the savings would likely be larger still, Axios’s Bob Herman said, since the study did not consider high-cost injectable drugs such as insulin.
How Alexandria Ocasio-Cortez Is Already Shifting the Debate on Taxes and DeficitsAlexandria Ocasio-Cortez, the youngest woman ever elected to Congress, has wasted no time in making waves in Congress, emerging as a focal point for the national press — and social media powerhouse to boot. Her first speech from the House floor, delivered on Wednesday, set a minor record by becoming C-SPAN’s most-watched Twitter video of remarks by any member of the House. (“It is actually not about a wall, it is not about the border, and it is certainly not about the well-being of everyday Americans,” the 29-year-old congresswoman said of the shutdown. “The truth is, this shutdown is about the erosion of American democracy and the subversion of our most basic governmental norms.”)Ocasio-Cortez is also on the cover of Bloomberg Businessweek (“READ MY LIPS: Yes, New Taxes. Lots. Big ones, too. Plus, Medicare for ALL.”) The cover story by Peter Coy and Katia Dmitrieva looks at how Ocasio-Cortex has already changed the conversation around tax rates and the deficit, among other things. “What Ocasio-Cortez understands is that getting an idea talked about, even unfavorably, is a necessary, if insufficient, step on the path to adoption,” the authors write.
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