By Bloomberg
January 4, 2019

President Donald Trump and congressional Democrats have staked out ground that leaves them far from any deal to end the partial government shutdown as the two sides head into negotiations for a second time this week.

House Democrats on Thursday ignored a Trump veto threat and passed a two-bill package that would reopen all federal agencies without the $5 billion the president wants for a wall on the U.S.-Mexico border. Trump claimed broad public support for building a wall or other barrier that Democrats called a waste of money.

Ahead of the meeting Friday, the 14th day of the government shutdown, Trump sent a letter to all members of Congress that included a presentation on border security and a pitch for building a wall.

“Absolutely critical to border security and national security is a wall or a physical barrier that prevents entry in the first place,” Trump said in the letter. “Walls work. That’s why rich, powerful, and successful people build them around their homes.”

The standoff has shuttered nine of the 15 federal departments and left hundreds of thousands of workers on furlough or working without pay.

House Vote

The White House discussions come a day after Democrats took control of the House and elected Representative Nancy Pelosi of California as speaker. One of their first acts was passage of two bills, one to fund eight cabinet departments through September and the second to reopen through Feb. 8 the Department of Homeland Security, which is at the center of the border security battle.

Almost all House Republicans stood by Trump on both bills. Senate Majority Leader Mitch McConnell has said his chamber won’t consider any measure that doesn’t have Trump’s backing, even though the Senate voted overwhelmingly in December to pass largely identical legislation before the president reversed course and announced his opposition.

“We are sending them back exactly, word for word, what they have passed,” Pelosi told reporters shortly before the vote. “The president cannot hold public employees hostage because he wants to have a wall that is not effective.”

Separating the Issues

Senate Minority Leader Chuck Schumer, a New York Democrat, accused McConnell of “abdicating his responsibility” by not taking up the bills. He said part of the reason may be that “he realizes this president, President Trump, is erratic, unreliable, and sometimes irrational.”

McConnell on Thursday called the House vote “political theater, not productive lawmaking.” The Kentucky Republican said his chamber won’t take up the spending bills because they don’t contain spending increases for border security.

Offer Disavowed

Vice President Mike Pence offered Democrats a compromise on Dec. 22, the first day of the shutdown, in which Trump would accept $2.5 billion for border security. Trump later disavowed the offer, saying he needed $5.6 billion for a wall.

Senate Democrats in August backed $1.6 billion for border security, though they now say they’re unwilling to provide any more than the $1.3 billion approved last year for fencing. Progressive House Democrats urged Pelosi to stand firm and not provide any money for a wall.

“We should not give in to extortion,” said Maryland Democrat Jamie Raskin, whose district contains thousands of federal workers. “We have sent back the most reasonable and mild proposal to reopen the government” and Republicans should accept it, he said.

Federal workers are bearing the brunt of the shutdown’s effects. More than 450,000 “essential” employees are working without pay, including law enforcement personnel, border patrol agents and airport screeners. These workers received paychecks at the end of December but will miss their next checks on Jan. 11 unless the agencies reopen. That could pressure lawmakers to resolve the dispute before next week.

Another 380,000 employees have been furloughed without pay.

For the public, the visible signs of the shutdown have come in the form of overflowing trash at national parks, closed museums in Washington, and a lack of guidance from the Internal Revenue Service as the first tax filing season begins under the new tax code enacted in 2017. Financial markets are flying blind as the Commerce and Agriculture departments suspended regular reports.

The partial shutdown will cut U.S. economic output by about 0.1 percent every two weeks, Kevin Hassett, chairman of the White House Council of Economic Advisers, said Thursday.

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