Trump Threatens Government Shutdown Over Border Wall Funding

August 23, 2017, 3:17 PM UTC

President Donald Trump threatened Tuesday to bring the U.S. government to the brink of a shutdown if needed to pressure Congress into funding the border wall that was a centerpiece of his 2016 campaign.

Delivering a warning to Democratic lawmakers who have objected to his plans to construct a wall along the U.S.-Mexico frontier, Trump called them “obstructionists” and said that it was time for the U.S. to crack down on illegal immigration.

“If we have to close down our government, we’re building that wall,” Trump told thousands of supporters gathered in Phoenix for a campaign-style rally. “One way or the other, we’re going to get that wall.”

Trump’s threats about shutting down the government and ending the North American Free Trade Agreement caused U.S. stock-index futures to pare gains and drop as much as 0.3 percent. Dow futures were down 0.2 percent as were E-Mini Nasdaq 100 futures.

Political Capital

“Given that Trump’s political capital has diminished, finding support amongst Republicans to approve potentially billions of dollars to fund construction of a controversial wall is likely to prove difficult,” said Rabobank analysts Piotr Matys and Jane Foley.

Trump’s comment that he might terminate Nafta at some point caused the yen to strengthen, while the Mexican peso weakened 0.2 percent.

“His comments on the NAFTA negotiations once again brings the general direction toward obstructing free trade, and raises concerns over its impact on global trade,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. in Tokyo.

Trump has asked for $1.6 billion to begin construction of the wall, with Congress under pressure to pass some kind of spending bill to keep the government open after Sept. 30.

But Republicans in Congress haven’t shown much appetite for fighting to spend potentially billions more on a border barrier either. The funding would add to the deficit at the same time Republicans are trying to figure out how to pay for tax cuts.

Debt Limit

The issue could also get wrapped up with legislation to raise the federal government’s debt limit, which needs to be raised between late September and mid-October to avoid a default.

One option being considered by GOP leaders is attaching a debt limit measure to the stopgap spending bill that will likely be considered next month. Under that scenario, Trump’s threat to shut down the government over the border wall could entangle the debt ceiling debate.

Senate Majority Leader Mitch McConnell said Monday in a speech that he sees “zero chance” that Congress won’t lift the debt limit. Trump’s Treasury secretary, Steven Mnuchin, said at the same event that he will run out of authority to stay under the limit late next month and his priority when Congress returns in early September is ensuring it’s lifted.

During his speech, Trump also repeated his call for a historic tax cut. While he provided no details of any planned legislation, he urged congressional Democrats to support it. Democratic senators in states he won should be particularly wary, Trump said. Most Senate Democrats have said they’ll refuse to support any tax legislation that provides a tax cut to the highest earners.

“The Democrats are going to find a way to obstruct,” Trump said. If so, he told his supporters, they’ll be preventing Americans from receiving a “massive tax cut.”

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