Trump Kicks Off Game of Chicken Over Border Wall
The question is will he do it?
During a rally in Arizona, President Trump threatened to let the government shut down if Congress doesn’t come through with funding to build a wall along the US-Mexican border.
If we have to close down our government, we’re building that wall. We’re going to have our wall. The American people voted for immigration control. We’re going to get that wall.”
The price of gold jumped on safe-haven buying after the president’s comments. Most analysts had considered the threat of a government shutdown relatively remote, but Trump’s emphatic pronouncement suddenly kicked off a game of chicken.
Congress must put together a funding deal, and the president must sign it, by a Sept. 30 deadline. If Congress doesn’t get a deal done, or if the president vetoes it, the government will go into shutdown mode. Treasury Secretary Steven Mnuchin has warned the US could go into default by October if Congress doesn’t act.
Republicans need support from the other side of the aisle to get a deal done. But congressional Democrats have pledged to reject any spending package that includes funding for a border wall.
Of course, nobody knows if Trump will actually follow through on his threat. It could just be bluster. As Longview Economics CEO Chris Waiting said during a CNBC interview, Trump says a lot of things.
We’ve heard a lot of comments out of Trump that sort of go away very quickly, about as quickly as they come. We’ll have to see how other people in the administration react. I suspect he’s just playing to the crowd.”
Nevertheless, the fact Trump raised the specter of a shutdown could spell trouble.
It’s clearly concerning if he wants to tie the wall to the government shutdown. That’s certainly an issue and that’s an issue for the dollar.”
Trump’s comments underscore the political uncertainty in Washington D.C. Failure to repeal or even reform Obamacare was a major stumble for Trump and the GOP, and it has cast doubt on the president’s ability to advance his ambitious economic agenda. Trump may be willing to push hard to make sure he gets funding for the wall. After all, immigration was his signature issue during the campaign. Failure could conceivably put a political fork in his administration.
Even if his threat to shut down the government is just a bluff, he may have maneuvered himself into a corner. Backing down would squander what political capital he has left.
And as we’ve reported, eroding faith in Trump’s ability to enact his economic agenda could be the pin that pricks the stock market bubble.
In the wake of Trump’s election, stock markets continued their meteoric rise. Some have dubbed it the Trump Trade. It rests on the idea that the president’s proposed policies of lower taxes, infrastructure spending, Obamacare repeal, and decreasing government regulations will juice the economy. But if the politics start to unravel, the Trump trade might unwind right along with it.
During an interview at International Metal Writers Conference, Peter Schiff said Trump supporters have allowed themselves to get caught up in unreasonable optimism. We see this reflected gold sales here in the US.
The people who typically buy gold in America voted for Trump, and they’re no longer worried about the economy. So they’re not buying gold. They’re buying stocks instead, and I think they’re making a big mistake. They should be selling their stocks and buying even more gold.”
Of course, there’s another question that virtually nobody will even ask – would it be so bad to shut down the government? Peter doesn’t really think so. During an interview on The Street, he said a genuine shutdown would “liberate the economy.”
So, my fear is that the government won’t shut down. It will just get bigger and bigger and bigger.”
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