Trump shutdown threat complicates Congress’s debt ceiling plans

President Donald Trump’s threats to shut down the government in October over border wall funding triggered concerns on Capitol Hill and could complicate Congress’s job of raising the debt ceiling.

Congress needs to pass a spending measure to keep the government open by Sept. 30 — the same time it’s facing a deadline to raise the nation’s debt limit. GOP leaders don’t have a plan yet for how they’ll proceed but one likely scenario is to package the two measures together to get them to the president’s desk.

Trump’s shutdown threat may just be part of the routine bluster he employs in negotiations, but it still raises the specter of a potentially market-shaking showdown if he decides to follow through on it.

Trump has made clear for months he wasn’t happy with the last bipartisan spending deal in May because it didn’t fund a new wall on the southern border, his signature campaign promise. At the time, he tweeted that a “good” government shutdown may be needed to force Democrats to make concessions.

The president has requested $1.6 billion to for wall construction, which Democrats have widely rejected. While the House has passed a package of spending bills that contain wall funding, such a measure doesn’t have the support of the 60 senators needed to pass it in the Senate. Now, the president has suggested he would veto a spending bill that doesn’t fund the wall.

“If we have to close down our government, we’re building that wall,” Trump said Tuesday at a combative rally speech in Phoenix. “One way or the other, we’re going to get that wall.”

The S&P 500 Index and Dow Jones Industrial Index both fell Wednesday following Trump’s threats, while gold futures rose.

Trump’s remarks were “unsettling,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note Wednesday.

“Government shutdowns are not unprecedented in the U.S., of course, and they typically are mildly disruptive,” he wrote. “They are not good for the investment climate.”

Any connection to the debt limit fight would heighten the stakes, he added. “While political maneuvering can lead to a shutdown, missing a debt payment is considerably more serious and one that in this game of brinkmanship largely within the Republican Party neither side seems to want to risk,” he wrote.

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