The Shutdown Showdown Has Officially Begun

Johnson and GOP leaders at a Tuesday news conference
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Tuesday! President Trump headed to London today, where he will be the first U.S. president to get a second state visit to the United Kingdom. Meanwhile, FBI Director Kash Patel sparred with senators as he was grilled on Capitol Hill, where he will be back tomorrow for a similar hearing in the House. Here's what else is happening.

House Republicans Release Their Plan to Jam Democrats in Shutdown Fight

The shutdown showdown has officially begun.

House Republicans today unveiled a stopgap spending bill that would avert a potential government shutdown at the end of the month by funding federal agencies through November 21. Amid safety concerns heightened by the assassination of conservative activist Charlie Kirk, the bill would provide $30 million each in additional security funding for Members of Congress and the executive branch and $28 million for the security of the Supreme Court justices.

Forcing Democrats to decide: The GOP plan essentially dares Democrats to allow a shutdown at the end of the month. House Republicans are set to vote on their plan by Friday, and if they can approve it along partisan lines it would then go to the Senate, where at least seven Democratic votes would be needed. That would force Democrats and Senate Minority Leader Chuck Schumer to make a difficult choice, much like they faced in March, when they ultimately helped pass a partisan GOP funding bill.

This time, Schumer and House Minority Leader Hakeem Jeffries have already signaled that they are prepared to reject the GOP plan and are instead demanding the Republicans negotiate a bipartisan deal that also addresses healthcare issues, including the scheduled expiration at the end of the year of enhanced Affordable Care Act tax credits.

Schumer and Jeffries rejected the Republican plan on Tuesday, saying it fails to stop a looming healthcare crisis. "At a time when families are already being squeezed by higher costs, Republicans refuse to stop Americans from facing double-digit hikes in their health insurance premiums," the Democratic leaders said in a joint statement. "Instead of governing, Republicans are once again taking orders from Donald Trump, hurting the American people and recklessly marching our nation to the brink of a shutdown."

Democrats reportedly plan to release their own short-term funding bill, including healthcare provisions and a restriction on President Donald Trump's ability to claw back funding approved by Congress.

Republicans counter that Democrats are politicizing the funding process to appease those in their base who want to fight Trump. They point out that Democratic leaders have not yet laid out specific demands and say Democrats should give up any gamesmanship and instead agree to the "clean" stopgap bill to prevent any disruptions to federal programs and continue to work on annual appropriations.

House Speaker Mike Johnson today said there is "zero chance" the Republicans will agree to undo some of the Medicaid changes they enacted as part of the megabill they passed this summer. And he said that the question of renewing the higher Affordable Care Act tax credits - an issue that divides Republicans - should wait a few months. "That is a December policy issue, not a September funding issue," he told reporters.

So Republicans are locked in on their strategy and messaging. "It'll be a clean, short-term continuing resolution, end of story," Johnson said. "And it's interesting to me that some of the same Democrats who decried government shutdowns under President Biden appear to have no heartache whatsoever at walking our nation off that cliff right now. I hope they don't. I hope that they'll work with us, so we can all do our jobs here. We get a short-term CR done, complete the appropriations bill, and get back to the regular order that we have all seen as necessary so we can be good stewards of taxpayers' funds."

Johnson also noted that the House Appropriations Committee has passed all 12 annual appropriations bills for fiscal year 2026, with three bills headed to a conference committee with the Senate.

Senate Majority Leader John Thune this week quoted Schumer's remarks from a 2023 funding debate in which the Democrat argued for passing a "clean extension" on a bipartisan basis. "Well, today the Democrat leader is ready to hold the CR hostage and shut down the government over extraneous policy measures," Thune said in remarks on the Senate floor. "It really is amazing, Mr. President, how the rules change for Democrats depending on their perceived political advantage."

An Obamacare cliff: Democrats want to address the Affordable Care Act subsidies now for more than just political reasons. Open enrollment in ACA marketplaces starts on November 1.

"Some people have already received notices that their premiums - the monthly fee paid for insurance coverage - are poised to spike next year," Kevin Freking of the Associated Press reports. "Insurers have sent out notices in nearly every state, with some proposing premium increases of as much as 50%. The Congressional Budget Office has estimated that the number of people without insurance would rise by 2.2 million in 2026, and by 3.7 million the following year, if Congress does not extend the enhanced tax credits."

Punchbowl News reports that the Congressional Budget Office also estimated that 1.5 million more people would go uninsured if Congress waits until the end of December to permanently extend the tax credits, relative to an earlier enactment date. An end-of-year extension also has other cost implications: "CBO said the average benchmark premium would be about 4% higher in 2026 if Congress waits that long. An extension would also cost $10 billion less, per the analysis."

What else is in the CR: The GOP bill also allows the Trump administration to continue providing food assistance as needed through the nutrition program for low-income Women, Infants, and Children (WIC).

And it includes what's known as the "D.C. fix," which would allow the nation's capital to spend its fully allotted funding through the 2026 fiscal year, resolving a $1 billion shortfall created in March.

You can see a PDF summary of the 91-page bill here.

Appeals Court Blocks Trump From Firing Cook as Fed Meeting Begins

In a ruling issued late Monday, the U.S. Court of Appeals blocked President Trump from immediately firing Federal Reserve Governor Lisa Cook, clearing the way for her to attend a closely watched policy meeting that began earlier today.

The Trump administration said it would appeal the decision, taking the case to the Supreme Court, but no timeline for the appeal has been announced.

Trump has been seeking to remove Cook from the Fed board since late August, when he attempted to fire her for cause following allegations that she made false claims on a mortgage application. Cook challenged the firing in court, and a federal judge ruled last week that Trump could not remove Cook while that case was still in progress. The judge also raised questions about Trump's legal authority to fire a Fed board member. Trump appealed that ruling, taking the case to the court that weighed in on Monday night.

Fed meeting begins: The appeals court ruling means Cook is attending a two-day meeting of the Federal Open Market Committee, which determines the central bank's interest rate policy. Also in attendance is Stephen Miran, the White House economist and Trump ally who was approved by the Senate late Monday to fill a vacant seat at the Fed.

Trump's attempt to fire Cook is part of a multifaceted effort to influence the Fed, which includes nominating Miran and pressuring Fed chief Jerome Powell with insults and threats of removal. Trump wants the Fed to lower interest rates, which the central bank has held off on this year amid concerns that Trump's tariff increases could ramp up inflationary pressure in the economy.

The FOMC - which consists of the Fed's seven board members plus five of the regional bank presidents - is expected to vote to lower the central bank's benchmark rate for the first time in 2025, giving Trump something of a win, though it's not clear that his pressure will have been a major factor. Although Trump was able to add Miran to the board and appointed two other members during his first term, the majority of the seven-member board was appointed under different administrations.

Chart of the Day: Hey Big Spenders

Millions of Americans report that the economy isn't working for them, and this chart from Moody's Analytics may provide some insight as to why that's the case. Moody's analysis of consumer spending through the first half of 2025 finds that only those with "high" and "very high" incomes have been spending more since 2019. Everyone else is just treading water.

"For those in the bottom 80% of the income distribution, those making less than approximately $175,000 a year - their spending has simply kept pace with inflation since the pandemic," Moody's Chief Economist Mark Zandi wrote. "The 20% of households that make more have done much better, and those in the top 3.3% of the distribution have done much, much, much better."

Zandi notes that the data indicate that the U.S. economy is being driven largely by the consumption of upper-income households. "As long as they keep spending, the economy should avoid recession," Zandi said, "but if they turn more cautious, for whatever reason, the economy has a big problem."

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