White House Threatens ‘Maximum Pain’ in Shutdown Fight

Trump spoke with reporters before heading to the Ryder Cup.
NurPhoto
By Yuval Rosenberg and Michael Rainey

Good evening. The Supreme Court just allowed the Trump administration to unilaterally freeze more than $4 billion in foreign aid, delivering another win for President Trump in his push for more power over federal spending. The court’s three liberal justices dissented. “The decision,” Politico notes, “effectively blessed Trump’s ‘pocket rescission’ — a controversial maneuver in which the president withheld the funds toward the end of the fiscal year so that the money could not be spent even if Congress did not approve the rescission.”

Here's what else is happening.

White House Threatens ‘Maximum Pain’ in Shutdown Fight

The clock keeps ticking toward a September 30 deadline to avoid a government shutdown. That’s just four days away, and there’s no sign of a last-minute deal to keep federal agencies open. If anything, the indications that a shutdown will happen are growing stronger by the day.

“The radical left Democrats want to shut it down, and it’s up to them,” President Trump told reporters on Friday in the latest sign that the parties are currently more interested in finger-pointing than deal-making.

In interviews with news outlets, Senate Majority Leader John Thune suggested that a shutdown is still “avoidable” but said Democrats would have to “dial back” their demands, which he again dismissed as over the top. 

Democrats, under pressure from their voters to stand up to Trump, are pressing for an extension of enhanced subsidies for Affordable Care Act health insurance plans and are calling for a reversal of Republicans’ recent cuts to Medicaid and other programs as well as restrictions on the president’s ability to claw back congressionally approved funding. Some Republicans are also looking to extend the subsidies, but Thune has indicated that any extension would have to include broader reforms to the program — changes that Democrats would likely oppose.

“I’m a big believer that there’s always a way out,” Thune told the Associated Press on Thursday. “And I think there are off-ramps here, but I don’t think that the negotiating position, at least at the moment, that the Democrats are trying to exert here is going to get you there.”

Thune indicated to The Wall Street Journal that Trump will be the key to any potential deal. “In the end, if the president is interested in weighing in, then I think there’s potentially a path forward here,” he said.

But Trump and his administration have no current plans to negotiate with Democratic leaders and expect a shutdown starting on Wednesday, a senior White House official told Politico. Trump and his allies are gearing up for a fight. They expect to force a series of tough votes and predict that Democrats — and their constituents — will bear the brunt of a shutdown. “We’re going to extract maximum pain,” the White House official told Politico, adding that Democrats “will pay a huge price for this.”

As the deadline nears, Republican leaders are aiming to ramp up the pressure on Democrats. House Republicans left Washington after they passed a stopgap bill to fund the government through November 21. That bill was blocked by Democrats in the Senate, where 60 votes are needed and Republicans have only 53. House GOP leaders already said that they wouldn’t hold any votes until October 1, after the shutdown deadline, but now they reportedly may not bring members back at all next week in an attempt to force Senate Democrats to accept the House-passed plan.

Republicans also feel they have history and political math on their side. “Historically, it’s the aggressor that always loses,” the unnamed White House official was quoted telling Politico. “And quite simply, their constituencies and their priorities are all going to get chewed up, and ours, not so much.”

Senate Minority Leader Chuck Schumer says it is Republicans who will be under pressure to end the shutdown. Schumer predicted in an interview with The Wall Street Journal that Trump and congressional Republicans will ultimately feel the heat as the time grows short for a deal to extend expiring Affordable Care Act subsidies and prevent huge premium increases for some 22 million Americans.

“There’s going to be pressure on them on that…and Democrats are going to say, very simply, ‘Just come and sit down and talk to us and negotiate agreements, and you can end the shutdown,’” Schumer said. “All we’ve asked is that they sit down, negotiate, and help relieve the pain the Americans are feeling because of their healthcare cuts.”

The bottom line: “There are a number of ways to solve this problem,” Democratic Sen. Jeanne Shaheen said Thursday on CNBC. “But in order to do that we have to talk to each other.” As of now, that’s not happening at the leadership level.

Trump Jacks Up Tariffs on Pharmaceuticals, Says He’ll Bail Out Farmers With Tariff Revenues

Hours after saying he plans to use tariff revenues to aid distressed farmers in the U.S., President Trump announced late Thursday that he is raising tariffs on pharmaceuticals, heavy trucks and some types of furniture as of October 1.

Writing on his social media platform, Trump said he is imposing a 100% tariff on pharmaceutical imports starting on the first of the month. There is a significant loophole, though: The tariff will be waived for any company that is actively building new facilities within the U.S. at that time.

Trump also announced that he is imposing a 25% tariff on heavy truck imports, so that “our Great Large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks ... will be protected from the onslaught of outside interruptions.” Some specific categories of home goods will also see new import taxes, including kitchen cabinets (50%) and upholstered furniture (30%).

As Politico’s Ari Hawkins reports, those categories of goods have been under investigation by the Commerce Department under Section 232 of the Trade Expansion Act of 1962, which empowers the Commerce secretary to recommend tariffs or quotas on products that are deemed to be a threat to national security because they harm or threaten domestic industries. The Commerce Department is reportedly investigating a wide variety of product types, and Section 232 has already been used by Trump to impose new tariffs on steel, aluminum, copper and vehicles.

Higher prices ahead? The pharmaceutical industry warned that a 100% tariff can only drive drug prices higher.

“Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures,” Alex Schriver, a spokesman for Pharmaceutical Research and Manufacturers of America, known as PhRMA, said in a statement. “Medicines have historically been exempt from tariffs because they raise costs and could lead to shortages.”

Truck and furniture prices will likely rise, as well. “There will be more upward price pressure from tariffs, especially on the ones manufactured in Mexico,” Kenny Vieth, a truck-market analyst, told The Wall Street Journal.

Help for farmers: Many U.S farmers are suffering from the international blowback to Trump’s aggressive use of tariffs, and earlier Thursday the president said he plans to use tariff revenues to assist them as they struggle with weaker exports.

“We’re going to take some of that tariff money that we made, we’re going to give it to our farmers who are, for a little while, going to be hurt until it kicks in, the tariffs kick in to their benefit,” Trump said at the White House. “So we’re going to make sure that our farmers are in great shape because we’re taking in a lot of money.”

Trump said that the details of the bailout plan are still being discussed in coordination with Agriculture Secretary Brooke Rollins. Speaking to reporters in Missouri, Rollins said the aid could be delivered “perhaps in the next couple of weeks.” She also said that about $2 billion remaining in the $10 billion Emergency Commodity Assistance Program, which was provided by Congress to aid farmers suffering losses in 2024, could be released “within the week.”

China not buying: One of the most pressing problems for American farmers is the fact that China has stopped buying some of their most widely produced crops. As The New York Times’s Kevin Draper detailed Friday, soybeans were the largest U.S. export to China last year, with the Asian giant paying $12.6 billion for 52% of all U.S. soybean exports. But China stopped buying U.S. soybeans in May, amid Trump’s tariff blitz, and as farmers harvest their crop this fall, there is growing concern that their biggest customer is now looking elsewhere.

In response to Trump’s punitive tariffs on virtually all Chinese imports, China has imposed its own tariffs on U.S. agricultural goods, making them uncompetitive. To make up for the loss of U.S. imports, China has turned to other global producers, including Brazil and Argentina.

Overall, total U.S. soybean exports are down 23% so far this year compared to a year ago. Farmers have hoped that a comprehensive trade agreement with China would provide relief, but so far negotiators have been unable to agree on anything beyond some general principles, leaving many high tariffs in place.

Calls for aid: Lawmakers from farm states, many of them Republicans, are complaining about the effects of Trump’s trade policy, and some are worried about potential political blowback in the midterm elections.

Republican Sen. Chuck Grassley of Iowa said on social media that farmers are upset in particular that Argentina is selling more soybeans to China, even as the U.S. pledged to provide a $20 billion backstop to support the Argentine economy.

Although the details have yet to be ironed out, the aid program will likely be sizeable. In 2018, the U.S. provided $28 billion to farmers suffering from the effects of a trade war with China during the first Trump administration.

Key Inflation Measure Held Steady in August

The personal consumption expenditures price index rose 0.3% in August, the Commerce Department reported Friday. The monthly result contributed to an annual inflation rate of 2.7%.

The core PCE rate — which leaves out volatile food and fuel prices and is closely watched by the Federal Reserve as a sign of the underlying trend — rose 0.2% on the month, and 2.9% on an annual basis, matching the reading from the month before.

The numbers were largely in line with forecasts and provided some relief from concerns that inflation would surge higher as businesses struggle with higher tariffs for all kinds of imported goods.

At the same time, income and spending were a bit stronger in August than expected. Personal income rose 0.4% during the month and personal consumption expenditures grew 0.6%, suggesting U.S. consumers were still feeling healthy, even if they are dipping into savings.

“Summer was the time for consumer revenge spending after hunkering down in retreat from the shops and malls during the uncertainty and fear produced by the White House tariff rollout in April and May,” Chris Rupkey, chief economist at Fwdbonds, told CNBC.

Quote of the Day

“What we are seeing is the almost wholesale collapse of the Justice Department as an organization based on the rule of law.”

‒ Alan Z. Rozenshtein, a former Justice Department official who now teaches at the University of Minnesota Law School, as quoted in a New York Times analysis of Thursday’s extraordinary indictment against former FBI Director James Comey, who was charged with making false statements and obstructing justice.

The indictment came after President Trump called for charges to be brought against Comey and others he has targeted for retribution. It was filed and presented to a grand jury by Lindsey Halligan, the newly appointed U.S. attorney for the Eastern District of Virginia, who had been Trump’s personal attorney and a White House official but had never prosecuted a single case in her career. And it came after other prosecutors had raised serious doubts about the case against Comey.

While Trump and his allies see the case as a necessary exercise in accountability for what they describe as politically motivated abuses of power, the charges against Comey have raised widespread fears that Trump’s continued pursuit of payback against his critics and foes will continue and will further obliterate democratic norms, including the traditional independence of the justice system.

Trump on Friday denied that he was going after political opponents. “It’s about justice, really. Not revenge,” he told reporters as he was leaving the White House to head to the Ryder Cup golf competition, the latest in a string of sporting events he has attended. But the president indicated that more criminal cases are coming. “It’s not a list, but I think there will be others,” he said. “Frankly, I hope there are others because you can’t let this happen to a country.”

News

Views