Trump is promising $2,000 for Americans, but here's why it may not happen

Key Concepts

• Government Shutdown
• Senate Bill Funding
• SNAP Benefits (Supplemental Nutrition Assistance Program)
• Furloughs
• Veterans Day Recess
• Midterm Elections
• ACA Subsidies (Affordable Care Act)
• Tariffs
• Rebate Checks
• Filibuster

Government Shutdown Nears End After 41 Days

The US government shutdown, which has lasted for 41 days, is reportedly nearing its end. A bill has advanced in the Senate that would provide funding for the government through January of 2026. This bill passed with a 60-40 vote, with several Democratic senators joining Republicans in support.

Timeline and Resolution

Henrietta Trees, Managing Partner and Director of Economic Policy at VA Partners, describes the situation as being "on the goal line" and estimates that the shutdown could be over within approximately 48 more hours. This would mark the end of America's longest government shutdown, offering relief for holiday travel.

Pressure Points Leading to Resolution

The resolution of the shutdown is attributed to a culmination of various pressure points:

• Temporary Layoffs and Permanent Concerns: Discussions around temporary layoffs and the potential for them to become permanent created significant pressure.
• SNAP Benefits: The back-and-forth debate over the disbursement of SNAP benefits was a critical factor.
• Airport Disruptions: Dramatic curtailments in flights at US airports, particularly impacting TSA and FAA operations, served as a significant catalyst.
• The Calendar and Recesses: The upcoming Veterans Day recess, a 10-day period starting the Friday of the previous week, was a key consideration. Keeping the calendar in mind is a recurring strategy for clients.
• Public Opinion and Elections:
  • The "no kings" rally, with 7 million participants nationwide, indicated public sentiment.
  • The results of the recent election, described as a "very big momentum event for the Democratic party," also played a role.
  • President Trump's approval rating was cut in half (doubled in severity, worsening by seven points) during the shutdown, largely driven by the controversy surrounding the withholding of SNAP benefits.
• Furloughs of Federal Employees: The furlough of 700,000 employees across the country, with a disproportionate impact on Virginia due to an important gubernatorial race where Republicans lost by double digits, added to the pressure.

House of Representatives and Speaker Johnson

With the House not in session, Speaker Johnson has issued an "all call" for members to return, regardless of their travel method. The expectation is that votes will be taken quickly. It is anticipated that President Trump may need to exert pressure on some Republican members to secure the necessary votes for the package. A handful of moderate Democrats are also expected to support the bill, providing sufficient "breathing room" for Speaker Johnson. The Senate is expected to leave after voting on the package, which will likely compel House members to accept the agreement to avoid a shutdown extending into Thanksgiving.

Role of President Trump

President Trump has largely taken a backseat during the shutdown, becoming involved only at the end to call for the elimination of the filibuster, which is considered a non-starter in the Senate. It is unlikely he will need to exert significant pressure as the White House has "blessed this deal." However, the possibility of a few House members attempting to "make waves" and become holdouts cannot be discounted, potentially leading to a "roller coaster" of events. The President and the White House are expected to pressure Republicans to pass the bill and reopen the government.

ACA Subsidies and Democratic Strategy

The absence of ACA subsidies in the Senate bill, which Democrats had staked their position on, raises questions about how they will present this outcome to their constituents. The package was not designed to convince Democrats to support Democrats, but rather to force a fight. The strategy appears to have been to put the ACA subsidies "in the spotlight."

• Impact on Voters: For individuals in states that voted for Trump, particularly those 60 years or older, healthcare costs are projected to increase by $1919 next year due to the shutdown's premise on ACA subsidies.
• Sustained Focus: The discussion about ACA subsidies will continue, with a vote expected in December and a potential government shutdown threat in January. This sustained focus is historically a winning message for Democrats, especially leading into midterm election cycles, as seen in 2018 when Speaker Pelosi gained 41 House seats campaigning on similar issues.

January Outlook and Potential Shutdown Risk

There is a potential risk of another government shutdown in January, specifically by January 30th.

Tariffs and Rebate Checks

President Trump's social media comment about everyone receiving "$2,000" due to tariffs has been clarified by Treasury Secretary Besson as referring to tax savings from a previous bill, not an actual check.

• President Trump's Preference: The President reportedly favored the rebate checks issued during his first term.
• Cost of Rebates: A $1,500 tax rebate per person and $500 per child during COVID-19 cost $292 billion. A $2,000 rebate for everyone now would cost upwards of $450 billion.
• Tariff Revenue: Tariffs have generated $89 billion under the AIPA statute this year.
• Feasibility: Neither tariffs nor other measures are expected to fund such rebates without raising taxes. This idea is considered a "non-starter." It is anticipated that President Trump will include this proposal in his fiscal year 26 budget in February.