What to watch as Congress returns: An 'almost certain' shutdown and new energy for a stock trading ban
Lawmakers are returning to Washington this week with a large to-do list and a few issues in key focus for investors — from yet another shutdown fight to new energy for, at the least, a debate on banning lawmakers from trading stocks.
The shutdown is clearly top of mind. Recent developments — notably a Trump move to unilaterally cancel some congressionally approved spending — have further increased partisan tensions ahead of an Oct. 1 deadline when a shutdown will commence.
Unless, that is, Democrats and Republicans work together.
Terry Haines of Pangaea Policy said Monday morning in a live appearance on Yahoo Finance that a shutdown “is almost certain,” largely because of Trump’s provocations as well as the fact that “Democrats feel politically that they have to make some huge political show of Trump resistance.”
Meanwhile, lawmaker stock trading is also set to be at least an agenda item, with even leaders like Speaker Mike Johnson open to considering the issue.
These twin issues are just part of a huge agenda after an extended late-summer recess.
The full list of hot-button issues includes the Jeffrey Epstein files, a response to Trump’s use of federal troops in Washington, D.C., and possible Senate rules changes.
And markets will also be closely watching Thursday as confirmation hearings for Trump’s pick to join the Federal Reserve, Stephen Miran, get underway.
Republicans are looking to fast-track his confirmation ahead of a Sept. 16-17 central bank meeting.
Trump may not care ‘about avoiding a shutdown’
Perhaps the top agenda item for Congress as a whole is a government shutdown that will commence on Oct. 1 without action.
Senate rules require at least some Democratic support to advance legislation to extend government funding, and at least some Democrats say there’s no deal they can support.
Senate rules require at least 60 votes (which means seven Democrats in support if all Republicans vote in favor) to end a filibuster and advance any potential bill to a final vote.
The standoff comes after President Trump last week used a maneuver called a “pocket rescission” to unilaterally cut about $5 billion in congressionally approved funding in the area of foreign aid. Even some Republicans have slammed the move. The argument from many Democrats: Why cooperate on anything if Trump can just later nullify any spending agreements on his own?
In addition, as the American Action Forum’s Douglas Holtz-Eakin pointed out Tuesday morning, “The key to a deal usually is to have the White House brokering that deal, and it doesn’t appear, to my eye, that the White House cares a lot about avoiding a shutdown.”
Read more: What happens to Social Security payments during a government shutdown?
Democrats likewise promise they are willing to move forward and are promising a fight — even after a similar standoff in March saw those lawmakers ultimately back down.
Senate Minority Leader Chuck Schumer is the key figure to watch.
In a new letter out Tuesday, he wrote that “the Trump administration is waging an all-out war against Congress’ Article I authority.” He didn’t make a direct shutdown threat, but said that “where [Republicans] threaten shutdown, we hold them accountable.”
Republicans, meanwhile, are largely focused on, for the time being, blaming Democrats for any shutdown. A White House official suggested late last week that “it’s very hard for me to believe that they are going to oppose a [bill to simply extend government funding] that would cause them to be responsible for a government shutdown.”
A focus on stock trading
Meanwhile, there is a growing focus on congressional stock trading as a bipartisan group of lawmakers is expected to unveil a plan this week — with supporters from across the ideological spectrum —to ban the practice.
The efforts come after years of stops and starts on the issue — first highlighted by trades during the COVID-19 pandemic — in new focus this year as some lawmakers appeared to trade around tariff-fueled fluctuations.
The proposal is being led by two longtime champions around the issue: Rep. Seth Magaziner, a Rhode Island Democrat, and Chip Roy, a Texas Republican.
The forthcoming bill — according to a Wall Street Journal report — will give members 180 days to sell individual stocks (mutual funds and ETFs will remain allowed) and then impose fines and force lawmakers to give up any profits if they break the rules.
It remains an uphill battle, with many lawmakers openly opposed to the idea of a ban. But Speaker Mike Johnson recently said he supports a ban on trading without endorsing the new proposal.
“I understand people that have misgivings about that,” he added earlier this year of the opposition. He avoided promising a vote but stated his support, saying, “We’ll see where it lands.”
Likewise, Treasury Secretary Scott Bessent also supported the measure, saying in a Bloomberg interview last month that “people shouldn’t come to Washington to get rich, they should come to serve the American people.”
Stock trading is also emerging as an increasingly powerful political weapon, with some early midterm ads raising the issue.
Just the latest example came this week with new ads, first reported by Punchbowl News, from a top Senate Democratic super-PAC.
Those spots are set to slam Sen. Susan Collins — a Maine Republican in the middle of one of the most high-profile races in the country — over her opposition to a ban.
The group, called Majority Forward, has released two digital ads on the issue in a campaign it says is backed by $700,000.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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