US: agreement reached on the federal budget but Trump’s political escalation shows no signs of abating

The two parties and the US president reached an agreement on the budget dispute a few days ago, just before the deadline was set to expire. Another shutdown of numerous federal authorities was thus avoided – good news from the US political front. However, just after the compromise was reached, President Trump declared a national emergency in order to access the full amount he had demanded to build a wall at the border to Mexico. Rather than leading to the anticipated easing of internal political affairs, it escalated the confrontation instead. The Democrats and a few individual federal states have already announced their intention to take political and legal action against this.

Trump only declared the national emergency to bypass Congress’ budgetary authority, thus creating a precedence in US history. Although the US president holds considerable sway over foreign policy, domestic policy generally requires the approval of the Senate and the House of Representatives. With the help of the apparent emergency, funds of around USD 6bn should now be misappropriated to build the wall.

But what happens next? Can Trump still be stopped? Congress can halt the emergency by a simple majority vote, to which the president will no doubt respond with a veto, so that the emergency will remain in place. Congress can only override the president veto if it gets a two-thirds majority to this effect, which is highly unlikely. Although the Democrats hold the majority in the House of Representatives, with 235 out of 435 seats, the Republicans dominate the Senate with 53 out of 100 seats. Many Republicans by all means welcome the president’s plans or will not oppose them. The only other option available to the Democrats is to take legal action. However, this is likely to extend over several months, even up to the next election in November 2020.

Some experts already see a constitutional crisis looming in the US. The declaration of an emergency on spurious grounds could set a precedence and be used in future by other presidents too as standard government resources, thus opening the door wide to abuse of office. It is therefore important for the Supreme Court, in its role as guardian of US laws and democracy, to take a decision without delay.

Ultimately, our fears have confirmed that the entrenched political fronts and the associated division of American society will pose a burden to the US economy. According to the monthly Consumer Confidence Survey conducted by the Conference Board Institute, consumer’s outlook has deteriorated. There was also a surprisingly sharp decline in retail sales at the turn of the year.

The latest escalation level does not bode well for the next time the debt ceiling is to be raised – this is on the agenda already for March, with another nail-biting affair expected. Consensus is now unlikely on important topics such as upgrading the infrastructure, although this was offered by the president at his State of the Union address.

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