Washington Policy Pulse: US Government Shutdown, Tariffs, and Crypto Update

US Government Shutdown Outlook

• ⚠️ The odds of a US government shutdown are increasing, with the deadline set for 12:01 AM on October 1st.
• 💡 Republicans have offered a clean seven-week Continuing Resolution (CR) through November 20th, typically giving them the political high ground.
• 🎯 Democrats may push for a shutdown to be seen fighting President Trump, potentially seeking an extension of ACA subsidies.
• 📅 A key factor will be the outcome of the 3:00 PM meeting between President Trump and Republican/House leadership, and discussions between Senators Schumer and McConnell the following morning.

Shutdown Implications and Contingency Plans

• 📊 A shutdown could lead to a lack of government data, such as the Bureau of Labor Statistics employment reports, which are often deemed non-essential.
• 📉 Contingency plans for government agencies are expected to be released, detailing essential vs. non-essential functions.
• 🏛️ The impact on government workers, particularly in the Washington D.C. area, might influence the votes of local senators.
• 💼 While defense contractors are less likely to be impacted due to long-term contracts, government workers may not receive paychecks for 10-15 days, though historically they are paid retroactively.

International Policy and Trade

• 🌍 President Trump's speech at the UN General Assembly did not mention China and previewed potential discussions for the South Korea Asia summit.
• 🇺🇦 The speech also touched upon Ukraine's ability to win the war against Russia.
• 🌾 There is anticipation for a new round of farmer aid, potentially funded by tariff revenue, similar to past distributions.
• 🚫 The farm bill is not progressing due to current government shutdown issues.

Crypto and Financial Policy Updates

• ⚖️ The Senate Banking Committee's markup of the Responsible Financial Innovation Act (the Senate counterpart to the Clarity Act) is delayed, which may be beneficial for the bill.
• 🤝 The SEC and CFTC will hold a roundtable this week to discuss harmonization and potential areas of friction in the crypto space, aiming to prevent future jurisdiction disputes.
• 🏦 The Federal Reserve is expected to release a more robust bank capital proposal soon, potentially tied to the GIB search charge, and Vice Chair Bowman has suggested pushing back the Basel 3 timeline.

Trade and Tariffs

• 🎬 President Trump has floated a 100% tariff on movies made outside the US, though this idea is considered to be on weak legal grounds and presents operational challenges.
• 🛏️ Tariffs on imported furniture have also been discussed, with potential confusion regarding the scope of such measures.