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Government unlikely to get fully back to business for days
WASHINGTON — The federal government is expected to remain partially closed past Christmas Day in a protracted standoff over President Donald Trump’s demand for money to build a border wall with Mexico.
With Trump’s insistence on $5 billion for the wall and negotiations with Democrats in Congress far from a breakthrough, even a temporary measure to keep the government running while talks continued seems out of reach until the Senate returns for a full session Thursday.
From coast to coast, the first day of the shutdown played out in uneven ways. The Statue of Liberty was still open for tours, thanks to money from New York state, and the U.S. Post Office was still delivering mail, as an independent agency.
Yet the disruption has affected many government operations and the routines of 800,000 federal employees. Roughly 420,000 workers were deemed essential and were expected to work unpaid. An additional 380,000 were to be furloughed, meaning they will stay home without pay. The Senate had already passed legislation ensuring that workers will receive back pay, and the House was likely to follow suit.
No one knew how long the closures would last. Unlike other shutdowns, this one seemed to lack urgency, coming during the long holiday weekend after Trump had already declared Monday, Christmas Eve, a federal holiday. Rather than work around the clock to try to end the shutdown, as they had done in the past, the leaders of the House and the Senate effectively closed up shop. But they didn’t rule out action if a deal were struck.
“Listen, anything can happen,” Senate Majority Leader Mitch McConnell told reporters after he closed the Senate’s rare Saturday session hours after it opened.
But after ushering
At the White House, Trump hosted a lunch Saturday with conservative lawmakers, including House Freedom Caucus chiefs Mark Meadows of North Carolina and Jim Jordan of Ohio, and several senators. Absent from the guest list were GOP leaders or any Democrats, who would be needed for a deal.
“I am in the White House, working hard,” tweeted the president, who
Trump’s re-election campaign sent out a fundraising email late Saturday launching what he called “the most important membership program ever – the OFFICIAL BUILD THE WALL MEMBERSHIP.” The president urged donors to sign up.
With Democrats set to take control of the House on Jan. 3, and Speaker Paul Ryan on his way out, the shutdown was providing a last gasp of the conservative majority before the new Congress.
Trump savored the prospect of a shutdown over the wall for months. Last week he said he would be “proud” to close down the government. He had campaigned on the promise of building the wall, and he also promised Mexico would pay for it. Mexico has refused to do so.
In recent days, though, Trump tried to shift blame to Democrats for not acceding to his demand. He has given mixed messages on whether he would sign any bill into law.
After the luncheon at the White House, Sen. Lindsey Graham, R-S.C., said, “It’s clear to me he believes the additional funding is necessary.”
Senate Democratic leader Chuck Schumer of New York met with Pence on Saturday at the request of the White House, according to Schumer’s office. But the senator’s spokesman said they remained “very far apart” on a spending agreement.
Schumer said the “Trump shutdown” could end immediately if the president simply dropped his demand for money. “If you want to open the government, you must abandon the wall,” Schumer said.
Democrats said they were open to other proposals that didn’t include the wall, which Schumer said was too costly and ineffective. They have offered to keep spending at existing levels of $1.3 billion for border fencing and other security.
But Trump, digging in, tweeted about “the crisis of illegal activity” at American’s southern border is “real and will not stop until we build a great Steel Barrier or Wall.”
Republican leaders largely stayed in the background of the negotiations. McConnell acknowledged that any deal to reopen government would require Democratic support for passage and the president’s signature.
Senators approved a bipartisan deal earlier in the week to keep the government open into February and provide $1.3 billion for border security projects, but not the wall. But as Trump faced criticism from conservatives for “caving” on a campaign promise, he pushed to House to approve a package temporarily financing the government but also setting aside $5.7 billion for the border wall.
A test vote in the Senate on Friday showed that Republicans lacked the 60 votes needed to advance the House plan.
Pelosi, poised to become speaker, said in a letter to colleagues Saturday that “until President Trump can publicly commit to a bipartisan resolution, there will be no agreement before January when the new House Democratic Majority will swiftly pass legislation to re-open government.”
The impasse blocked money for nine of 15 Cabinet-level departments and dozens of agencies, including the departments of Homeland Security, Transportation, Interior, Agriculture, State and Justice.
Those being furloughed included nearly everyone at NASA and 52,000 workers at the Internal Revenue Service. About 8 in 10 employees of the National Park Service were to stay home; many parks were expected to close.
Some agencies, including the Pentagon and the departments of Veterans Affairs and Health and Human Services, were already funded and will operate as usual. Also still functioning were the FBI, the Border Patrol and the Coast Guard. Transportation Security Administration officers continued to staff airport checkpoints and air traffic controllers were on the job.
Many of Congress’ most conservative Republicans welcomed such a confrontation, but most GOP lawmakers wanted to avoid one because polling found the public opposed the wall and a shutdown over it.
Sen. Lamar Alexander of Tennessee said, “This is a complete failure of negotiations and a success for no one.”
___
Associated Press writers Alan Fram, Mary Clare Jalonick and Jill Colvin in Washington contributed to this report.
Lisa Mascaro, Darlene Superville And Kevin Freking, The Associated Press
From the Canadian Taxpayers Federation
By Carson Binda
BC Government promised carbon tax would reduce CO2 by 33%. It has done nothing.
The Canadian Taxpayers Federation is calling on the British Columbia government to scrap the carbon tax as new data shows the province’s carbon emissions have continued to rise, despite the oldest carbon tax in the country.
“The carbon tax isn’t reducing carbon emissions like the politicians promised,” said Carson Binda, B.C. Director for the Canadian Taxpayers Federation. “Premier David Eby needs to axe the tax now to save British Columbians money.”
Emissions data from the provincial government shows that British Columbia’s emissions have risen since the introduction of a carbon tax.
Total emissions in 2007, the last year without a provincial carbon tax, stood at 65.5 MtCO2e, while 2022 emissions data shows an increase to 65.6 MtCO2e.
When the carbon tax was introduced, the B.C. government pledged that it would reduce greenhouse gas emissions by 33 per cent.
The Eby government plans to increase the B.C. carbon tax again on April 1, 2025. After that increase, the carbon tax will add 21 cents to the cost of a litre of natural gas, 25 cents per litre of diesel and 18 cents per cubic meter of natural gas.
“The carbon tax has cost British Columbians a lot of money, but it hasn’t helped the environment as promised,” Binda said. “Eby has a simple choice: scrap the carbon tax before April 1, or force British Columbians to pay even more to heat our homes and drive to work.”
If a family fills up the minivan once per week for a year, the carbon tax will cost them $728. The carbon tax on natural gas will add $435 to the average family’s home heating bills in the 12 months after the April 1 carbon tax hike.
Other provinces, like Saskatchewan, have unilaterally stopped collecting the carbon tax on essentials like home heating and have not faced consequences from Ottawa.
“British Columbians need real relief from the costs of the provincial carbon tax,” Binda said. “Eby needs to stop waiting for permission from the leaderless federal government and scrap the tax on British Columbians.”
From the Fraser Institute
By Tegan Hill and Jake Fuss
This fiscal year (2024/25), the federal government and eight out of 10 provinces project a budget deficit, meaning they’re spending more than collecting in revenues. Unfortunately, this trend isn’t new. Many Canadian governments—including the federal government—have routinely ran deficits over the last decade.
But why should Canadians care? If you listen to some politicians (and even some economists), they say deficits—and the debt they produce—are no big deal. But in reality, the consequences of government debt are real and land squarely on everyday Canadians.
Budget deficits, which occur when the government spends more than it collects in revenue over the fiscal year, fuel debt accumulation. For example, since 2015, the federal government’s large and persistent deficits have more than doubled total federal debt, which will reach a projected $2.2 trillion this fiscal year. That has real world consequences. Here are a few of them:
Diverted Program Spending: Just as Canadians must pay interest on their own mortgages or car loans, taxpayers must pay interest on government debt. Each dollar spent paying interest is a dollar diverted from public programs such as health care and education, or potential tax relief. This fiscal year, federal debt interest costs will reach $53.7 billion or $1,301 per Canadian. And that number doesn’t include provincial government debt interest, which varies by province. In Ontario, for example, debt interest costs are projected to be $12.7 billion or $789 per Ontarian.
Higher Taxes in the Future: When governments run deficits, they’re borrowing to pay for today’s spending. But eventually someone (i.e. future generations of Canadians) must pay for this borrowing in the form of higher taxes. For example, if you’re a 16-year-old Canadian in 2025, you’ll pay an estimated $29,663 over your lifetime in additional personal income taxes (that you would otherwise not pay) due to Canada’s ballooning federal debt. By comparison, a 65-year-old will pay an estimated $2,433. Younger Canadians clearly bear a disproportionately large share of the government debt being accumulated currently.
Risks of rising interest rates: When governments run deficits, they increase demand for borrowing. In other words, governments compete with individuals, families and businesses for the savings available for borrowing. In response, interest rates rise, and subsequently, so does the cost of servicing government debt. Of course, the private sector also must pay these higher interest rates, which can reduce the level of private investment in the economy. In other words, private investment that would have occurred no longer does because of higher interest rates, which reduces overall economic growth—the foundation for job-creation and prosperity. Not surprisingly, as government debt has increased, business investment has declined—specifically, business investment per worker fell from $18,363 in 2014 to $14,687 in 2021 (inflation-adjusted).
Risk of Inflation: When governments increase spending, particularly with borrowed money, they add more money to the economy, which can fuel inflation. According to a 2023 report from Scotiabank, government spending contributed significantly to higher interest rates in Canada, accounting for an estimated 42 per cent of the increase in the Bank of Canada’s rate since the first quarter of 2022. As a result, many Canadians have seen the costs of their borrowing—mortgages, car loans, lines of credit—soar in recent years.
Recession Risks: The accumulation of deficits and debt, which do not enhance productivity in the economy, weaken the government’s ability to deal with future challenges including economic downturns because the government has less fiscal capacity available to take on more debt. That’s because during a recession, government spending automatically increases and government revenues decrease, even before policymakers react with any specific measures. For example, as unemployment rises, employment insurance (EI) payments automatically increase, while revenues for EI decrease. Therefore, when a downturn or recession hits, and the government wants to spend even more money beyond these automatic programs, it must go further into debt.
Government debt comes with major consequences for Canadians. To alleviate the pain of government debt on Canadians, our policymakers should work to balance their budgets in 2025.
Tegan Hill
Director, Alberta Policy, Fraser Institute
Jake Fuss
Director, Fiscal Studies, Fraser Institute
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