Trump Rejects Democrats’ Demands as US Nears Shutdown Brink

(Bloomberg) — President Donald Trump said Democrats must drop their demands for renewing health care subsidies and ending Medicaid cuts before he’ll agree to negotiate with congressional leaders at a meeting they planned for Thursday, ratcheting up the risk of an Oct. 1 government shutdown.

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“After reviewing the details of the unserious and ridiculous demands being made by the Minority Radical Left Democrats in return for their Votes to keep our thriving Country open, I have decided that no meeting with their Congressional Leaders could possibly be productive,” Trump said in a social media post on Tuesday.

Trump added that he looks “forward to meeting with them if they get serious about the future of our Nation. We must keep the Government open, and legislate like true Patriots rather than hold American Citizens hostage.”

The president’s pre-conditions upend a Thursday Oval Office meeting that had been planned with Senate Democratic Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries. Republicans need at least seven Democrats’ votes to pass a government funding bill in the Senate, giving the minority party leverage in the talks.

“Trump Always Chickens Out,” Jeffries responded in a social media post after Trump said he wouldn’t meet. “The extremists want to shut down the government because they are unwilling to address the Republican healthcare crisis.”

Financial markets tend to shrug off threats of a shutdown as just more heated Washington rhetoric given the history of standoffs being resolved at the last minute. Both sides are more dug in this time so a shutdown is both more likely and more difficult to end.

US equity markets, large-cap companies and major US government contractors are unlikely to be affected much in a short shutdown, even if it continues for a few weeks, according to a Bloomberg Intelligence analysis. But a longer funding lapse could start to impact economic growth, with a month-long shutdown lowering quarterly GDP growth by 0.4 percentage points as a rule of thumb, according to Bloomberg Economics.

Democrats want to permanently extend expiring Obamacare subsidies, reverse cuts to Medicaid and prevent the White House from unilaterally canceling spending as part of a deal to avoid a shutdown. They have rejected a House-passed Republican plan to keep the government open through Nov. 21 with no strings attached.