President Trump has cautioned that the government will “likely” shut down ahead of a deadline at midnight on Tuesday and that Democrats could face consequences as a result.
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“Nothing is inevitable, but I would say it’s probably likely. We can do things during the shutdown that are irreversible, that are bad for them and irreversible by them,” Trump said, referring to cutting federal programs and employees.
ACA Clash Fuels Shutdown Standoff
Congressional Republicans have stressed that Democrats are holding back from signing a seven-week funding extension deal over issues like Affordable Care Act (ACA) subsidies and program funding. “We’re not trying to chop the traditional ACA subsidies, we’re just letting this other one sunset,” said Republican Senator Roger Marshall. The last government shutdown occurred in 2018 over a billion-dollar border wall dispute.
However, investors shouldn’t panic. The S&P 500 (SPX) has an average return of 0.3% during shutdowns, with an average 12-month return of 12.7% after the government reopens, according to Carson Research.
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