Evening Report — Shutdown drama unfolds amid recession fears

Evening Report

TRUMP FIRST 100 DAYS

Government shutdown deadline approaches as trade war roils markets

CONGRESS IS RUSHING TO PASS a continuing resolution (CR) to avoid a government shutdown, as fallout from President Trump’s trade wars roil the financial markets and spark fears of a potential recession.

The shutdown fight will be an early test for Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.), while intense scrutiny will fall on Senate Democrats over whether they’ll give the GOP the votes they need in the upper chamber to keep the lights on in Washington.

The House GOP’s stopgap bill, which was released over the weekend, would fund the government for six months, giving Republicans time to develop a long-term deal to implement Trump’s agenda of tax and spending cuts. The CR reduces government spending by $13 billion overall compared to 2024 levels, while increasing spending on defense and border security.

Trump is whipping the CR, declaring on Truth Social over the weekend that “NO DISSENT” is permissible.

Johnson will once again have to navigate the dynamics of a bare majority and an unpredictable caucus in the House.

Rep. Thomas Massie (R-Ky.) has already said he’ll vote against the temporary funding patch, giving Johnson almost no room for further defections. Several conservative hardliners remain undecided, although they all came around to pass the GOP’s budget resolution last month after getting phone calls from Trump.

In the Senate, most Republicans are expected to vote for the CR, with Sen. Rand Paul (R-Ky.) the lone potential holdout. At least seven or eight Senate Democrats will have to get on board to surpass the 60-vote threshold in the upper chamber.

Sen. John Fetterman (D-Pa.) is a yes, arguing that Democrats should not play with fire and potentially be blamed for a shutdown that could make it easier for Elon Musk to gut the federal workforce.

The House is expected to vote Tuesday on the CR, and the Senate is expected to vote Thursday. The government will shut down Friday if the CR doesn’t pass both chambers by then.

TARIFFS CHAOS ROILS MARKETS

The markets and economists don’t like the uncertainty around the escalating trade wars.

The government of Ontario on Monday slapped a 25 percent surcharge on electricity sold to 1.5 million homes and businesses in Michigan, Minnesota and New York.

That comes despite Trump last week providing carve-outs for most of the tariffs he applied to goods coming into the U.S. from Mexico and Canada. Over the weekend, Trump threatened an additional 250 percent levy on Canadian dairy.

China’s retaliatory tariffs targeting U.S. agriculture also hit Monday.

U.S. tariffs on steel and aluminum are expected to go into effect this week as planned, according to Commerce Secretary Howard Lutnick.

Stock market indices sold off again Monday, with the Nasdaq shedding about 4 percent and the Dow falling about 2 percent.

Republicans are growing nervous that Trump’s tariffs could harm the broader economy, as well as workers in their home states.

The Hill’s Alexander Bolton spoke with Sen. Rand Paul (R-Ky.):

“I have every major industry in Kentucky lobbying me against them: the cargo shippers, the farmers, the bourbon manufacturers, the homebuilders, the home sellers — you name it — fence manufacturers,” Paul said.“The bourbon industry says they’re still hurt from the retaliatory tariffs [from Trump’s first term]. So do the farmers.”

Trump’s own words in an interview over the weekend did little to calm markets.

“I hate to predict things like that,” Trump said when asked by Fox’s Maria Bartiromo if he expects a recession this year.

Trump has acknowledged there will be some economic pain from the tariffs, but he described it as a “period of transition” to Bartiromo.

Lutnick sought to nix talk of a recession in a Sunday interview with NBC News’ “Meet the Press.”

“There’s going to be no recession in America,” Lutnick said.

“Will there be distortions? Of course. Foreign goods may get a little more expensive, but American goods are going to get cheaper, and you're going to be helping Americans by buying American.”

CANADA ELECTS NEW PRIME MINISTER

Canada’s Liberal Party elected former central banker Mark Carney as its new leader amid escalating tensions with the U.S.

Carney, who will be sworn in to replace Prime Minister Justin Trudeau in the coming days, has talked tough on dealing with Trump and the U.S.

“There is someone who is trying to weaken our economy,” he said. “Donald Trump, as we know, has put unjustified tariffs on what we build, on what we sell and how we make a living. He’s attacking Canadian families, workers and businesses and we cannot let him succeed and we won’t.”

Carney will face Conservative Party Leader Pierre Poilievre, with national elections expected to be called in the coming days or weeks.

Trudeau appeared headed for a massive defeat before he made the decision to step aside, but his Liberal Party has since rallied in the polls amid the fighting with Trump.

💡Perspectives:

• The Wall Street Journal: A shutdown test for Republicans.

• The Liberal Patriot: Cracks in Trump’s floor start with the economy.

• The Guardian: Canadians believe Carney will stand up to Trump.

Read more:

• Johnson looks to pass stopgap as government shutdown deadline looms.

• 3 groups to watch in the final push to fund the government.

• Trump-district Democrats face risky vote on GOP spending bill.

• Mexicans rally with president to celebrate US decision to delay tariffs.

• What to know about Mark Carney, elected next Canadian prime minister.

CATCH UP QUICK

President Trump says the arrest of a Columbia University student who led pro-Palestinian protests would be the first “of many to come.” U.S. Immigration and Customs Enforcement arrested Mahmoud Khalil, a green card-holding graduate student, over the weekend.
The Supreme Court will review a challenge to a law in Colorado banning mental health care providers from engaging minors in conversion therapy.

NEWS THIS AFTERNOON

Sanders draws huge crowds in GOP-held swing districts

Sen. Bernie Sanders (I-Vt.) is drawing massive crowds to his anti-oligarchy town-hall events in GOP-held swing districts across the Midwest, giving Democrats a blueprint as the party seeks a message that resonates with voters after suffering sweeping losses at the ballot box in 2024.

Sanders drew about 15,000 people combined to three events over the weekend in Michigan and Wisconsin, where he warned about the dangers of power being concentrated in the hands of a few wealthy people in the Trump administration.

Sanders’s biggest event was in Warren, Mich., where an overflow crowd of 9,000 gathered to see him and United Autoworkers President Shawn Fain. Sanders also drew 2,600 people in Altoona, Wis., which has a population of about 9,000 people in total.

“If we stand together we can defeat Trumpism,” Sanders posted on X.

Last month, Sanders held huge rallies in swing districts in Nebraska and Iowa.

These rallies and others are taking place in districts held by vulnerable Republicans, including Reps. Don Bacon (Neb.), Marianne Miller-Meeks (Iowa) and Bryan Steil (Wis.). There will also be a closely watched state Supreme Court race in Wisconsin this year.

Rep. Alexandria Ocasio-Cortez (D-N.Y.) plans to join Sanders on the trail for future events.

“You look around — who else is doing it? No one,” Ocasio-Cortez told The Associated Press. “My hope is that the dam will break in terms of Democrats going on the offense … We need to take the argument directly to the people.”

💡Perspectives:

• The Bulwark: The Democrats’ authenticity trap.

• The Hill: Dem performative protests expose lack of an alternative.

• John Kass: Democrats are locked in their own hell.

• The Nation: Why Democrats are losing my generation.

• The Guardian: Is Stephen A. Smith a solution for Democrats?

Read more:

• Slotkin says Trump has Democrats ‘on their heels’ since election.

• Walz: Democrats played it 'too safe' in 2024.

• Wisconsin Democrats look to harness anger with Musk in court race.

IN OTHER NEWS

Roundup: Rubio to Saudi Arabia for Ukraine talks

Secretary of State Marco Rubio and other U.S. officials are expected to meet with their Ukrainian counterparts Wednesday in Saudi Arabia to begin formulating the framework for a peace deal with Russia.

Ukrainian President Volodymyr Zelensky is not expected to be in attendance, though there are signs that his relationship with President Trump is on the mend.

Trump said over the weekend he’s “just about” at the point where he’d consider lifting the pause on U.S. intelligence-sharing with Ukraine.

There is hope that the long-awaited minerals deal between the U.S. and Ukraine could be signed ahead of the summit.

It’s a busy week for Rubio, who will travel from Saudi Arabia to Canada for the Group of Seven meetings, where tariffs are certain to dominate the discourse.

There have been reports of tension between Rubio and Elon Musk.

However, Rubio thanked the Department of Government Efficiency (DOGE) on Monday, saying they’d come to an agreement to cancel 83 percent of the programs at the U.S. Agency for International Development (USAID).

“The 5200 contracts that are now cancelled spent tens of billions of dollars in ways that did not serve, (and in some cases even harmed), the core national interests of the United States,” Rubio said. “In consultation with Congress, we intend for the remaining 18% of programs we are keeping (approximately 1000) to now be administered more effectively under the State Department. Thank you to DOGE and our hardworking staff who worked very long hours to achieve this overdue and historic reform.”

ELSEWHERE…

Trump’s envoy to the Middle East will take part in ceasefire talks between Israel and Hamas in Qatar this week.

Senior U.S. officials have been negotiating directly with Hamas, which the U.S. has long designated as a terrorist organization. NPR is reporting that Hamas is offering a truce with Israel that could last five to 10 years.

Trump's Middle East envoy Steve Witkoff says a deal to release of every hostage held by Hamas “could come together within weeks.”

Israel cut off electricity and aid to Gaza ahead of the latest round of negotiations.

💡Perspectives:

• The Hill: Trump’s ‘Gaza Riviera’ — a profile in arrogance.

• The Atlantic: The tragic success of global Putinism.

• The Hill: The Roberts court is America’s last safeguard against Trump.

Read more:

• Trump turns screws on Zelensky heading into Jeddah talks.

• Iranian leader rejects Trump’s push for nuclear talks.

• Trump shifts tone on Musk as tensions rise with Cabinet.

• HHS sends employees a $25K voluntary buyout offer.

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