Government Funding Deadline Approaches amid Election Turmoil

As the election rhetoric rages on, Congress returns from its summer recess facing a pre-election deadline. Funding authorization for the federal government expires on September 30. Thus, Congress must pass legislation to fund the government by that date to avoid a shutdown on October 1.

Although the leaders of both parties want to avoid a shutdown prior to the election, some House conservatives are balking at continuing the current funding compromise reached last December, which they see as failing to rein in spending. Their failure to support continued funding would place Speaker Ryan in the same uncomfortable position “enjoyed” by his predecessor, John Boehner. Does he pass funding legislation – with Democratic support if necessary – or accede to the wishes of his caucus? Another wild card is whether and how Donald Trump wades into this issue. Could he stir up opposition to a funding bill that emboldens the House conservatives?

In the final analysis, we believe Congress will pass timely legislation to fund the government for a short period, perhaps until the post-election lame duck session or into 2017. But the possibility of a Congressional failure to act cannot be dismissed. If it becomes apparent that Congress will struggle to pass funding legislation, late September could be a volatile time for the markets. Failure to act also could factor into a Fed decision to postpone an interest rate hike in September until the turmoil passes.

Andrew H. Friedman is the principal of The Washington Update LLC and a former senior partner in a Washington, D.C. law firm. He and his colleague Jeff Bush speak regularly on legislative and regulatory developments and trends affecting investment, insurance, and retirement products. They may be reached at www.TheWashingtonUpdate.com.

The authors of this paper are not providing legal or tax advice as to the matters discussed herein. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. It is not intended as legal or tax advice and individuals may not rely upon it (including for purposes of avoiding tax penalties imposed by the IRS or state and local tax authorities). Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.

Copyright Andrew H. Friedman 2016. Reprinted by permission. All rights reserved.

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