Trump Wants to Avoid a Government Shutdown by Funding a Border Wall and Illegal Obamacare Subsidies

The deal floated by the president reveals his governing priorities.


Gage Skidmore

If Congress doesn't negotiate a budget deal or temporary extension by the end of this week, the federal government will shut down. That's an outcome that President Trump wants to avoid. So his administration has proposed a deal intended as a compromise: If Democrats agree to fund Trump's border wall, Trump will agree to fund payments to health insurers that are keeping Obamacare afloat.

This is the deal that White House Budget Director Mick Mulvaney outlined over the weekend, and, tellingly, it appears to be Trump's preferred outcome: money for Obamacare and money for a border wall.

One complicating factor is that House Republicans have spent the last several years arguing in court that the Obamacare payments Trump wants to make are unconstitutional.

The payments, known as cost-sharing reduction (CSR) subsidies, are part of the statute of the Affordable Care Act. But Congress never appropriated any money to pay for them. The Obama administration, after initially requesting that Congress set aside money for the subsidies, made the payments anyway. House Republicans sued, arguing that under the Constitution, only Congress has the power of the purse, and that the Obama administration's decision to spend money that Congress did not appropriate violated the separation of powers. In May of last year, a federal judge agreed, ruling that the Obama administration's decision to fund the subsidies was illegal.

(The Obama administration appealed the ruling and kept making the payments. After Trump won, House Republicans suspended their suit, and so far the Trump administration has continued to make the payments as well, while repeatedly threatening to end them.)

The relevant history is clear enough. House Republicans argued in court that the CSR subsidies were unconstitutional. A federal judge agreed. And, as the Cato Institute's Michael Cannon points out, both Health and Human Services Secretary Tom Price and Attorney General Jeff Sessions have also said that the payments violated the law. This is the money that Trump wants to spend in order to pick up support for funding a border wall. This is the compromise he is willing to make.

That Trump now want to make these payments is both awkward and revealing.

There may be political and budgetary reasons, at this point, to continue funding the CSR payments, at least on a temporary basis. Without those payments in place, many if not most insurers would almost certainly drop out of Obamacare's exchanges, leading to a nearly instant collapse of the individual market. In addition to the toll of rapidly throwing millions of people out of their coverage, this would likely be a political nightmare, because even small disruptions make the always-difficult politics of health policy reform even tougher. In addition, Obamacare's subsidy system is structured in a way that could result in substantially higher costs to the government if the subsidy were cut off.

To the extent that the CSR subsidies provide the administration with options for tactical negotiation, that leverage should be to negotiate for better health care policy. The problem is that, by all accounts, Trump neither knows nor cares what that would look like. Instead, he remains focused on restrictionist trade and immigration policy—even as illegal immigration has fallen from its 2015 peak.

The president may yet soften on his demand for wall funding. But the fact that he has pursued this supposed compromise reveals much about his policy priorities and his approach to governance, as well as his political instincts. Trump has always branded himself a master dealmaker, and this is what his idea of a terrific deal looks like.