U.S. government shutdown looms amid immigration battle

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(Note language that may offend some readers)

By Richard Cowan and Susan Cornwell

WASHINGTON (Reuters) – Partisan finger-pointing over immigration policy on Tuesday left the U.S. Congress and the White House stumbling closer to a possible federal government shutdown by the end of the week, although Wall Street held out hopes for a deal to prevent that.

Republicans who control Congress are expected to try to push another stopgap funding bill and get it to President Donald Trump’s desk before Friday’s midnight deadline.

But there are perils. Conservatives want a large increase in defense spending that such a bill would not provide. Many Democrats might withhold their support unless immigration policy is addressed.

Meanwhile, Senate Majority Leader Mitch McConnell warned that a government funding bill should not be held “hostage” to the immigration debate. And the White House director of legislative affairs, Marc Short, told reporters there was “no artificial timeline” for a deal on so-called Dreamers and that it would be “herculean” to get it done by this week.

The negotiating climate has become increasingly poisonous after a sudden halt last week in talks toward a deal to shield the Dreamers – immigrants brought into the country illegally as children – from deportation.

The Republican president rejected a bipartisan agreement reached by a group of senators. Divisions between Republicans and Democrats then deepened amid an uproar over Trump’s reported use of the word “shithole” when speaking about African countries last week. Trump has denied using that word.

The head of the influential Congressional Hispanic Caucus expressed her opposition to the bipartisan Senate deal, although she said she had not seen its text and noted it had some positive aspects.

“In its current form I’m probably a no,” Representative Michelle Lujan Grisham said in an interview. The Democrat said she will back a narrower bipartisan House of Representatives bill.

The Senate approach, Lujan Grisham said, would reduce the parents of Dreamers to “second-class citizens” because they would receive temporary protections and no pathway to citizenship, as well as other problems.

Republican Senator Lindsay Graham on Tuesday blamed White House staff for altering Trump’s positive view on the Senate bipartisan agreement on the Deferred Action for Childhood Arrivals (DACA) program that protects the Dreamers. “I will say I don’t think the president was well-served by his staff,” Graham said.

House Republicans were scheduled to huddle on Tuesday night to try to figure out how best to avoid a government shutdown, congressional aides said.

If a temporary “continuing resolution” to keep the government operating results, it would be the fourth such measure since the 2018 federal fiscal year began on Oct. 1, a sign of Washington’s serious struggles to pass spending legislation.

Analyst Ed Mills at financial firm Raymond James said another short-term extension is expected. “This is likely to be a week of brinkmanship and the potential of a government shutdown is elevated. Should a shutdown occur, we do not expect much of a market reaction,” Mills noted.

‘KICK THE CAN’

No. 2 House Democrat Steny Hoyer said Democrats have not decided whether they will support another continuing resolution and “can kick the can down the road one more time.”

The slim Republican margin of control in the U.S. Senate means Trump’s party will need some Democratic support to resolve the government funding stand-off. Democrats have said they want a spending bill that protects the Dreamer immigrants, mostly Hispanic young adults.

Talks also continued on related issues, including how to fund a children’s healthcare program and to establish higher spending caps for the U.S. military and other domestic programs.

House Energy and Commerce Chairman Greg Walden was pushing for a six-year reauthorization of the Children’s Health Insurance Program (CHIP) to be passed this week, possibly as part of a stopgap spending bill, a House Republican aide said.

Trump and Democratic Senator Dick Durbin have traded accusations over the collapse of the immigration talks.

Durbin intends to introduce the bipartisan agreement as legislation on Wednesday, spokesman Ben Marter said. But it was not yet clear whether Senate Majority Leader Mitch McConnell would schedule it for a floor debate and vote.

Trump said in September he was terminating the DACA program, launched by his Democratic predecessor Barack Obama, effective in March. Congress has until then to pass legislation to protect the roughly 700,000 Dreamers from deportation and give them work permits.

Trump said he was willing to make a deal to help the Dreamers but insisted that funding for border security, including his long-promised wall along the U.S.-Mexican border opposed by Democrats, be included in any spending package.

The bipartisan deal called for $2.7 billion for an array of border security steps.

“The Democrats want to shut down the Government over Amnesty for all and Border Security. The biggest loser will be our rapidly rebuilding Military, at a time we need it more than ever,” Trump wrote on Twitter.

Senate Democratic Leader Chuck Schumer countered in a speech on the Senate floor: “If you want to begin the long road back to prove you’re not prejudiced or bigoted, support the bipartisan compromise that three Democrats and three Republicans have put before you.”

(Reporting by Richard Cowan and Susan Cornwell; Additional reporting by Doina Chiacu, Mohammad Zargham and Blake Brittain; Writing by Doina Chiacu; Editing by Kevin Drawbaugh, Will Dunham and Cynthia Osterman)