Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, congressional correspondent Erik Wasson looks at the standoff over government spending. Sign up here and follow us at @bpolitics. Email our editors here.

Truth or Dare

Democrats took the Republicans’ dare, and now the chances of a government shutdown as of 12:01 a.m. Saturday are suddenly on the rise.

After three days of heated closed-door meetings, several key moderate Democratic senators, including Mark Kelly of Arizona and Mark Warner of Virginia, announced they’d vote against moving forward with a spending bill that Republicans pushed through the House earlier this week.

And under the Senate’s esoteric rules, that leaves the 53-member Republican majority short of the 60 votes they need to send the spending package to final passage (which only needs a simple majority).

That gives some additional leverage to Senate Democratic leader Chuck Schumer, because Republicans were operating on the assumption that the threats to let the government run out of funding was a bluff.

Schumer and Senator Tina Smith. Photographer: J. Scott Applewhite/AP Photo

Schumer was being squeezed between the Democrats’ left wing’s demands to stand up to President Donald Trump and the worries among some party moderates from swing states that they’ll be blamed for any shutdown.

Trump and Republicans were only too happy to feed that worry. “If there’s a shutdown, it’s only because of Democrats,” Trump said at the White House today.

The Republican spending bill would keep government funds flowing through Sept. 30, the end of the fiscal year. But it also made cuts, including $20 billion from the IRS, and blocked the city of Washington from spending $1 billion of its own tax dollars.

Arguably most objectionable to Democrats, it also put no limits on Elon Musk’s Department of Government Efficiency from firing federal workers or canceling grants and contracts.

The Democrats counteroffer was a stopgap through April 11 so that they could negotiate some changes, including reining in Musk. But they don’t have the votes either.

With the Senate, there’s always a chance for an 11th-hour deal, even if it means a relatively low-impact weekend government shutdown.

The House is gone on a two-week recess and there’s little chance Trump would budge on his preferred Sept. 30 bill, though he did today offer to negotiate directly with Schumer.

Trump has his own leverage, though. If there’s a shutdown the president would have great latitude to decide how many and which workers to furlough, giving a roadmap to a mass layoff of federal employees he deems non-essential. — Erik Wasson

Don’t Miss

Trump asked the Supreme Court to let him partially enforce his executive order seeking to restrict automatic birthright citizenship, pulling the court into his drive to upend a longstanding constitutional rule.

The president threatened to impose a 200% tariff on wine, champagne and other alcoholic beverages from France and elsewhere in the European Union, the latest escalation in a growing transatlantic trade war.

One of the Trump family’s crypto ventures, World Liberty Financial, has discussed doing business with digital-asset exchange Binance, whose founder pleaded guilty to violating anti-money-laundering rules.

The White House withdrew the nomination of vaccine critic Dave Weldon for the top job at the CDC as it grew clear there weren’t enough Senate votes to confirm him.

Wholesale inflation in the US stagnated in February, though one measure of goods prices jumped and details were also less favorable for the Federal Reserve’s preferred inflation gauge.

Trump was sued by a group of mostly Democratic-led states over his plan to effectively dismantle the Education Department by slashing its workforce in half.

A federal judge in San Francisco ordered the Trump administration to rehire thousands of the government’s newest employees who were terminated in early February.

Musk made an unannounced visit to the National Security Agency, a week after saying the secretive office responsible for foreign-intelligence collection needed to be revamped.

Faced with the logistical and financial limits of mass deportations, the Trump administration has turned to a $200 million campaign aimed at persuading undocumented immigrants to leave the US voluntarily.

The Senate Banking Committee advanced landmark stablecoin legislation in a major victory for the ascendant cryptocurrency industry, despite strong objections from top Democrat Elizabeth Warren.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., senior Washington correspondent Saleha Mohsin interviewed Steven Mnuchin, who was Treasury secretary during Trump’s first term, about the state of the economy and his views of the president’s policies.

On the program at 5 p.m., hosts Joe Mathieu and Kailey Leinz talk with Daniel Fried, the former US ambassador to Poland, about the administration’s attempts to get Russia to the table to negotiated a ceasefire in its war against Ukraine.

On the Odd Lots podcast, Bloomberg’s Tracy Alloway and Joe Weisenthal talk with Kevin Erdmann, a senior affiliated scholar at the Mercatus Center at George Mason University, who argues that after the financial crisis regulators over-tightened lending standards, and in so doing, took out the entire "starter home" segment of the new housing market. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

Continuing claims for unemployment benefits by federal workers ticked higher last week but haven't, so far, soared, despite the Trump administration’s escalating efforts to shrink the government workforce. In the latest data, 1,580 new applications were received and 8,215 federal workers are already obtaining benefits. Applications filed by out-of-work federal employees have been climbing in the past month, and new claims filed by all workers in Washington, DC, Maryland and Virginia have all risen in recent weeks. But, because a large share of these workers are taking incentives to leave, the deferred resignations are creating a slow-motion purge of talent that isn't causing a sharp jump in claims. Further, some federal workers are retiring instead applying for unemployment insurance. — Alex Tanzi

What’s Next

The University of Michigan’s preliminary measure of consumer sentiment for this month will be released tomorrow.

Current government funding authority expires tomorrow.

Retail sales for February will be reported on Monday.

Housing starts in February are set for release on Tuesday.

The Fed’s Open Market Committee meets Tuesday and Wednesday.

Existing homes sales in February will be reported March 20.

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