Senate breaks from Trump with Syria troop vote

FILE PHOTO: Syrian schoolchildren walk as U.S. troops patrol near Turkish border in Hasakah, Syria Nov. 4, 2018. REUTERS/Rodi Said/File Photo

By Patricia Zengerle

WASHINGTON (Reuters) – The Republican-led U.S. Senate backed largely symbolic legislation on Monday that broke with President Donald Trump by opposing plans for any abrupt withdrawal of troops from Syria and Afghanistan.

The Senate voted 70-26 in favor of a non-binding amendment, drafted by Majority Leader Mitch McConnell, saying it was the sense of the Senate that Islamist militant groups in both countries still pose a “serious threat” to the United States.

The amendment acknowledged progress against Islamic State and al Qaeda in Syria and Afghanistan but warned that “a precipitous withdrawal” could destabilize the region and create a vacuum that could be filled by Iran or Russia.

It called on the Trump administration to certify conditions had been met for the groups’ “enduring defeat” before any significant withdrawal from Syria or Afghanistan.

Before the vote, McConnell said he introduced the bill so the Senate could “speak clearly and directly about the importance of the” missions in Afghanistan and Syria.

Passage was expected, after the Senate voted to advance it in a procedural vote last week. After concerns from some Democrats, the Senate approved a change to the bill making it clear the amendment was not intended to be a declaration of war or authorization to use military force.

The vote added the amendment to a broader Middle East security bill making its way through Congress. The Senate voted 72-24 to advance the broader bill in a procedural vote on Monday after the amendment vote.

To become law, however, the bill would need to pass the Democratic-controlled House of Representatives, where it is unlikely to move without significant changes because of concerns about a provision addressing the “Boycott, Divest and Sanction” movement concerned with Israel’s treatment of the Palestinians.

The votes marked the second time in two months that the Senate supported a measure contradicting Trump’s foreign policy, although legislation to change his policies has yet to become law.

Several of Trump’s fellow Republicans strongly disagreed with his plans to withdraw 2,000 U.S. troops from Syria on the grounds that militants no longer pose a threat.

Senator Jim Risch, the Republican chairman of the Senate Foreign Relations Committee, disputed before Monday’s vote that the amendment rebuked or insulted Trump. “As I read it, it recognizes … his effort for us to examine exactly what we are doing in these places,” Risch said.

(Reporting by Patricia Zengerle; Editing by Peter Cooney)

Shares surge to 2-month high, dollar climbs ahead of Trump speech

FILE PHOTO - Visitors look at an electronic stock quotation board at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, October 1, 2018. REUTERS/Toru Hanai

By Lewis Krauskopf

NEW YORK (Reuters) – World stocks raced to a fresh two-month high on Tuesday to keep up their fast start to 2019 while the U.S. dollar strengthened for a fourth straight session as investors awaited President Trump’s annual State of the Union speech later in the day.

With European shares posting strong gains and Wall Street opening solidly higher, MSCI’s gauge of stocks across the globe gained 0.60 percent, rising for a sixth straight session as it hit a two-month high.

Trump was due to give his address at 2100 ET (0200 GMT), with investors awaiting indications of progress in U.S.-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown.

The Federal Reserve’s dovish recent statement on interest rate policy, along with optimism over U.S.-China tensions, has fueled recent risk appetite, even as estimates for U.S. corporate earnings have been falling.

“Despite the State of the Union tonight, investors seem increasingly certain that we are going to avoid any escalation of the trade tensions with China and avoid another government shutdown,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab in Boston.

“Investors are viewing policy considerations offsetting falling earnings expectations,” Kleintop said.

On Wall Street, the Dow Jones Industrial Average rose 168.25 points, or 0.67 percent, to 25,407.62, the S&P 500 gained 11.94 points, or 0.44 percent, to 2,736.81 and the Nasdaq Composite added 55.71 points, or 0.76 percent, to 7,403.24.

Shares of Esta Lauder Cos and Ralph Lauren reacted favorably to the companies’ respective quarterly reports.

Fourth-quarter earnings for companies on the benchmark S&P 500 index were on track to have climbed 15.4 percent, but profit in the first quarter is now expected to rise by only 0.5 percent, according to IBES data from Refinitiv.

The pan-European STOXX 600 index rose 1.33 percent, as BP shares jumped after its earnings report.

The dollar index, which measures the greenback against a basket of currencies, rose 0.22 percent, up for a fourth straight session, with the euro down 0.24 percent to $1.1408.

Continued recovery in investors’ appetite for risk-taking exerted pressure on safe-haven currencies, dragging the Swiss franc to an 11-week low against the dollar.

U.S. Treasury yields fell as investors started to price in the Fed’s dovish interest rate outlook amid an uncertain global economic outlook.

“Yields are consolidating around levels that are more consistent with the new position at the Fed which is … it is effectively on hold at least in the next six months,” said John Herrmann, rates strategist at MUFG Securities in New York.

Benchmark U.S. 10-year notes last rose 7/32 in price to yield 2.6983 percent, from 2.724 percent late Monday.

U.S. crude fell 0.24 percent to $54.43 per barrel and Brent was last at $62.60, up 0.14 percent on the day.

(Additional reporting by Gertrude Chavez-Dreyfuss and Saqib Iqbal Ahmed in New York, Marc Jones in London; Editing by Bernadette Baum)

Trump pushes border wall fight ahead of State of the Union speech

U.S. President Donald Trump speaks during a meeting to "discuss fighting human trafficking on the southern border" in the Cabinet Room of the White House in Washington, U.S., February 1, 2019. REUTERS/Jim Young

By Steve Holland

WASHINGTON (Reuters) – President Donald Trump on Tuesday was set to deliver a State of the Union speech challenging Democrats to approve funding for his long-sought border wall, but stopping short of declaring a national emergency over it, at least for now.

At 9 p.m. EST (0200 GMT Wednesday) before a joint session of Congress, Trump likely will stir contention with remarks on immigration policy, after his demand for $5.7 billion in wall funds triggered a historic 35-day partial government shutdown that more than half of Americans blamed him for, according to Reuters/Ipsos polling.

Millions of Americans were expected to watch the address on television, giving the Republican president his biggest opportunity to date to explain why he believes a barrier is needed on the U.S. southern border with Mexico. The speech was delayed for a week because of the shutdown, which ended on Jan. 25.

When Trump takes center stage in the chamber of the House of Representatives for the big speech, sitting behind him over his shoulder will be his main congressional adversary, Democrat Nancy Pelosi, who became House speaker after her party won control of the chamber in November’s elections.

She has shown no sign of budging from her opposition to Trump’s wall-funding demand. That has led Trump to contemplate declaring a national emergency, which he says would let him reallocate funding from elsewhere without congressional action.

A source close to Trump said the president was not expected to take that step, which likely would draw a swift court challenge from Democrats. Instead he will urge a congressional committee to work out a border security deal by Feb. 15.

“He’s going to set the stage,” the source said. “He’ll tell people, ‘Here’s why I should,’ but say, ‘I’m giving Congress another chance to act.'”

Trump continued to push his wall in a Tuesday morning tweet ahead of his evening remarks, noting that the Pentagon has sent more troops to the U.S. southern border.

“We will build a Human Wall if necessary,” he said.

WANTS DEAL FROM CONGRESS

Asked on Tuesday if Trump would use the speech to announce an emergency, White House senior adviser Kellyanne Conway said the president “has an absolute right to do it” but would prefer that lawmakers forge a solution.

“He wants Congress to finish its work and hopefully come to an agreement, put a deal on his desk that he will sign into law,” Conway told reporters at the White House.

Trump’s speech also will offer an olive branch to opponents as he looks toward the 2020 election, targeting areas he sees for potential bipartisan agreement, such as infrastructure improvements, lowering prescription drug costs and healthcare.

A senior administration official said Trump would “encourage Congress to reject the politics of resistance and retribution, and instead adopt a spirit of cooperation and compromise so we can achieve it.”

Senator Angus King, an independent, on Tuesday told MSNBC he saw potential for bipartisan action over opioids, HIV and infrastructure that could be derailed “if he throws down the gauntlet and gives us another lecture on the wall.”

Trump’s message could also be undermined by his threats to go his own way on the long-promised wall if he cannot get Congress to approve the funding he wants. He has said the wall, which he promised during his 2016 campaign and said Mexico would pay for, is needed to deter illegal immigration and drugs.

Some of Trump’s own fellow conservatives are also urging Trump not to declare an emergency. “I’m for whatever works that prevents the level of dysfunction we’ve seen on full display here the last month, and also doesn’t bring about a view on the president’s part that he needs to declare a national emergency,” Senate Majority Leader Mitch McConnell told reporters last week.

OTHER TOPICS

Trump also will address foreign policy, including support for an effort to coax Venezuelan President Nicolas Maduro into leaving power and declaring the Islamic State militant group all but defeated. He will also give an update on trade talks with the Chinese.

Asked if he would announce where he will next meet North Korean leader Kim Jong Un, White House spokeswoman Sarah Sanders declined to give any details in an interview with Fox News Tuesday morning.

Trump, Vice President Mike Pence and White House acting Chief of Staff Mick Mulvaney went over the speech on Monday night with about a dozen supporters including former campaign aides Corey Lewandowski and David Bossie, as well as Matt Schlapp, chairman of the American Conservative Union, a source familiar with the meeting said.

The source said Trump would discuss troop drawdowns in Syria and Afghanistan and that about half the speech would be devoted to foreign policy.

Trump also will claim success on economic policy, including cutting federal regulations, the source said.

Some Democrats have invited guests to the speech to highlight various causes, some at odds with Trump’s policies, making a raucous atmosphere possible inside the House chamber.

Representative Pramila Jayapal said on Monday she would invite climate scientist Lisa Graumlich, dean of the College of the Environment at the University of Washington, to underscore the climate change issue.

“One thing you will see is that the chamber is full and the president is surrounded by women, by people of color, by individuals who have really been hurt by this president and many of the actions that he has taken,” Jayapal said.

Republican strategist and former White House official Raj Shah said the speech offered Trump a chance to turn the page.

“Washington right now looks a little bit petty and a little bit small and the State of the Union is an opportunity to go big and talk in broad themes about what’s good about America and look beyond some of the issues of the last few weeks,” he said.

(Reporting by Steve Holland; Additional reporting by Susan Cornwell, Roberta Rampton and Susan Heavey; Editing by Peter Cooney and Bill Trott)

Trump says U.S. military intervention in Venezuela ‘an option;’ Russia objects

Venezuelan opposition leader and self-proclaimed interim president Juan Guaido and his wife Fabiana Rosales gesture during a rally against Venezuelan President Nicolas Maduro's government in Caracas, Venezuela February 2, 2019. REUTERS/Carlos Garcia Rawlins

By Brian Ellsworth

CARACAS (Reuters) – U.S. President Donald Trump said military intervention in Venezuela was “an option” as Western nations boost pressure on socialist leader Nicolas Maduro to step down, while the troubled OPEC nation’s ally Russia warned against “destructive meddling.”

The United States, Canada, and several Latin American countries have disavowed Maduro over his disputed re-election last year and recognized self-proclaimed President Juan Guaido as the country’s rightful leader.

Trump said U.S. military intervention was under consideration in an interview with CBS aired on Sunday.

“Certainly, it’s something that’s on the – it’s an option,” Trump said, adding that Maduro requested a meeting months ago.

“I’ve turned it down because we’re very far along in the process,” he said in a “Face the Nation” interview. “So, I think the process is playing out.”

The Trump administration last week issued crippling sanctions on Venezuelan state-owned oil firm PDVSA, a key source of revenue for the country, which is experiencing medicine shortages and malnutrition.

Maduro, who has overseen an economic collapse and the exodus of millions of Venezuelans, maintains the backing of Russia, China and Turkey, and the critical support of the military.

Russia, a major creditor to Venezuela in recent years, urged restraint.

“The international community’s goal should be to help (Venezuela), without destructive meddling from beyond its borders,” Alexander Shchetinin, head of the Latin America department at Russia’s Foreign Ministry, told Interfax.

France and Austria said they would recognize Guaido if Maduro did not respond to the European Union’s call for a free and fair presidential election by Sunday night.

“We don’t accept ultimatums from anyone,” Maduro said in a defiant interview with Spanish television channel La Sexta carried out last week and broadcast on Sunday.

“I refuse to call for elections now – there will be elections in 2024. We don’t care what Europe says.”

EMBOLDENED OPPOSITION

The 35-year-old Guaido, head of the country’s National Assembly, has breathed new life into a previously fractured and weary opposition. Tens of thousands of people thronged the streets of various Venezuelan cities on Saturday to protest Maduro’s government.

Guaido allies plan to take a large quantity of food and medicine donated by the United States, multilateral organizations and non-profit groups across the Colombian border into the Venezuelan state of Tachira this week, according to a person directly involved in the effort.

The group has not yet determined which border point it will cross, said the person, who asked not to be identified because he is not authorized to speak publicly about the issue.

It is unclear whether Maduro’s government, which denies the country is suffering a humanitarian crisis, will let any foreign aid through.

The embattled president on Sunday promised peace for Venezuela without specifically responding to Trump.

“In Venezuela, there will be peace, and we will guarantee this peace with the civil-military union,” he told state television, in the company of khaki and black-clad soldiers who were earlier shown carrying guns and jumping from helicopters into the sea.

Maduro has overseen several such military drills since Guaido declared himself president to display he has the backing of the military, and that Venezuela’s armed forces are ready to defend the country.

Air Force General Francisco Yanez disavowed Maduro in a video this weekend, calling on members of the military to defect. But there were no signs the armed forces were turning against Maduro.

Venezuela has as many as 2,000 generals, according to unofficial estimates, many of whom do not command troops and whose defection would not necessarily weaken the ruling socialists.

The police have also fallen in line with Maduro.

A special forces unit called FAES led home raids following unrest associated with opposition protests in January, killing as many as 10 people in a single operation in a hillside slum of Caracas.

Venezuela’s ambassador to Iraq, Jonathan Velasco, became the latest official to recognize opposition leader Guaido this weekend.

(Reporting by Brian Ellsworth; Additional reporting by Lucia Mutikani and Doina Chiacu in Washington; Writing by Brian Ellsworth and Sarah Marsh; Editing by Lisa Shumaker and Peter Cooney)

Trump says may declare an emergency for wall as little headway in talks

U.S. President Donald Trump speaks during a meeting to "discuss fighting human trafficking on the southern border" in the Cabinet Room of the White House in Washington, U.S., February 1, 2019. REUTERS/Jim Young

WASHINGTON (Reuters) – President Donald Trump said on Friday he might declare a national emergency to obtain funding to build a wall along the U.S. border with Mexico because it did not appear Democrats were moving toward a deal that would provide the money.

“We’re not getting anywhere with them,” Trump said during an event at the White House.

“I think there’s a good chance that we’ll have to do that,” he added, referring to the possibility of an emergency declaration that could allow him to use funds that Congress has approved for other purposes.

His comments came a day after Nancy Pelosi, the Democratic speaker of the House of Representatives, told reporters, “There’s not going to be any wall money” in legislation to fund border security for the rest of this year.

Pelosi said funding for more ports of entry or additional border security technology was open for negotiation. She added that the 17 House and Senate negotiators working on legislation to fund homeland security for the year should decide the components of the nation’s border security.

Democratic negotiators unveiled a detailed opening position containing no money for any type of additional physical barriers on the border to control the flow of undocumented immigrants and illegal drugs. Previously they had supported $1.3 billion for new fencing and improvements to existing barriers.

Trump has said he has to have a wall for border security.

(Reporting by Steve Holland; Writing by David Alexander; Editing by Tim Ahmann)

Trump upbeat on China trade talks but wants broad access for U.S. firms

FILE PHOTO: U.S. Trade Representative Robert Lighthizer (2nd right) sits across from China's Vice Premier Liu He (left) during the opening of US-China Trade Talks in the Eisenhower Executive Office Building at the White House in Washington, U.S., January 30, 2019. REUTERS/Leah Millis/File Photo

By Doina Chiacu and David Lawder

WASHINGTON (Reuters) – President Donald Trump expressed optimism about forging a comprehensive trade deal with China as high-level talks continued on Thursday, but said any arrangement that fails to open Chinese markets broadly to U.S. industry and agriculture would be unacceptable.

As delegations from the world’s two top economies held the second of two scheduled days of talks in the U.S. capital aimed at easing a six-month-old trade war, Trump also said no final accord will be made until he meets with Chinese President Xi Jinping in the near future.

The talks were aimed at resolving deep differences over China’s intellectual property practices. Trump has threatened to raise tariffs on $200 billion of Chinese goods to 25 percent from 10 percent on March 2 if an agreement is not reached and impose new tariffs on the rest of Chinese goods shipped to the United States.

Trump was scheduled to meet with the leader of the Chinese delegation, Vice Premier Liu He, at the White House at 3:30 p.m. as talks conclude.

“Meetings are going well with good intent and spirit on both sides,” Trump said on Twitter. “No final deal will be made until my friend President Xi, and I, meet in the near future to discuss and agree on some of the long-standing and more difficult points.”

Trump, who has engaged in a series of fights with a variety of trade partners since becoming president in 2017, has acted as the final decision-maker in U.S. trade negotiations. Trump has vetoed multiple proposed trade deals with China, choosing to push ahead with tariffs on Chinese goods to gain leverage.

The Republican president set a high bar for any agreement in the current round of talks, writing on Twitter, “China’s representatives and I are trying to do a complete deal leaving NOTHING unresolved on the table.”

Trump said he was looking for China to open its markets “not only to Financial Services, which they are now doing, but also to our Manufacturing, Farmers and other U.S. businesses and industries. Without this a deal would be unacceptable!”

Chinese negotiators proposed a meeting between Trump and Xi next month in the Chinese city of Hainan, the Wall Street Journal reported.

Two White House officials said the Chinese had not made an invitation in the current talks for Trump to meet Xi in China soon, but added that they would not be surprised if such an offer was extended during Liu’s meeting on Thursday.

“The White House thus far has been focused on substance, not next steps,” one official told Reuters, speaking on condition of anonymity.

THUMBS UP

People’s Bank of China Governor Yi Gang declined comment on Chinese proposals as he left the delegation’s hotel for the meetings in Eisenhower Executive Office Building, next to the White House. Asked how the talks were going, Yi flashed a thumbs-up sign.

The Journal quoted anonymous sources as saying Chinese proposals mostly involved more purchases of U.S. farm and energy products and promises to invite more American capital into China’s manufacturing and financial services sectors.

U.S. officials have demanded that Beijing make deep structural changes to its industrial policies, including broad new protections for American intellectual property and an end to practices that Washington has said force U.S. companies to transfer technology to Chinese firms in exchange for market access.

The U.S. complaints, along with accusations of Chinese cyber theft of American trade secrets and a systematic campaign to acquire U.S. technology firms, were used by Trump’s administration to justify punitive tariffs on $250 billion worth of Chinese imports.

China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of U.S. soybeans during the talks.

Chinese officials have said their policies do not coerce technology transfers. They have emphasized steps already taken, including reduced automotive tariffs and a draft foreign investment law expected to be approved in March that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.”

A crucial component of any progress in the talks, according to U.S. officials, is agreement on a mechanism to verify and enforce China’s follow-through on any reform pledges. This could maintain the threat of U.S. tariffs on Chinese goods for the long term.

The U.S. tariffs on Chinese goods are just one front in Trump’s efforts to upend the global trading order with his “America First” strategy. He has also imposed global tariffs on imported steel and aluminum, washing machines and solar panels and has threatened to raise tariffs on imported cars unless Japan and the European Union offer trade concessions.

(Reporting by Doina Chiacu, Susan Heavey, Chris Prentice, Jeff Mason, Steve Holland, Alexandra Alper and David Lawder; Writing by David Lawder; Editing by Will Dunham)

Trump says time, location for summit with North Korea’s Kim has been set

FILE PHOTO: U.S. President Donald Trump arrives to deliver remarks on border security and the partial shutdown of the U.S. government in the Diplomatic Room at the White House in Washington, U.S., January 19, 2019. REUTERS/Yuri Gripas/File Photo/File Photo

WASHINGTON (Reuters) – U.S. President Donald Trump said on Thursday a time and location for his second summit with North Korea’s Kim Jong Un had been agreed upon, but he did not give any details and said they would be announced next week.

Secretary of State Mike Pompeo said in an interview on Wednesday he was dispatching a team to prepare for the summit to be held somewhere in Asia in late in February.

The last summit, which took place in Singapore in June, was the first such event between a sitting U.S. president and a North Korean leader.

The meeting resulted in a vague commitment by Kim to work toward the denuclearization of the Korean peninsula. But he has not yet taken concrete steps to that end, in Washington’s view.

Speaking in the Oval Office, Trump said he was making tremendous progress with North Korea, but provided no evidence.

(Reporting by Steve Holland; Writing by Makini Brice; Editing by David Alexander and Sonya Hepinstall)

Trump to lawmakers: Don’t waste your time, deal needs wall

U.S. President Donald Trump announces a deal to end the partial government shutdown as he speaks in the Rose Garden of the White House in Washington, U.S., January 25, 2019. REUTERS/Kevin Lamarque

By Richard Cowan

WASHINGTON (Reuters) – With little time to craft a deal over funding security operations on the U.S.-Mexico border, a bipartisan group of lawmakers was to meet in a public work-session on Wednesday even as President Donald Trump maintained a hard line on constructing a massive wall.

Congressional negotiators are up against a Feb. 15 deadline for agreeing on funding through Sept. 30 for several federal agencies, including the Department of Homeland Security and its border operations.

Realistically, Republican and Democratic lawmakers have about a week to settle differences and still give the full House of Representatives and Senate time to debate and vote on any deal.

A 35-day partial shutdown of agencies was triggered on Dec. 22 when Trump refused to sign funding bills that did not contain $5.7 billion for a wall along the southwestern U.S. border.

Faced with steadfast opposition in the Democratic-majority House, Trump relented on Friday, agreeing to re-open federal agencies temporarily without his $5.7 billion request. In return, Congress agreed to a special panel to negotiate a border security deal.

Trump has threatened a resumption of the record-long shutdown if the panel fails to find common ground or produces a plan he does not like.

In a tweet on Wednesday, Trump warned: “If the committee of Republicans and Democrats now meeting on Border Security is not discussing or contemplating a Wall or Physical Barrier, they are Wasting their time!”

Physical barriers have long been installed on parts of the border to keep out illegal drugs and undocumented immigrants and more are underway.

It was unclear whether Trump, who views the current arrangement as insufficient, would accept a simple continuation of such installations. Building a wall on the U.S. southern border – with Mexico paying for it – was one of Trump’s most often repeated promises during the 2016 presidential campaign. Mexico has refused to pay for a wall.

Democrats, arguing a border wall is ineffective, say they want a mix of security tools: drones, sensors, scanning devices and fences, along with more border patrol agents.

Wednesday’s committee meeting might be the only public session since behind-the-scenes negotiations are the stage for the real bargaining.

The session is expected to mainly allow the seven Senate negotiators and 10 House negotiators an opportunity to make opening statements. The committee is headed by House Appropriations Committee Chairwoman Nita Lowey, a Democrat, and Republican Richard Shelby, chairman of the Senate Appropriations Committee.

With a mix of wall supporters and opponents, it is unclear whether the panel will reach agreement.

Republican Representative Kay Granger was optimistic, telling reporters she and Lowey “have worked together well” over the years.

If Congress denies his request, Trump has threatened to declare a “national emergency” in order to take existing funds appropriated by Congress for other purposes – possibly from the Defense Department, for example – to build his wall.

There is bipartisan opposition in Congress to that plan, which likely would spark legal challenges since the U.S. Constitution gives Congress the power to appropriate funds and direct their use.

(Reporting by Richard Cowan and Susan Cornwell; Editing by Chizu Nomiyama and Bill Trott)

Shutdown costs pegged at $3 billion as U.S. government reopens

Commuters walk from the Federal Triangle Metro station after the U.S. government reopened with about 800,000 federal workers returning after a 35-day shutdown in Washington, U.S., January 28, 2019. REUTERS/Joshua Roberts

By David Morgan and Richard Cowan

WASHINGTON (Reuters) – The U.S. economy was expected to lose $3 billion from the partial federal government shutdown over President Donald Trump’s demand for border wall funding, congressional researchers said on Monday as 800,000 federal employees returned to work after a 35-day unpaid furlough.

The nonpartisan Congressional Budget Office (CBO) said the cost of the shutdown will make the U.S. economy 0.02 percent smaller than expected in 2019. More significant effects will be felt by individual businesses and workers, particularly those who went without pay.

Overall, the U.S. economy lost about $11 billion during the five-week period, CBO said. However, CBO expects $8 billion to be recovered as the government reopens and employees receive back pay.

The longest shutdown in U.S. history ended on Friday when Trump and Congress agreed to temporary government funding – without money for his wall – as the effects of the shutdown intensified across the country.

Republican Trump had demanded that legislation to fund the government contain $5.7 billion for his long-promised wall along the U.S.-Mexico border. He says it is necessary to stop illegal immigration, human trafficking and drug smuggling, while Democrats call it costly, inefficient and immoral.

A committee of lawmakers from both major parties holds their first open meeting on Wednesday as they try to negotiate a compromise on border security before the Feb. 15 deadline.

The CBO estimated the shutdown reduced gross domestic product in the last quarter of 2018 by $3 billion.

It said that in the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been, citing “an effect reflecting both the five-week partial shutdown and the resumption in economic activity once funding resumed.”

Trump said he would be willing to shut down the government again if lawmakers do not reach a deal he finds acceptable on border security. On Sunday, he expressed skepticism such a deal could be made, putting the odds at 50-50.

Trump has also said he might declare a national emergency to get money for the border wall. Democrats would likely challenge that in court.

The CBO report serves as a stark warning to Trump against another shutdown, said U.S. Representative John Yarmuth, the Democratic chairman of the House Budget Committee.

“The CBO confirms that the Trump shutdown had a debilitating effect on our entire economy, and if it were to resume in three weeks, millions of Americans would again share the pain of the 800,000 workers who spent the past month without a paycheck,” he said.

Most employees should be paid by Thursday for back pay, which one study estimated at $6 billion for all those furloughed. Contractors and businesses that relied on federal workers’ business, however, face huge losses, although some lawmakers are pushing legislation to pay contractors back as well.

Federal workers poured off of commuter buses and subway escalators on a block of downtown Washington on Monday. Federal Communications Commission chairman Ajit Pai greeted employees in the lobby, while the Securities and Exchange Commission offered doughnuts, fruit and coffee.

“I’m ready to go. I’m rested and I’m ready. I’m energized,” Gary Hardy, a manager in the Employee Assistance Program at the Department of Homeland Security.

The National Highway Traffic Safety Administration was reviewing five weeks of auto safety recalls that had been submitted by automakers but has not yet begun posting them publicly. The Federal Aviation Administration said it would assess and prioritize immediate post-shutdown needs.

(Reporting by David Morgan and Richard Cowan; Additional reporting by David Shepardson, Mana Rabiee and Susan Heavey; Writing by Doina Chiacu; Editing by Grant McCool)

U.S. lawmakers search for remedies as government shutdown rolls on

At the end of a stormy day, the setting sun breaks through the clouds to illuminate the White House in Washington, U.S., January 24, 2019. REUTERS/Kevin Lamarque

By Richard Cowan

WASHINGTON (Reuters) – The U.S. Senate, after rejecting two shutdown-ending bills, was searching for a way to end a government closure entering its 35th day and threatening the economy, as hundreds of thousands of federal workers missed a second paycheck on Friday.

Republican President Donald Trump was dug in at the White House, continuing to insist on funding for a wall he wants to build on the U.S.-Mexico border, while the Democratic-led House of Representatives, which opposes the wall, had left Washington for the weekend.

On Thursday, a bill backed by Trump to end the shutdown by including $5.7 billion he wants for the wall and a separate bill supported by Democrats to reopen shuttered agencies without such funding did not get the votes required to advance in the 100-member Senate.

Afterward, a bipartisan group of lawmakers said they were introducing an amendment in the Senate to temporarily reopen the roughly one-quarter of the federal government affected by the longest shutdown in U.S. history. Senator Ben Cardin, one of the Democratic co-sponsors, said he did not think it contained any wall funding.

Trump said on Thursday that if Republican Senate Majority Leader Mitch McConnell and Senate Democratic leader Chuck Schumer reached an agreement to end the shutdown, he would support it.

The president also said, however, that a deal was “not going to work” unless it included “a wall or a barrier.” He said one suggestion was “a pro-rated down payment for the wall.”

White House spokeswoman Sarah Sanders said a temporary measure to reopen shuttered government departments and agencies must have “a large down payment on the wall.”

A spokesman for Schumer said on Thursday night that Senate Democrats “have made clear to Leader McConnell and Republicans that they will not support funding for the wall, pro-rated or otherwise.”

Democratic House Speaker Nancy Pelosi told reporters the possibility of legislation that includes a large down payment on a wall, “is not a reasonable agreement.”

McConnell told reporters on Thursday night: We’re still talking. At least we’re talking. I think that’s better than it was before.”

The Senate was scheduled to work on Friday, but it was unclear whether it might take any action on ending the shutdown.

CNN reported on Thursday that the White House was preparing an emergency declaration that Trump could issue to circumvent Congress if lawmakers do not fund his wall.

Asked about the report, a White House official, who spoke on condition of anonymity, said: “Nothing is off the table, but we still believe the best path forward is working with Congress on a solution to the humanitarian and national security crisis at the southern border.”

An emergency declaration would almost certainly be swiftly challenged on constitutional grounds by Democrats.

(Reporting by Richard Cowan; Editing by Kevin Drawbaugh and Peter Cooney)