The White House made a truly game-changing announcement on Monday that looks like it could radically change the economics of the ongoing government shutdown. 

Here's the background. One of the big land mines ahead is (or maybe was) that the Internal Revenue Service is (or again, maybe was ) prohibited from processing federal tax refunds during a shutdown.

The reason is that the government can only perform "essential" functions, like protecting lives and government property. Paying tax refunds wouldn't seem to fit that legal definition.

As The Wall Street Journal reports, "Until Monday, the Trump administration and its predecessors had said refunds couldn't be paid while the IRS was shut."

But that meant that millions of Americans who are expecting between $100 billion and $200 billion back on their taxes (maybe more) starting next month, wouldn't get it. And that in turn meant massive potential economic and political risk for the Trump administration.

So, on Monday, the White House announced it's simply going to change the legal ruling.

"We're going to continue to take steps like that to mitigate the impact," Vice President Mike Pence said after the announcement, according to the Journal.

How does the legal argument work to justify the 180-degree change ? So far, the White House hasn't said. However, it's not clear who if anyone would challenge the decision in court.

Who wants to be the one person in America working to try to stop millions of Americans from getting paid?

Practically speaking, there is another issue, which is that the IRS has to examine tax returns before it can process refunds. Much of that can happen automatically, but there is a human element to the process.

Currently, the IRS is operating with only 12 percent of its employees working -- and none of them are getting paid. 

But let's stipulate that if the administration believes it can simply change the law on what an "essential" government function is, it probably will come up with a way to bring people back to work to process the returns and refunds.

The announcement doesn't change other parts of the shutdown of course. There's still a giant chasm apparently between President Trump and Democrats in Congress about whether Trump should get $5 billion to build a wall separating the U.S. from Mexico.

It appears Democrats in the Senate will try to push the matter by refusing to take up any other matters besides the shutdown. Their goal is to force a vote on a "clean" budget--which would carve out the border wall debate and open the rest of the government--and which the House, controlled by Democrats, has already passed.

For his part, President Trump plans to address the nation tomorrow night, and to visit the border to make his case. Previously, he'd threatened to keep the government closed for "months or even years" if necessary to get the money for the wall.

At least 800,000 federal government workers aren't getting their salaries in the meantime, and the U.S. Department of Housing and Urban Development apparently has now realized it didn't reauthorize a rent assistance program before the shutdown began-- meaning low income Americans who depend on it might not be able to pay their rent.

Also, 38 million Americans who count on the government's Supplemental Nutrition Assistance Program (SNAP) are slated to get reduced benefits for February and nothing at all for March if the shutdown lasts that long.

Another anonymous administration official told The Washington Post that the White House is trying to figure out a legal way to pay SNAP benefits, however, possibly using an aggressive legal argument similar to the tax refund idea--so maybe our next report on this will be good news on that front.

Of course, better news will be when the entire thing comes to an end. If the shutdown lasts through this weekend, it will be the longest in U.S. history.

Published on: Jan 7, 2019
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