Congressional leaders have reached a deal to fund the government through September.
Lawmakers said late Sunday that they have struck an agreement for a $1.1 trillion spending bill, avoiding a partial shutdown of the government at the end of the week. Wall Street breathed a tentative sigh of relief at the news after weeks of consternation Republicans and Democrats wouldn't be able to find enough common ground to push a bill through.
Stocks opened slightly higher on Monday. The S&P climbed 0.18%, the Nasdaq gained 0.43% and the Dow was flat in early-morning trading. Safe haven gold fell 0.30%.
The bill allows the White House and Congressional Republicans to sidestep what would have been an embarrassing setback in a government shutdown, with the same party in control of the federal government. However, it also shows where Trump and the GOP were forced to compromise over their stated priorities.
A number of President Trump's spending priorities did not make the final package, noted Compass Point Research's Isaac Boltansky in a note on Monday. Trump wanted $30 billion in additional defense spending but got only $15 billion. No funding for his proposed wall at the U.S.-Mexico border is provided, nor are there restrictions blocking sanctuary cities from getting new funding. Instead, the bill contains $1.5 billion for border security.
Bloomberg notes that the bill also lacks a provision that would have blocked the Labor Department's fiduciary rule limiting financial advice to retirees.
"The exclusion of many of President Trump's spending priorities suggests that Congressional leaders were willing -- if not eager -- to refocus on health care and tax reform efforts," Boltansky said.
Some Democratic priorities were included in the package, including $295 million in funding for Puerto Rico's Medicaid program, continued funding for Planned Parenthood and the extension of coal miner health benefits. It also has $2 billion for the National Institutes of Health.
"In Washington's zero-sum construct, the narrative this morning is likely to paint Democrats as victorious in the first major spending battle of President Trump's administration," Boltanksy said. "Our read is that Democrats were dealt a strong hand in these negotiations and they played the cards well. Republicans were desperate to demonstrate a capacity to govern given the initial failure of their health care legislation and President Trump's 100-day threshold."
The House Rules Committee meets on Tuesday at 3:00 p.m. to consider advancing the bill, setting the stage for floor debate and passage Wednesday and giving members two days to examine the text. Analysts at Washington, D.C.-based research firm Height Securities said in a note Monday there's a good chance the bill will pass.
"Given that it was negotiated by both parties and the Appropriations Committees usually work together in bipartisan fashion, it should receive more than enough votes from Democrats to offset the loss of conservative Republicans in both chambers who typically vote 'no' on spending bills to get over the 216-vote threshold in the House and 60-vote threshold in the Senate," analysts said. "Both sides have some wins in the bill."
Height notes the package contains good news for private prison stocks Geo Group (GEO - Get Report) and Corecivic (CXW - Get Report) , which have soared under Trump. It funds Immigration and Customs Enforcement (ICE) custody operations at $2.7 billion, about $500 million more than what the Obama administration had previously requested. The funding envisions the need for more than 39,000 detention beds, above historical norms.
The spending deal also includes millions of dollars for reimbursements for protecting Trump and his family at Trump Tower in New York City and at Mar-a-Lago in Florida.
The bill keeps the government up and running into the fall. It expires on October 1, around the same time the debt ceiling hits its deadline. The Trump administration has called on Congress to raise the debt ceiling, but thus far, no action has been taken. If the scenario continues through the summer, lawmakers could be headed for a major showdown later this year.
"With the spending and debt ceiling deadlines nearly aligned, there is growing concentration of political risk in the fall," Boltansky said.