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Carolyn Kaster / AP

Top White House and GOP leadership officials tell us the chances of a market-rattling government shutdown are rising by the day — and were even before Trump threatened at his raucous Phoenix rally on Tuesday night to use a shutdown as leverage to get funding for a border wall. Trump is dead serious about this fight, a senior administration source tells us, and the president's talk is starting to spook markets.

  • Goldman Sachs, in guidance to investors last Friday, pegged the odds at 50/50. This strikes us as high, but the dynamics are ominous:
  • A top Republican source put the chance as high as 75%: "The peculiar part is that almost everyone I talk to on the Hill agrees that it is more likely than not."
  • This may all come down to Trump's mood: The president is spoiling for a fight and the [conservative House] Freedom Caucus haven't had a fight for a while. That's a dangerous dynamic.

Based on funding mechanisms, the showdown could come either in September or December — or both:

  • Officials at both ends of Pennsylvania Avenue who are up to their necks in tax reform think passage probably doesn't happen until early next year.
  • So a September shutdown could be better for tax reform than a Christmas shutdown, because it would allow conservatives and Trump to get it out of their system.

Democrats feel certain they have Trump boxed in, and see no reason to compromise/help:

  • Trump is at war with Senate Leader McConnell and several other Republicans, complicating communications and compromising trust.
  • Congressional leadership doesn't want a shutdown and can pass the fall bare necessities — continuing resolution / debt ceiling / Children's Health Insurance Program extension — using mostly Democratic votes.
  • But the Freedom Caucus will hammer Speaker Ryan for doing so, and conservatives in the Senate will hammer Leader McConnell.

Be smart: With the departure of Steve Bannon, Trump is surrounded more and more by conventional/mainstream folks, which could actually make him feel more compelled to buck them.

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Go deeper

Former D.C. Guard alleges Army Generals lied about Jan. 6 response

Members of the National Guard and Capitol police keep a small group of pro-Trump demonstrators away from the Capitol following the insurrection on Jan. 6. Photo: Spencer Platt/Getty Images

A former D.C. National Guard official has alleged that top Army generals "lied" to Congress in their testimony on the U.S. Capitol riot, Politico first reported Monday.

The big picture: Col. Earl Matthews, who was serving on Jan. 6, alleges in a memo that the official version on the military response is "worthy of the best Stalinist or North Korea propagandist" and that the Pentagon inspector general's November report on it features "myriad inaccuracies, false or misleading statements, or examples of faulty analysis."

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: Toyota's Prius hybrid won environmental plaudits when it launched in 1997, but it has since lost ground to electric vehicle world leader Tesla, per Axios' Joann Muller. This battery plant will be the first to produce automotive batteries for Toyota in North America.

4 hours ago - Politics & Policy

Congress hunts for shortcut to pass defense funding, debt limit combo

Senate Majority Leader Chuck Schumer returned to his office Monday. Photo: Anna Moneymaker/Getty Images

The scramble in Congress to pass the National Defense Authorization Act is being complicated by an effort to tie it to a needed hike in the federal debt limit.

Why it matters: The House and Senate are rapidly coming up against a series of deadlines they must address before the end of the year — or risk disrupting crucial military funding and upending the economy. Congressional leaders are now hoping they can knock out both "must-pass" priorities in one, complex swoop.