The 1,547-page interim spending bill to avoid a government shutdown is effectively dead. House Speaker Mike Johnson (R-La.) has all but yanked the plan off the floor after President-elect Trump, Vice President-elect Vance and Elon Musk torched the package to avoid a government shutdown this weekend and fund the government through March 14.

Had House Republicans had the votes to pass the bill – without leaning too heavily on Democrats – Republicans may have been able to pass the bill late Wednesday afternoon before the intervention of Mssrs. Trump and Vance. But there was just too much grassroots pressure, sparked by Musk on X and elsewhere.

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The stopgap spending package proved unpopular due to its size, and various legislative ornaments festooned on the bill like a Christmas tree. Conservatives were expecting Johnson to handle the spending plan differently this year at the holidays. But it backfired. Badly.

It’s notable that Mr. Trump did not weigh in until the 11th hour. He also demanded a debt ceiling increase. That’s something which faced the President-elect in the first quarter of the year and threatened to derail any legislative agenda or potentially spook the markets.

Johnson’s decision to veer off course – despite touting the bill heartily on Fox this morning – underscores several things.

This is a sign of things to come once President-elect Trump is in office. And that could present problems for Johnson as he may be at the whim of decisions by the new President?

Why did Johnson pull the bill?

It was wildy unpopular with his rank and file. But it devolved further once Musk and the President-elect got infused themselves. 

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In many respects, Johnson’s decision to pull the bill was all about January 3. That’s the day of the Speaker’s vote. With 434 members to start the new Congress, Johnson needs 218 votes. Otherwise, he lacks a majority and cannot become Speaker. The House must vote repeatedly – as it did in January 2023 – before electing former House Speaker Kevin McCarthy (R-Calif.) five days later in what was the longest Speaker’s race since the 1850s. 

Johnson tried to salvage himself in the Speaker’s vote by adding emergency agriculture spending to the bill. But Johnson is now trying to salvage himself by coming up with a new bill. 

Speaker of the House Mike Johnson (R-LA) listens during a news conference following the Republican conference meeting at the U.S. Capitol on January 17, 2024, in Washington, DC. (Kent Nishimura/Getty Images)

The irony is that Johnson did not want to create drama before Christmas with a spending package. But drama is exactly what he got in what quickly became the worst Congressional holiday standoff since the fiscal cliff in 2012 or a government shutdown threat in 2014.

So here’s the $64,000 Question: What play does Johnson call next?

Does he do a clean CR to fund the government with nothing attached? Is it a bill that just re-ups current funding coupled with disaster aid? Do they attach a debt ceiling suspension as President-elect Trump has requested?

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And then the biggest question of all: can ANYTHING pass at all? Especially without votes from the Democrats?

Johnson has a tranche of conservatives who won’t vote for any CR at all. Many of them would also not vote for a debt ceiling increase, either. 

And even if there is a new bill, do conservatives insist on waiting three days to ponder that bill? That triggers a government shutdown right there.

The US Capitol in Washington, DC, on Monday, Nov. 11, 2024.  (Stefani Reynolds/Bloomberg via Getty Images)

The deadline is 11:59:59 pm ET on Friday.  

So this is going to require someone to pull a rabbit out of a hat. 

President-elect Trump’s maneuver today is reminiscent of a similar move he made in December 2019, which sparked the longest government shutdown in history. 

Then-Senate Majority Leader Mitch McConnell (R-Ky.), then-Appropriations Committee Chairman Richard Shelby (R-Ala.) and others thought they had a deal to fund the government and avoid a Christmas-time shutdown. 

The Senate voted for the bill. Senators even sat in the back of the chamber and sang Christmas carols during the vote. 

Mr. Trump then balked at the last minute. House Republicans followed suit. The government shut down for more than a month. 

Sen. Rand Paul, R-Ky., blocked a Senate bill Wednesday that would have authorized resources for state and local authorities to track drones that have mystified residents across New Jersey and the Northeast in recent weeks. 

Paul objected to the passage of the bill, citing his long-standing concerns over expanding governmental powers. 

“This body must not rush to grant sweeping surveillance powers without proper consideration and debate by the committees of jurisdiction,” he said.

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Paul said the bill would “expand federal authority to intercept communications and disrupt drone activity – powers that raise serious concerns for Americans’ privacy, civil liberties, and Fourth Amendment protections against unwarranted search and seizure.”

Senate Majority Leader Chuck Schumer, D-N.Y., sought to speed a bipartisan bill through the Senate by seeking unanimous consent on the floor before it was blocked by Paul. 

“The people in New York and New Jersey have a lot of questions, and they’re not getting good enough answers,” said Schumer. “The utter confusion surrounding these drone sightings shows that the feds can’t respond all on their own.”

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Photos taken in the Bay Shore section of Toms River of what appear to be large drones hovering in the area at high altitudes in New Jersey on Sunday, Dec. 8, 2024. The drones seemed to be well above the 400 feet height FAA regulations allow. (Doug Hood/Asbury Park Press)

In addition to giving local authorities the ability to track drones, the proposed legislation would expand some federal agencies’ authority to start a pilot program to allow states and local authorities to disrupt, disable or seize a drone without prior consent of the operator.

The drone sightings across the Northeast have worried some local and state officials, but the Biden administration has said the drones don’t appear to be a sign of foreign interference or a public safety threat.

However, they have not determined who is responsible for them. 

President-elect Trump last week called for the administration to release information on the drones or shoot them down. Paul, who has often called for limiting governmental powers, said he objected to the bill because it wasn’t clear that urgent action was needed. 

“We’re being told that this legislation is urgent, that it is needed to address an imminent drone threat,” he said. “Yet the government itself admits no such threat exists.”

The Associated Press contributed to this report. 

WASHINGTON —  The Federal Reserve on Wednesday made another cut in interest rates, but dialed back expectations for lowering rates in the near future.

The rate reduction, the third in a row, had been widely expected, but where policymakers go from here is anything but certain.

Plans for several more rate cuts in 2025 have become muddied as progress the Fed made on curbing inflation has stalled and uncertainties abound about what impact the incoming Trump administration will have on the economy.

The Fed’s new quarter-point rate reduction, coming out of its last policy-setting meeting of the year, will give consumers a bit more relief on interest payments for credit cards, home equity lines and some other personal loans.

The cumulative effects of the three rate cuts since September, totaling a full percentage point, are more meaningful and could help households that are stretched financially. More Californians have fallen behind in making debt payments this year, with delinquency rates on credit cards and auto loans rising especially for millennials (ages 28-43), according to the California Policy Lab at UC Berkeley.

The Fed’s recent rate cuts, however, haven’t done a whole lot for potential homebuyers and sellers. The 30-year fixed mortgage rate, while ticking down a little this month, most recently stood at 6.6% last Thursday — which is actually up from about 6% in mid-September, according to Freddie Mac. And analysts don’t see mortgage rates coming down significantly in the near term.

While Wednesday’s rate cut was expected — futures markets gave it a 95% probability before the announcement — the view ahead is clouded by uncertainty over what President-elect Trump might do, on trade as well as fiscal policy.

Trump has talked about cuts in taxes and regulations, which would likely stimulate economic activity. But he also has proposed tariffs on all imports and even higher levies on Chinese goods, which most analysts see as inflationary and a hit to economic growth.

Whether Trump will go through with his tariff threats, and if so, when and by how much, remain highly uncertain.

Beyond questions about the new administration’s intentions, Fed policymakers already had reason to slow their rate-cut plans. The American economy and jobs, while slowing a bit, have kept growing at a solid pace.

At the same time, consumer price inflation, which reached near double digits in the summer of 2022, has recently stopped trending down toward the Fed’s 2% target. Inflation edged up a notch in November, with prices rising 2.7% from a year earlier as consumers paid more for used cars and airline fares, but also staple items like medical care and foods purchased for home. Rising grocery prices, in particular, have gnawed at consumer sentiments, and were seen as a key factor in Trump’s victory in November.

“I think for lower- and moderate-income households, the budgetary battle continues, month in and month out,” said Greg McBride, chief financial analyst at Bankrate.com. “Inflation on everyday necessities continues to be an issue.”

In September, the Fed began its latest rate-cutting scheme by making a big half-point reduction, followed by two quarter-point moves. And based on the trajectory of inflation then, it had forecast four more smaller cuts next year.

But on Wednesday, the Fed’s updated projections showed officials expecting just two quarter-point cuts in 2025 and another two the following year. And analysts say policymakers are likely to pause at their next rate-setting meeting in January.

In their latest projections, most Fed officials said the U.S. economy would grow 2.1% next year, compared with 2.5% this year, which is up significantly from its previous September forecast. They see their preferred measure of core inflation as ending the year at 2.8% and at 2.5% in 2025. The nation’s unemployment rate, which was 4.2% in November, is expected to rise to 4.3% around this time next year.

Wednesday’s announcement takes the Fed benchmark interest rate down to a range of 4.25% to 4.5%. That’s a full percentage point lower than it was in September, but is still considered above the so-called neutral rate that’s neither stimulative nor restrictive for the economy.