Cookies are used at this website. By continuing to browse it, you agree with our Cookie Policy.

Trump Vetoes Huge $740 Billion Bill Sending Markets Wavering

Trump Vetoes Huge $740 Billion Bill Sending Markets Wavering

Published: December 30th, 2020

 On Wednesday, December 23, the U.S. President Donald Trump broke ranks with the Republican-led Senate, vetoing the National Defense Authorization Act (NDAA). This extensive defense bill sanctions an exceptional spending budget of $740 billion for the Pentagon while outlining the Department of Defense's policy. He also threatened to reject the new coronavirus stimulus bill that Congress has been negotiating for months.

President Donald Trump on Wednesday, December 23, vetoed the sweeping National Defense Authorization Act (NDAA). The bill legalizes unmatched $740 billion in spending for the U.S. Department of Defense while also outlining the Pentagon's policy.

While vetoing the bill, the president said in a letter to Congress that the law failed to include crucial national security steps. Besides, Trump said the bill has provisions that do not respect the country's veterans and its illustrious military history.

Trump's lengthy letter added that the bill's spirit contradicts his administration's goal of putting America first in foreign policy and national security actions. The president termed the draft legislation as a gift to Russia and China.

However, he failed to cite the specific sections or details about the law that led him to this controversial conclusion.

Earlier this month, NDAA passed both houses of Congress by veto-proof margins. Meaning, any veto by the president can easily be overridden. However, the politics of succession and the need by many Congressional Republicans to appear relevant in President Trump's eyes might change the scenario when the bill comes back to the Senate.

However, while Congress must now override the president to give the law a chance, the action would have to wait until the house returns to work from the Christmas holiday break on Monday, December 28. The House Majority Leader Mitch McConnell has hinted that his chamber would vote on overturning the veto on Tuesday, December 29.

The Contentious Section 230 and the Threat of More Vetoes

While President Trump has chosen to hide his intention in some sections of the draft legislation that he considers inadequate, his real issue is section 230 of the Communications Decency Act. He has reiterated in the past that he wants the bill to contain a provision that repeals the contentious segment.

Section 230 was enacted by Congress in 1996 to prevent minors from getting sexually explicit content from the internet. According to Trump, the said section of the law facilitates the spread of disinformation online, which, according to the president, is a severe threat to America's national security.

Amending the segment of the law has been Trump's priority recently. In May, he signed an executive order that urged the Federal Communications Commissions to reevaluate the regulation. The order came after Twitter started fact-checking Trump's tweets over false voter-fraud claims. The claims grew in the wake of the elections after Trump continued using social platforms to spread false accounts of fraudulent voting.

Social media platforms, mostly Facebook and Twitter, have come under pressure lately to moderate Trump's social media activity when he posts falsehoods online. However, the platforms' efforts and the increased vigilance and moderation have elicited ire from Republicans who claim the networks are biased.

Meanwhile, President Trump had threatened to reject the stimulus bill agreed on by Democrats and Congressional Republicans. On Tuesday, December 22, the president blasted the draft legislation and asked Congress to increase the direct payments to $2,000 instead of the measly $600.

In a video posted online, Trump attacked the bill on multiple fronts. He termed it a disgrace that has almost nothing to do with COVID. The president took issue with how it combined the stimulus with broader spending that funds many government functions. Trump's pillory came despite the draft having been agreed upon by the president's point man on the issue, Treasury Secretary Steven Mnuchin. And, despite the Senate Republicans backtracking from sizable direct checks.

An About Turn

Despite the big talk and grandstanding that has characterized President Trump's last days in office, he made a surprising about-turn on Sunday, December 27, signing the stimulus package and averting a government shutdown with only hours to spare.

The $2.3 trillion measure that he signed now means the $900 billion coronavirus relief and the government's $1.4 trillion funding that will see the government working until September 2021 is guaranteed. The process caps months of negotiation with teams on either side of the aisle. However, President Trump has been noncommittal and missing from most of the talks.

Signing the bicameral relief legislation brings immense relief to more than 14 million Americans who lost their unemployment benefits on the Christmas weekend. Besides, it will shore more millions struggling to survive during the economic crisis brought about by the currency health pandemic.

Pre-Christmas Dive and Jitters Over Stimulus Hopes

After crashing following Trump's erratic actions, Thursday, December 24, brought some hope.

The markets moderately climbed as investors awaited news on the then unconcluded stimulus legislation. The continued wrangling during Christmas Eve followed President Trump's request that the direct checks be adjusted from $600 to $2,000.

However, House Speaker Nancy Pelosi's effort to increase the direct checks' size via unanimous consent was quickly shut down on Thursday, December 24, during the morning session.

Overall, the S&P 500 shot up 0.36% to stand at 3,703.26 at 9:30 ET on Thursday, December 24. The Dow Jones Industrial Average climbed by 70.04 points or 0.23% to stand at 30,199.87, while the Nasdaq composite was up 0.26% (12,804.73).

However, the modest swings are in line with the expectations of 2021. According to Yun Li, a contributor with CNBC, it is unlikely that the markets will experience dramatic crashes even if the president does something wayward. She said that stock markets are already tuned to the next four years.

Final Thoughts

President Donald Trump vetoed the National Defense Authorization Act (NDAA) a day before Christmas. His erratic action, coupled with the threat to reject the new stimulus bill that Congress had been negotiating, threw the markets in turmoil. However, the slips experienced were quickly recouped when he later signed the same draft law he was threatening to reject. The act and the anticipation of the buildup pushed the stock markets about 0.40% up.

Show Results