U.S. Capitol building in Washington, D.C. October 9, 2016. (Photo: Mike Scarcella/ALM)

After the midterm elections, all eyes are on Congress to take up, and maybe pass, during the lame duck session the Retirement Enhancement and Savings Act (RESA), with a potential government shutdown having the potential to “roil the markets,” according to political analyst Andy Friedman.

If Congress does not pass appropriations legislation to fund the government by Dec. 7, “then on Dec. 8 the government will shut down,” Friedman of The Washington Update, said in his Monday analysis.

Greg Valliere, chief global strategist for Horizon Investments, adds that funding for several agencies, including Homeland Security, will expire if there isn’t a final budget deal by Dec. 8.

“A must-pass measure like this will attract two very controversial provisions: funding for a border wall with Mexico – which [President] Trump has insisted must pass or the government will be shut down – and a measure protecting [former FBI director] Robert Mueller from political interference, which could tie both houses in knots before Christmas,” Valliere said in his Tuesday Capitol Notes briefing.

Friedman points out that an appropriations bill requires 60 affirmative votes in the Senate to overcome a filibuster.

“Because the Republicans hold 51 seats in the existing Senate, some Democratic support is necessary for passage,” Friedman said, adding that Trump has demanded that the appropriations bill provide sufficient funds to begin constructing a wall on the U.S.-Mexican border.

However, “Democrats have made clear their strong opposition to that objective. The Democratic takeover of the House in the next Congress adds some urgency to the President’s demand that the matter be settled now,” Friedman opines.

That mandate sets up “the possibility of the parties failing to reach agreement on funding legislation,” he continued. “If that scenario appears plausible as Dec. 7 approaches, it could roil the markets, which prefer to see Washington handle ministerial matters without fanfare.”

Valliere sees Trump getting a “few billion” for border security, “which he can probably apply to construction of a wall, despite objections from Democrats.”

However, Trump “will not get as much funding as he wants, and that could prompt a Dec. 8 shutdown until there’s an inevitable deal that will give him a couple billion more.”

As to the bipartisan RESA legislation, Friedman notes that while the bill aims to “extend access to pension plans for employees of small companies and to ease market concerns that impede the inclusion of lifetime income products in employer-sponsored plans,” the bill’s downside is that it “threatens to curtail significantly the use of ‘stretch IRAs’ (a strategy that defers distributions to IRA beneficiaries).”