(UBS)
Iran Uncertainty.
As the war entered its second week, Trump administration officials held additional closed door briefings on Capitol Hill on the operation and cost of the war. The Pentagon told Congress that the cost of military spending alone in the first week of the war was more than $11.3 billion. Given that, the Trump administration likely will need to seek supplemental funding that could run well into the tens of billions of dollars. GOP leaders have given the administration early leeway, but several lawmakers are already signaling discomfort with the prospect of an unpaid for war bill, particularly if the conflict drags on without a defined endgame. Public support could erode further with any uptick in US casualties and with rising energy prices. Republicans may be willing to absorb the political hit of backing the war in the short term, but history suggests both congressional and public support could thin quickly if the cost continues to climb.
DHS Deadlock.
With the lapse in funding for the Department of Homeland Security (DHS) nearing the one-month mark, a deal still remains elusive. In the Senate, Republicans and Democrats tried to bring forward competing proposals on extending funding, but the other party objected to each. Senate Democrats would fund all DHS agencies except for ICE and CBP, while Senate Republicans countered with a two-week funding extension to keep DHS open while negotiations continue. Senate Majority Leader John Thune (R-SD) also teed up a procedural vote on a full-year DHS funding bill, but Senate Democrats blocked the measure. Republicans argue that President Trump has offered changes to immigration enforcement practices, but this has not provided nearly enough comfort for Democrats. There is some hope that progress can be made when both chambers are in session (the House was out this week). As DHS employees and the public increasingly feel the effects of the shutdown (notably longer lines for airport security), the likelihood of a deal may rise, but, as things stand, the two sides aren't close.
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