(UBS)
Iran Conflict Cost.
Iran put forward a proposal to reopen the Strait, but the Trump administration rejected it because it pushes off complex nuclear issues. It is considering military options to try to reopen the Strait and try to move Iran’s negotiating position. Meanwhile, there were verbal fireworks this week in Washington with the testimony of Secretary of Defense Pete Hegseth and other senior officials on Capitol Hill. During hearings with a stated focus on the defense budget, Secretary Hegseth traded barbs with Democratic members on the Iran war. At the hearing, the Pentagon’s top comptroller indicated that the war in Iran had cost $25 billion thus far, though there were doubts among some members whether this number accounted for the full cost of all US operations to date (for example, this estimate does not include the cost of rebuilding American bases that have been bombed). At some point, the Trump administration will need to send a supplemental request for funding that is likely to need bipartisan support in both chambers. Under the War Powers Resolution of 1973, a president technically is required to terminate unauthorized military operations within 60 days without Congressional approval or a declaration of war. With the conflict now reaching that point, the Senate held another failed vote on Iran war powers. While Republicans mostly continue to show a united front with the Trump administration, many are uneasy with the conflict’s economic toll and are interested in a quick resolution. However, further escalation and military action look at least as likely as a diplomatic breakthrough.
With the blockade continuing to exact an economic toll on both sides and the global economy, it’s unclear how long the current stalemate can last.
DHS Shutdown Ends.
The House yesterday relented in passing a bill to fund the Department of Homeland Security (DHS) aside from Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP). The Senate had approved this bill back in March. With Democrats remaining unified in opposing immigration enforcement funding without additional guardrails, Republicans are separately trying to fund ICE and CBP through the budget reconciliation process. As an initial step, both the Senate and House have passed a budget resolution that would provide $70 billion in funding for ICE and CBP over three years. The Senate will look to move forward with the actual reconciliation bill the week of 11 May. President Trump has given Republicans the deadline of 1 June to pass it.
The more than ten-week funding lapse had tangible consequences, including the departure of more than 1,100 TSA agents and the pausing of several homeland security initiatives (e.g., preparations for upcoming World Cup matches).
