Washington Weekly: Government Reopening in Sight?

The Senate confirmed Trump administration nominees and voted again on, but failed to pass, the House-passed resolution to extend government funding through November 21. It will also consider a package today that combines a lengthier government funding extension with three full year government funding bills (see below). The House continued to be out of session.

The Senate had planned a recess but likely will be in session to continue working on a compromise to potentially end the government shutdown. The House will be out of session.

Government Reopening in Sight?

The government shutdown, currently at 38 days, became the longest one in US history earlier this week. The House has not been in session for 49 days. In the Senate, there have been bipartisan discussions among groups of Senators to try to find an off ramp. As it has in previous weeks, the Senate also held votes on the House-passed funding bill. Republican leadership plans to vote today on a new package that would extend government funding to a later date (likely January). It also would include three full-year spending bills (Agriculture-FDA, Military Construction-VA and Legislative Branch) already passed by the Senate with bipartisan support in August. However, it is unlikely that this will reach the needed 60 vote procedural threshold since it does not have an extension of the Affordable Care Act (ACA) subsidies expiring at the end of the year that Democrats want. Nevertheless, pressure is mounting on lawmakers to take action. Supplemental Nutrition Assistance Program benefits for low-income families are only being partially paid, while an additional supplemental nutritional program targeted at supporting children is about to run out of funds. The Federal Aviation Administration is ordering a reduction of 4% of flights starting today with an increase of 1% each day till it reaches 10% at 40 high-traffic airports. With the impacts from the shutdown continuing to grow, there remains quiet optimism that a solution is close and next week could finally see the government reopen.

Nuking the Filibuster.

Despite renewed calls from President Trump this week to invoke the nuclear option of eliminating the Senate filibuster, Senate Majority Leader John Thune (R-SD) dismissed the idea as a nonstarter given that there was not sufficient support among Republicans. The filibuster has been a target of both sides in recent years. Democrats voted, but failed to pass, filibuster reform in 2022. President Trump also has thrown out the idea of ending the filibuster in the past. Majorities of voters in both parties support its removal. Nevertheless, many Senators continue to value the filibuster. It remains one of the few remaining tools of the minority party. Removing the filibuster also undermines the power of individual Senators and would eliminate perhaps the key feature that makes the Senate distinctive from the House, which can pass legislation through a simple majority. The filibuster doesn’t look like it will be going anywhere in the near future, but it’s far from certain that it has permanent staying power and may suffer from gradual erosion rather than one dramatic elimination.

Tariff Skepticism.

The Supreme Court this week held oral arguments on the Trump administration’s use of emergency powers to apply broad-based “reciprocal” tariffs on US trading partners. Lower courts already have ruled against the administration, but the tariffs remain in place while the Supreme Court considers the cases on an expedited basis (a final decision could come as soon as early next year). While this Supreme Court generally has a broad view of executive power, the questions from many justices evinced a skepticism over whether the law authorizes the use of tariffs, particularly on such a large scale. An adverse decision would be a big blow for the Trump administration’s trade agenda and would have a major impact on the US fiscal situation. The nonpartisan Congressional Budget Office (CBO) estimates that the tariffs imposed to date by the Trump administration would provide the US government with $3.3 trillion in revenue (over ten years), with most of that projected revenue to be generated by the emergency tariffs in question. US importers who have paid the tariffs also could be eligible to seek refunds, but that would be subject to a complicated and lengthy process. The Trump administration has back-up plans, but these emergency tariffs have been its preferred route because they have provided maximum flexibility. It could opt to rely on broad authorities to keep many of the tariffs in place, but that would be subject to similar legal challenges and vulnerabilities. The Trump administration also could rebuild a “tariff wall” by relying on sectoral and other tariffs that rest on a stronger legal foundation, but the composition of that tariff regime (and the industries and trading partners it would impact) likely will be different and take time to implement.

Senate’s Message on Tariffs.

The Senate last week sent its own message against Trump’s tariffs. The chamber passed three resolutions to repeal tariffs, which were supported by all Democrats and a few Republicans. The resolutions called for repeal of the reciprocal tariffs announced in April as well as the 35% and 50% tariffs on Canada and Brazil. The Senate voted on a resolution to roll back the reciprocal tariffs back in April, but that measure failed when Vice President JD Vance casting the tiebreaking vote to defeat it. These resolutions are political messages and have little practical effect. They also will go nowhere in the House since Republicans passed a measure in March that blocks any effort to repeal the reciprocal tariffs for a year.Though symbolic, the Senate votes send a message of dissatisfaction with the President’s trade agenda at a time when the legality of many of the tariffs are in question.

Health Coverage at Risk.

Senator James Lankford (R-OK) is sounding the alarm over a new consequence of the shutdown: the potential disruption of health insurance for federal employees. In a letter to the Trump administration, he warned that agency contributions to the Federal Employee Health Benefits’ trust funds have halted, thus threatening the program’s ability to pay premiums on behalf of workers and their families. While contingency reserves exist, the depletion could trigger coverage lapses, adding another layer of uncertainty for the millions of affected employees and their families. Republicans may use the issue to pressure Democrats who have insisted on extending Affordable Care Act subsidies as part of shutdown negotiations. As we reach uncharted territory for this government shutdown, more unforeseen issues will arise.

Democrats’ Big Night.

Tuesday night was a success for Democrats. In addition to winning gubernatorial races in New Jersey and Virginia, they gained seats in those state legislatures, held all three Pennsylvania Supreme Court seats, passed Proposition 50 in California, and won statewide elections in Georgia. The strong performance of Democrats has been attributed to a variety of factors, including voter concerns about cost of living, the lack of President Trump on the ballot to galvanize his base (though a reaction to the Trump administration clearly energized Democratic voters), the location of the elections in mostly Blue states, the quality of Democratic candidates, and the government shutdown. Both parties will try to learn lessons from Tuesday’s results going into the midterm elections next November.

California Redraws the Map.

With the passage of Proposition 50, California voters have overwhelmingly approved a sweeping overhaul of the state’s congressional redistricting process. The result shifts authority from an independent commission to the state legislature. Democrats are expected to gain somewhere between three to five seats as a result. This will counter Republican redistricting efforts in Texas. While California is garnering the headlines, Democrats scored an additional pair of redistricting wins on Tuesday. In Kansas, the legislature announced it would not redistrict and force out the state’s lone Democrat. Democratic wins in Virginia also give them the ability to redistrict in 2026. The redistricting battles are far from over, but the off-year elections provided a boost for Democrats’ chances of flipping the House in 2026.

Mamdani and Taxes.

While we mostly comment on federal issues, we have received a number of questions about New York City Mayor-elect Zohran Mamdani and his proposals to increase taxes. The Mayor of New York City, while a powerful job, has limitations. The Mayor cannot increase taxes on his own. The New York State legislature and Governor have to approve most tax increases. While Democrats control the legislature and the Governor’s mansion, we don’t expect them to approve tax increases next year. They will be hesitant to increase taxes next year as they come up for re-election. While Mayor-elect Mamdani has significant power as the leader of the financial capital of the world, he likely will be stymied on some of his plans like raising taxes.

Mamdani's National Impact.

The ballots haven't been fully counted yet, but that hasn't stopped national Republican groups from attempting to tie Mayor-elect Mamdani to Democratic candidates running for the Senate, House and other positions. Mamdani, a member of the Democratic Socialists of America, won on Tuesday with the most votes received in a mayoral election in 65 years. What that victory means is in the eye of the beholder. Advocates will point out that Mamdani met voters where they were (particularly by addressing kitchen table issues that helped President Trump win last year) and ran an impressive social media campaign. Critics will argue that he faced a weak field, especially in the general election. They also note that Mamdani only received 51% of the vote. Many Democrats are quick to point out the lack of connection between the mayor of a New York city and swing seats in Purple or Red states. Time will tell, but it seems certain that voters will be hearing quite a bit more about Mamdani regardless of where they live.