Washington Weekly: DHS Shutdown

The Senate confirmed Trump administration nominees. It also failed to pass an extension of funding for the Department of Homeland Security (see below). The House passed legislation to increase home supply and affordability. It also passed a resolution to overturn the Trump administration’s tariffs on Canada (see below). Finally, the House passed other bills to require voters to provide photo identification to vote in federal elections and proof of citizenship during registration, to increase the federal permitting process for critical mineral projects, to prohibit certain permitting requirements for fiber optic cable projects in protected coastal waters, and to modernize federal firearms laws to account for advancements in technology and less-than-lethal weapons.

Both the Senate and House will be out of session in celebration of President’s Day. Both chambers will return to Washington the following week.

DHS Shutdown.

While the vast majority of the federal government is funded through the end of the fiscal year, funding for the Department of Homeland Security (DHS) will expire at midnight tonight. Ongoing divisions on immigration enforcement reforms have prevented an agreement on even a short-term extension. Democrats have set out their demands (including judicial warrant requirements, use-of-force standards, mandatory use of body cameras, and a ban on masks), which have been rebuffed by the Trump administration. Yesterday, the administration did announce that it would be drawing down federal immigration operations in Minnesota, but this was insufficient to get Democrats to vote for extensions of DHS funding in the Senate. Ironically, the impact of the shutdown primarily will affect DHS agencies like FEMA, TSA, CISA, and the Coast Guard rather than the two (ICE, CBP) focused on immigration enforcement (since last year’s Republican tax bill already included enhanced funding for those agencies). With Congress set to be out of session next week (lawmakers are heading overseas to the Munich Security Conference) and with the shutdown likely to have a lagging impact, it is unclear exactly when there will be an offramp. Both sides will point the finger at the other for the shutdown and pressure will build when the impact of the shutdown is felt in areas like air travel and disaster relief.

Trade Votes.

Under the Constitution, Congress has primary authority with respect to trade and tariffs. However, over the years it has ceded much of that authority to the executive branch. There has been little formal response from Congress to the Trump administration’s aggressive trade actions, which have raised tariffs to levels not seen in over ninety years. The Senate has passed a few largely symbolic resolutions of disapproval of some of the administration’s tariffs (these generally have passed with the support of Democrats and some Republicans). House Speaker Mike Johnson (R-LA) has tried to put a lid on debate on the subject. House Republicans last year passed rules to block votes on the Trump administration’s trade actions. However, with a slim House Republican majority, this has proven tough to maintain. This week, three House Republicans joined Democrats to defeat a rule that would have maintained that prohibition on votes. That opened the door to the House voting on a resolution to overturn the Trump administration’s tariffs on Canada. It passed 219 to 211, with six Republicans supporting (the White House actively worked to ensure that the number wasn't higher). The resolution is likely to receive a vote in the Senate where it is expected to pass, but it will be subject to a veto by President Trump. While the Supreme Court will be the ultimate arbiter of many of the Trump administration’s trade actions, there will be more noise from Congress on the topic.

Talking Filibuster.

Some on the far right have called upon the Senate to change its rules on debate as a means of muscling through the SAVE Act, a bill that would require voters to provide photo identification to vote in federal elections and proof of citizenship during registration. Under Senate rules, it takes 60 votes to end debate (invoke cloture) and advance pending legislation. There are some lawmakers who would like to get rid of that requirement altogether or institute a “talking filibuster” whereby debate needs to be exhausted rather than ended through a cloture vote. Senate Republican leaders have tempered expectations for any such changes. Senate Majority Leader John Thune (R-SD) does not support weakening the 60-vote threshold given a lack of consensus within his conference and given that a talking filibuster could tie up the Senate for weeks or months with endless debates and votes on amendments. It could bog down progress on a long list of policy priorities, including housing legislation, crypto market structure, permitting reform, the farm bill, highway reauthorization, possible Russia sanctions, and of course nominations. Abandoning cloture also could give Democrats leverage and allow them to force votes on unrelated amendments, such as extending Obamacare subsidies or blocking President Trump’s tariffs. Given that the likely result of a talking filibuster is a stalled Senate, it is unlikely that this particular trial balloon will get off the ground.

Gas Tax Increase?

The current surface transportation authorization bill, also known as the highway bill, expires at the end of September. Currently, the main funding stream for the highway trust fund is the 19.3 cent per gallon gas tax, which has not changed in over 30 years. With the highway trust fund having run a deficit for the past 20 years, the reauthorization of the highway bill frequently generates debate over how to raise additional revenue. The Bipartisan Policy Center recently released a report that the gas tax would need to be increased to 40.8 cents per gallon in order to be a sufficient funding mechanism. This is a non-starter in Congress. Republicans are interested in exploring a vehicle fee to apply to electric vehicles that do not use gas and therefore are not contributing to the highway trust fund, but such a proposal is unlikely to come close to bridging the funding gap.

Online Scams.

Consumer fraud is a growing problem, with the Federal Trade Commission (FTC) estimating that consumers lost $12.5 billion to fraud in 2024 alone. Particularly following news reports last year, there’s been building concern in Congress over the pervasiveness of fraudulent and scam advertisements on social media platforms. Senators have called upon the heads of the FTC and SEC to investigate the issue. In the last two weeks, lawmakers on both sides of the Capitol have introduced bipartisan legislation called the Safeguarding Consumers from Advertising Misconduct (SCAM) Act. The bill would require online platforms to take basic steps to verify the identity of each advertiser and would give the FTC and states latitude to enforce violations. Some of the online platforms have concerns with the bill, but it is supported by both banking and consumer groups. While the SCAM Act is unlikely to advance anytime soon, it reflects congressional interest in addressing this growing problem.

National Debt.

The Congressional Budget Office (CBO) released a report earlier this week that included some sobering projections. The CBO projects that the US will have a $1.9 trillion deficit this fiscal year. This will increase the national debt to over $38 trillion, with overall debt on pace to reach $64 trillion within a decade. The annual cost of servicing the national debt is expected to be just over $1 trillion this year and could grow to over $2 trillion a decade from now. Increased interest costs and increased spending on entitlement programs (Social Security, Medicare, and Medicaid) will be the primary drivers of higher debt levels. Even with this report, there is little sense of urgency in Congress. We continue to believe that Washington won’t act on entitlement and broader budget reforms until we get closer to the insolvency date for Medicare (2033) and Social Security (2034).

Permitting Reform, Back Again.

A bipartisan group of House members this week introduced the Fighting for Reliable Energy and Ending Doubt for Open Markets (FREEDOM) Act. The bill is another attempt at permitting reform. The issue continues to be one of the few areas where there is significant bipartisan agreement in Washington. Many lawmakers view permitting reforms as a needed response to rising energy costs and broader affordability pressures. There are various proposals to speed up judicial review, lock in approvals for fully permitted projects, impose enforceable agency deadlines, and reduce the financial risk associated with regulatory delays and reversals. The argument is familiar: regulatory uncertainty is deterring investment, slowing the build out of critical energy infrastructure, and contributing to higher prices for consumers. What is notable is the volume of new bills and the diverse set of lawmakers introducing them. However, Congress has limited bandwidth and time to address permitting reform in an election year. Despite the significant bipartisan interest in tackling the issue, the clock is running out for Congress to translate that interest into legislative action this year.

Semiquincentennial Celebrations.

As the US gears up for the nation’s 250th anniversary, everyone in the government is looking to make their mark on the celebrations. The Trump administration has grabbed most of the headlines with proposals like a UFC fight on the White House grounds and an IndyCar race in the nation’s capital. Congress also has begun advancing some commemorative, but notably low-stakes, proposals to mark the anniversary (e.g. a bill to create a $2.50 coin). The House is moving on a bipartisan plan to bury a time capsule in the Capitol Visitor Center containing a letter from House and Senate leadership, with instructions for the 244th Congress to open it on July 4, 2276. As July 4th gets closer, expect more symbolic proposals out of Congress. While modest, these efforts reflect a broad interest in marking the historic anniversary in ways that reinforce continuity, civic reflection, and congressional stewardship across generations.