capitol building

This Week:

The Senate confirmed Trump administration nominees and approved a non-binding war powers resolution seeking to block military action in Iran. The House passed legislation for agriculture & forest disaster assistance. Both chambers passed affordable housing legislation (see below).

Next Week:

The Senate will be out of session until the week of July 13. The House schedule is fluid and will try to vote on FY27 government funding bills and bills to prohibit payment card networks from distinguishing firearms retailers from general-merchandise or sporting-goods retailers and an overhaul of the Department of Veterans Affairs.

The Lead

Logjam in DC.

Congress is at a standstill in Washington as lawmakers deal with partisan disagreements, intra-party disagreements, and disagreements between Congress and the Trump administration. Below are some of the issues that will have to be resolved in the coming weeks before the month-long recess in August.

  • Roadblock to Housing. In a rare bipartisan feat, both the Senate and House this week overwhelmingly passed legislation to promote housing supply and home buying. The legislation was a product of months of revisions and votes in both chambers. Leaders in both the Senate and House agreed on a final version last week. President Trump was scheduled to sign the bill into law at the Capitol on Wednesday, but he threw a last-minute wrench in those plans when he signaled that he will not sign the housing bill into law unless Republicans pass a controversial voter registration bill (see below). Lawmakers were frustrated by the move and were uncertain about likely next steps. House Speaker Mike Johnson (R-LA) is transmitting the bill to President Trump on Monday, which means the bill will become law after 10 days if the president doesn’t sign it during that window. If President Trump vetoes the bill, that veto could be overridden by a two-thirds majority in both the Senate and House. However, it remains to be seen how many Republicans would have the appetite to go against President Trump, even if the vast majority of them voted for the bill. This popular housing bill likely still will become law, but the process and timeline remain very unclear.
  • SAVE Act. President Trump and some Republican lawmakers on the far right remain focused on the Safeguard American Voter Eligibility (SAVE) Act, a contentious voter ID and citizenship verification bill. The SAVE Act would establish proof of citizenship (a birth certificate, passport, or a naturalization certificate) to be shown at the polling location when voting in federal elections. President Trump also wants to add additional controversial provisions to the bill. One proposed restriction on mail-in ballots has received significant pushback from several Republicans who hail from states with “no-excuse” mail-in voting (e.g. Arizona, Florida, Georgia, Iowa, Kansas, and North Carolina) or majority mail-in ballots (Alaska and Utah). Democrats oppose the bill for being too restrictive (only half the country has a passport, and many don’t have easy access to their birth certificate). Given the lack of support in the Senate to reach the needed 60 votes, President Trump has called for changes to the Senate filibuster rules. However, Senate Majority Leader John Thune (R-SD) has reiterated that there is also not enough support among Senate Republicans to do this. While Republicans may be able to find a way to pass certain voter verification provisions in other legislation to appease President Trump, passage of the SAVE Act does not seem likely.
  • Senate Filibuster. Despite renewed calls from President Trump to invoke the nuclear option of eliminating the Senate filibuster to pass the SAVE Act, Senate Leader Thune has continually dismissed the idea as a nonstarter given that there is not sufficient support among Republicans. The filibuster has been a target of both sides in recent years. Democrats voted on, but failed to pass, filibuster reform in 2022. Many Senators continue to value the filibuster. It remains one of the few remaining tools of the minority party. Removing the filibuster would undermine the power of individual Senators and would make the Senate less distinctive from the House, which can pass legislation through a simple majority. There will continue to be calls to nuke the filibuster, but there does not seem to be enough support in the Senate to go through with it.
  • Reconciliation 3.0. House Republican leadership is trying to find a viable option to advance a third reconciliation package that could combine new Pentagon funding (including funding to cover the cost of the Iran war and Venezuela operation) with budget cuts in other areas. The bill also could include some election identification measures that would need to be carefully crafted to meet the procedural requirements that provisions have a primary budget purpose. Republican leadership is hoping this may be enough to appease President Trump. However, there is not much interest among Senate Republicans to pass a third reconciliation bill.Passing spending cuts before the midterm elections also is a hard sell. Finally, getting all House Republicans to agree on a bill that includes Iran war funding is a tall mountain to climb.
  • FISA. There has been little progress made since Section 702 of the Foreign Intelligence Surveillance Act (FISA) expired two weeks ago. President Trump’s choice of Federal Housing Finance Agency Director Bill Pulte to serve as the acting Director of National Intelligence (DNI) originally derailed a bipartisan FISA reauthorization bill. President Trump later picked Jay Clayton to be the official nominee for DNI Director, but he has stalled Clayton’s progress in the Senate until James McDonald, his pick for the US Attorney for the Southern District of New York, is approved (McDonald would be Clayton’s successor in the key Justice Department post). While existing FISA Court certifications allow much of the program to continue operating through next March, lawmakers and industry groups have raised concerns that prolonged uncertainty over the authority could complicate future intelligence collection efforts. A FISA reauthorization continues to get punted down the road.

Other issues

Social Security and Taxes.

Social Security is funded via payroll taxes. In 2026, Social Security payroll taxes were levied on the first $184,500 of an individual’s income. For years, Democrats have long called to lift that cap so higher earners would pay more into Social Security. Republicans have generally opposed out of concern for small business owners who would be faced with paying both the employee and employer pieces of the tax. Senator Bernie Moreno (R-OH) joined Democrats this week in support of extending this tax to capture more from higher income earners and even coauthored an op-ed on the topic with Senator Elizabeth Warren (D-MA). While this proposal could be part of the eventual solution to fix Social Security’s finances, it is insufficient to address the looming insolvency of Social Security. We do not expect any major changes to Social Security until closer to the insolvency date, which is not expected till the end of 2032.

Data Center Debate.

There is growing interest in Washington over potential regulation of data centers as lawmakers grapple with balancing goals of artificial intelligence (AI) innovation, rising electricity demands, and national security concerns. A House Energy and Commerce Subcommittee this week advanced bipartisan legislation that would establish a federal standard requiring large power customers, including data centers, to bear the costs of new electric generation and transmission infrastructure at their facilities. At the same time, divisions emerged over broader federal intervention as House Energy and Commerce Ranking Member Frank Pallone (D-NJ) called for a nationwide moratorium on new data centers, while Chair Brett Guthrie (R-KY) argued such a proposal would slow AI innovation and weaken US competitiveness with China. Separately, a House Select Committee on China held a hearing this week over allegations that foreign actors, including China, are amplifying opposition to data center projects. Lawmakers will continue to weigh how to regulate data centers and address energy cost concerns without slowing AI innovation advancement.

The Final Word

Primaries Imperil Incumbents.

Historically, more than 98% of House incumbents seeking renomination prevail (only about six to seven primary losses per cycle on average since WWII). However, 2026 has already seen an unusually high number of these defeats. To date, nine sitting members of Congress, spanning both parties and including two Senators, have been ousted by intraparty challengers. While the primary losses on the Republican side of the aisle are easy to attribute to incumbents crossing President Trump in some regard, the Democratic ones are harder to assign a specific trend. The most high-profile of the incumbent losses have been from challenges from more progressive candidates, but that hasn’t been true across the board. In fact, the only true commonality appears to be the desire for change and to vote against the establishment. Given that the vast majority of elections are uncompetitive in November, the primary is growing as the main way for many voters to express their displeasure at the ballot box. Primaries are becoming the decisive election in these safe seats, going forward incumbent losses will be less of a fluke and more a reflection of the modern electoral system.