Republicans Plot New Path Out of DHS Shutdown Fight

Here's a sentence we didn't expect to write on this Monday, or ever: President Trump is now feuding with Pope Leo XIV.

Trump assailed the U.S.-born pope in a social media post and comments to reporters Sunday night, calling the pontiff "weak" on crime and nuclear weapons. "Leo should get his act together as Pope, use Common Sense, stop catering to the Radical Left, and focus on being a Great Pope, not a Politician," Trump wrote as part of a lengthy attack.

The pope responded by telling reporters that he would continue to speak out to promote peace. "I'm not afraid of the Trump administration or of speaking out loudly about the message of the Gospel, which is what the Church works for," he said.

Trump later posted what appeared to be an AI-generated image that depicted him as Jesus, clothed in a red robe, laying his hand on a bedridden man - but deleted it after a backlash from people who saw it as blasphemous. Trump said he thought the image depicted him as a doctor.

Now back to more fiscal news.

Republicans Plot New Path Out of DHS Shutdown Fight

Congress is back after a two-week recess, and it has plenty to do, though resolving the Department of Homeland Security funding fight isn't on the near-term agenda. Before lawmakers do much, though, they may have to face war powers votes aimed at reining in President Trump's military campaign in Iran and may also have to deal with calls to expel some of their own members. Democratic Rep. Eric Swalwell announced Monday that he will resign from Congress, a day after he dropped out of the California gubernatorial race in the wake of multiple allegations of sexual assault and misconduct.

DHS funding fight: The Department of Homeland Security on Friday ordered furloughed employees to return to work after President Trump directed the department to use funds from last year's One Big Beautiful Bill Act to pay all DHS employees. But the department remains partially shut down, future paychecks for employees are in limbo and Republicans are still split over a Senate plan to end the funding lapse that started almost two months ago, on February 14.

House Speaker Mike Johnson and Senate Majority Leader John Thune announced on April Fools' Day that they had reached a deal to move ahead with a two-track plan, funding most of DHS via a bipartisan appropriations bill and then using a Republican-only reconciliation bill to provide money for Immigration and Customs Enforcement and Customs and Border Protection.

Many House Republicans angrily rejected that approach, insisting that they won't vote for a bill that excludes funding for immigration enforcement. Now Johnson, who initially opposed the Senate plan before endorsing it, reportedly intends to leave it stalled as House Republicans wait for the Senate to move ahead with the reconciliation bill, which President Trump has said he wants on his desk by June 1. Trump said in a social media post Friday that "Reconciliation is ON TRACK, and we are moving FAST and FOCUSED in keeping our Border SECURE, and getting funding to the Department of Homeland Security and the Justice Department to continue our incredible SUCCESS at MAKING AMERICA SAFE AGAIN!"

But that part of the plan is also fraught with potential problems.

"Senate Republicans are charging ahead with a plan not to find spending offsets to pay for the cost of the legislation, which would help keep Democrats from forcing tough Senate votes on a wide variety of hot-button issues as part of the reconciliation process," Politico's Meredith Lee Hill reports. "But that decision will rankle House GOP fiscal hawks who wanted to include a raft of spending cuts and additional policies beyond immigration enforcement funding."

Trump's deadline leaves Republicans with seven weeks to decide what should be included in their reconciliation bill and resolve their differences on many of the details involved.

Republicans plan a tax pitch: With Tax Day coming up on Wednesday, President Trump and Republicans will be working to tout the sweeping cuts they passed in their One Big Beautiful Bill Act - though that message is complicated by surging oil and gas prices and the potential for further fallout from Trump's war in Iran. The president himself told Maria Bartiromo of Fox News yesterday that gas prices may not fall before November's midterm elections. Asked whether he thinks the price of oil and gas will be lower before the elections, Trump said he hopes so. "It could be. It could be the same, or maybe a little bit higher. It should be around the same."

The average price of a gallon of regular gas in the U.S. is now $4.13, according to AAA, up from $3.63 a month ago and $3.19 a year ago. A government report Friday showed that those rising energy prices have driven overall inflation to a two-year high.

After ceasefire talks with Iran ended Sunday without a deal, Trump is betting that a new U.S. Navy blockade of Iranian ports will pressure Tehran to reopen the vital waterway for shipments of oil and other goods or resume negotiations.

The bottom line: Congress is back, but the DHS shutdown looks likely to stretch on for weeks, officially at least.

Quotes of the Day

"When you have tens and tens of billions of dollars that can be easily spent with very limited oversight and no fear that you're going to have problems in the next fiscal year with Congress, you have created a real vulnerability to fraud or misconduct."

− John Sandweg, who served as acting director of U.S. Immigration and Customs Enforcement during the Obama administration, speaking to NPR about the $75 billion that Republicans gave to Immigration and Customs Enforcement in the One Big Beautiful Bill Act last summer.

The massive influx of funding, dwarfing the $9.8 billion the agency received in fiscal year 2024, turned ICE into the highest-funded law enforcement agency in the federal government. The money, which can be spent over four years, also reduced the ability of Congress to influence ICE's activities, since the agency now has no need to face congressional scrutiny while asking for more money.

Sam Bagenstos, general counsel at the Office of Management and Budget under President Biden, told NPR that Republicans essentially handed ICE a blank check. "Here what we have is just a massive shoveling of cash to an agency with few if any strings," he said, adding that lawmakers "gave ICE enough money that they can say to Congress, 'Yeah, sorry, we don't need to come back to you for money, and there's nothing you can do to us.'"

Sandweg emphasized the importance of annual funding debates and of Congress maintaining the power of the purse. "Having that appropriations mechanism where you have to get up there and defend what you did and how you did it every year - that is a tempering influence on the agency," he said. "You might get a call from a senior member of the Appropriations Committee. Those calls resulted in a lot more changes."

Critics of ICE say that the influx of money played a role in the agency becoming larger, more aggressive and more violent, contributing to the deaths of two American citizens during the immigration crackdown in Minneapolis. They have also expressed concerns about waste as the agency builds out a new detention network designed to hold upwards of 100,000 people at a time. Questionable spending by former DHS Secretary Kristi Noem, who used some of the funds to purchase two luxury jets and to commission an advertising campaign that served to promote her image, only heightened those concerns.

For now, ICE funding remains at the center of the DHS shutdown, the longest in U.S. history. Calling for reforms at the immigration agencies, Democrats want to pass a bill that denies new funds for DHS and Customs and Border Protection, which also received billions of dollars in extra funding, but Republican lawmakers in the House insist that the agencies be included in any bill.

As some Republicans eye a party-line reconciliation bill to fund ICE and CBP, Sen. Ted Cruz has proposed a 10-year appropriation. "I think we may very well be in a world where these Senate Democrats will never again vote to fund ICE, that they're simply saying, 'shut down,'" Cruz told Fox News.

"It's all we have to run on."

− An unnamed House Republican, referring to the tax cuts in the One Big Beautiful Bill passed last year, in a Politico article examining the party's agenda and election messaging, which have been complicated by rising energy prices and intraparty divisions on other policy issues.

"Do you see us turning out other big-ticket legislation? This is it," the anonymous GOP rep told Politico.

While Republicans hope gas prices will fall by Election Day, helping them deliver an affordability pitch to voters, many in the party are reportedly still planning on centering the tax issue in their campaign messaging.

"Republicans can and should take credit because the alternative would've been massive tax hikes under the Democrats had they won the 2024 election," Rep. Nicole Malliotakis told Politico.

Chart of the Day: Tariffs and Inflation

A new analysis of President Trump's tariffs finds that they raised prices on goods included in the personal consumption expenditure (PCE) index, which ignores volatile food and fuel prices. According to a team of economists at the Federal Reserve, Trump's tariffs explain virtually all of the price increases recorded in PCE categories.

"We find strong evidence that tariff changes in 2025 have raised core goods prices," the economists say. "Under our baseline estimates, tariff changes through November 2025 raised core goods PCE prices cumulatively by 3.1% through February 2026, explaining the entirety of excess inflation in the core goods category relative to pre-pandemic inflation rates and boosting core PCE prices as a whole by 0.8 percent [emphasis added]."

As the chart below illustrates, the PCE inflation rate would likely have returned to its pre-pandemic trendline in 2025 if the tariffs had not been imposed.

Number of the Day: 1.1 Million

As of April 8, just over 1.1 million taxpayers had taken advantage of President Trump's new $10,000 tax deduction for car-loan interest - "a sliver of all filers and well below projections," Politico's Brian Faler reports. By comparison, more than 23 million taxpayers have claimed Trump's tax break for overtime pay and nearly 20 million have filed using the expanded standard deduction for seniors, which Trump routinely misrepresents as "no tax on Social Security." Nearly 6 million have taken advantage of a deduction for tip income.

Faler writes that "the car incentive is proving less popular than Trump's other breaks, with many in the industry saying it's too small to make much difference to car buyers, and comes with so many restrictions that most aren't eligible." But some analysts say the auto-loan deduction could still grow in popularity as awareness rises over time.

Fiscal News Roundup

• US Begins Blockade in Strait of Hormuz; Trump Warns Iran 'Attack Ships' to Stay Away – CNBC
• Trump Says Gas Prices Might Not Drop by Midterms, Underscoring G.O.P. Peril – New York Times
• Congress Returns to Battles Over DHS, Expelling Lawmakers and the Iran War – NBC News
• DHS Calling Furloughed Staff Back to Work Despite Shutdown – Federal News Network
• 8 Weeks of Failed D.H.S. Shutdown Negotiations in 1 Chart – New York Times
• Trump Administration's Rush to Roll Back Environmental Rules Hits a MAHA Wall – Washington Post
• Trump's Auto-Loan Interest Tax Break Off to Sluggish Start – Politico
• 'It's All We Have to Run On': GOP Looks to Tout Tax Cuts as War Overtakes Hill Agenda – Politico
• Trump Gets McDonald's Delivery to Oval Office to Promote 'No Tax on Tips' – The Hill
• Fed Nominee Warsh Clears a Hurdle to Senate Hearing – CNBC
• Housing Shortage Is at Least 10 Million Homes, White House Says – Bloomberg
• Mexican Migrant Is 47th Person to Die in ICE Custody During Current Administration – ABC News
• Trump's Erratic Behavior and Extreme Comments Revive Mental Health Debate – New York Times
• Image Depicting Trump as Christ-Like Savior Removed From President's Social Media Page Following Backlash – NBC News
• Pope Leo Says He Does Not Fear Trump, Citing Gospel as He Pushes Back in Feud Over Iran War – Associated Press

Views and Analysis

• Trump's Strait Blockade Risks Another Serious Blow to the Global Economy – Stephen Collinson, CNN
• To Open the Strait of Hormuz, Trump Wants to Blockade Iran. Experts Are Skeptical – Ben Hubbard, New York Times
• Hormuz Blockade Could Deepen World's Worst Energy Crisis - and Risk a Dangerous Misstep – Anniek Bao, CNBC
• Iran War's Economic Shock Wave Is Expected to Get Even Bigger – Georgi Kantchev, Mike Cherney and Junko Fukutome, Wall Street Journal
• For Now at Least, the Iran War Seems to Be Failing – Gerard Baker, Wall Street Journal
• DoorDash Grandma Can't Deliver Trump a Win in Iran – Jessica Karl, Bloomberg
• New Disclosures Reveal How DOGE Actually Worked – Meryl Kornfield, Washington Post
• Will Elon Musk Ever Be Forced to Explain What He Did Inside DOGE? – René Marsh and Tierney Sneed, CNN
• A Giant Barrier to Being Self-Employed Is Falling, State by State – Jonathan Wolfson, Washington Post
• How a $75 Billion Windfall From Congress Has Insulated ICE – Sam Gringlas, NPR
• For Kushner and Witkoff, C.E.O. Diplomacy Is No Longer Working – Jonathan Guyer, New York Times
• 'Housewives' and Lawmakers See a Congress Devolving Into Reality TV Drama – Michael Gold, New York Times