Dems Demand ‘Dramatic Changes’ in DHS Funding Deal

Trump administration border czar Tom Homan announced an immediate drawdown of 700 immigration agents from Minneapolis, leaving a federal force of about 2,000 agents and officers in Minnesota. Gov. Tim Walz and Minneapolis Mayor Jacob Frey welcomed the move but said it does not go far enough. "Operation Metro Surge is not making Minnesota safer," Walz said in a statement. "Today's announcement is a step in the right direction, but we need a faster and larger drawdown of forces, state-led investigations into the killings of Alex Pretti and Renee Good, and an end to this campaign of retribution."

Here's what else is happening.

DHS Funding Talks Appears Doomed With Nine Days Until Deadline

With a short-term funding extension for the Department of Homeland Security set to expire in just nine days, Democratic congressional leaders on Wednesday laid out their demands for funding DHS operations through September, again insisting on "dramatic changes" to the Trump administration's immigration enforcement tactics, including proposals that Republicans have already rejected.

"The clash reflects a fundamental divide between the two parties over whether Mr. Trump's deportation drive should be carried out according to standard norms of policing in America, as Democrats are demanding, or must be given a special status of secrecy, speed and bare-knuckled tactics, as many Republicans have insisted," Carl Hulse and Michael Gold write in The New York Times.

Given the deep divide between the two parties - and the uncompromising rhetoric being used thus far - the push for a bipartisan deal seems destined to fail.

"Taxpayer dollars should be used to make life more affordable for everyday Americans, not to brutalize or kill them," House Minority Leader Hakeem Jeffries told reporters at a joint news conference with Senate Minority Leader Chuck Schumer. "ICE is completely and totally out of control, immigration enforcement should be just, it should be fair, and it should be humane. That is not what is taking place right now."

The demand put forth by the Democratic leaders largely repeated demands that Schumer outlined last week. For example, Jeffries reiterated that Democrats want body cameras to be mandatory for federal immigration officers, a demand that seems to have met bipartisan agreement, as DHS Secretary Kristi Noem announced Monday that federal officers in Minneapolis will be equipped with cameras immediately.

Democrats also want to end roving immigration patrols, require that Immigration and Customs Enforcement agents display identification and prohibit ICE from detaining or deporting American citizens. They also insist that judicial warrants should be required for immigration searches and arrests, with independent oversight of federal law enforcement. "The Fourth Amendment is not an inconvenience. It is a requirement embedded in our Constitution that everyone should follow," Jeffries said.

The House Democratic leader did seem to tone down one earlier demand: that federal agents be prohibited from wearing masks. Jeffries said Wednesday that the face coverings should not be used "in an arbitrary and capricious fashion."

Schumer said that Democrats plan to quickly issue legislative text reflecting their demands. "We're going to have tough, strong legislation," he said. "We hope to have it within the next 24 hours, that we will submit together. And then we want our Republican colleagues to finally get serious about this, because this is turning America inside out in a way we haven't seen in a very long time."

House Speaker Mike Johnson and other Republicans have dismissed the idea of banning masks for federal law enforcement officers, warning that the officers could easily be subjected to doxxing or other harassment. Republicans have also rejected requiring agents to wear identification and obtain judicial warrants.

Compounding the challenges of reaching a bipartisan agreement, some Republican lawmakers are also pushing their own demands, most notably a call to end "sanctuary cities," which tend to be Democratic-run municipalities that limit local cooperation with federal immigration enforcement activities. Leaders of those cities argue that their approach is meant to promote public safety by ensuring that immigrants feel they can report crime or use vital services.

What it all means: Another DHS shutdown is extremely likely, especially since Democratic leaders have already indicated that they will oppose another stopgap funding extension. DHS is more than just ICE and Customs and Border Protection - it also includes the Federal Emergency Management Agency, the Transportation Security Administration, Coast Guard, Secret Service, the Cybersecurity and Infrastructure Security Agency and more. So a shutdown of the department could involve some pain for the American public, even as ICE and CBP would be able to continue operations using billions in extra funding provided by Republicans last year as part of their One Big Beautiful Bill Act.

The bottom line: A deal will be nearly impossible, and lawmakers acknowledge as much. "There's always miracles, right? Maybe things will come together and we'll be able to vote on something at the end of the two weeks," Senate Majority Leader John Thune told reporters Tuesday. "I think that would be overly optimistic, based on my experience."

Immigrants Cut the Deficit by $14.5 Trillion Over 30 Years: Analysis

Immigrants have been net-positive contributors to federal, state and local governments for decades, according to a new report from the Cato Institute, a libertarian think tank.

According to Cato, immigrants - both legal and undocumented - paid more in taxes at all levels of government than they received in benefits over a 30-year period starting in 1994. Their cumulative fiscal surplus came to $14.5 trillion in constant 2024 dollars during that time, a figure that includes $3.9 trillion saved in lower interest payments on the national debt.

Without that surplus, the national debt as of 2023 would have been nearly twice as high as it was, equaling 205% of gross domestic product.

The Cato analysts say their estimate is conservative, since they did not model the positive but indirect fiscal effects resulting from higher economic growth produced by millions of additional workers.

"How can immigrants be so fiscally beneficial when the country overall is running such extreme deficits?" the Cato paper asks. "The answer is that a big part of the US budget is pure public goods-primarily the military and interest payments on past debt accrued before the immigrants came-which don't scale with population growth. These are essentially fixed costs or sunk obligations that the United States will have to cover whether immigrants come or not."

Overall, immigrants pay more taxes than average, because they work at higher rates than non-immigrants. They cost less as retirees, in part because they are less likely to retire, but also because some pay into Social Security but are unable to claim benefits due to their lack of citizenship. Immigrants cost school systems less than average, too, because so many arrive after school age.

"Immigrants are not to blame for government deficits," the Cato analysts said in conclusion. "Indeed, they reduced the deficit by about $14.5 trillion."

IRS Faces Staffing Crunch as Filing Season Ramps Up

The Trump administration slashed the IRS workforce by more than 20% last year, and now the agency is scrambling to fill in major gaps as the tax filing season begins in earnest.

Government Executive's Eric Katz reports Wednesday that the IRS is asking experienced employees from non-tax focused departments, including human resources and information technology, to handle basic tasks like answering phones and processing returns. The divisions that handle those tasks lost about 8,300 workers over the last 12 months, Katz notes.

A report by the IRS inspector general warns that diminished staffing levels are already being felt. The backlog of tax returns has soared to 2 million, up 33% in the last year.

IRS officials originally sought volunteers to fill in the front lines, but have had to resort to mandatory reassignments. Many of the reassigned employees have no experience in their new roles, and there are fears that error rates will soar.

"They are setting this agency up for failure for this tax season for sure," one employee told Katz. "It's going to make a bigger impact than people realize."

Fiscal News Roundup

• Democrats Lay Out Demands for DHS Funding, Urging GOP To "Get Serious" With Both Sides Far Apart – CBS News
• Prospects for ICE Deal Sour on Capitol Hill as Shutdown Deadline Nears for Critical Agency – CNN
• In Spending Talks, Senators Clash Over Immigration Crackdown – New York Times
• Bessent Says Fed Lacks Accountability and Has Lost Public Trust – New York Times
• Trump Says He 'Would Not' Have Picked Kevin Warsh to Lead the Fed if He Wanted to Raise Interest Rates – NBC News
• Those New Tax Breaks Trump Is Touting Come With a Catch – Politico
• Trump's Call to 'Nationalize' Elections Adds to State Officials' Alarm – New York Times
• Supreme Court Allows New California Congressional Districts That Favor Democrats – Associated Press
• California's Instant Electric Vehicle Rebates Would Require Automakers to Match State Funds – Associated Press
• Washington Post Cuts a Third of Its Staff in a Blow to a Legendary News Brand – Associated Press
• The CIA World Factbook Is No More – Associated Press

Views and Analysis

• The Dollar Is Doing What Trump Wanted. It Might Not Work Out the Way He Imagined – Jason Furman, New York Times
• One Path to U.S. Fiscal Disaster Is Most Alarming - and Most Likely – George F. Will, Washington Post
• Why Trump's Federal Reserve Pick May Surprise Him – Victoria Guida and Ian Ward, Politico
• Voters Say Housing Prices Are Too High. Trump Wants Them Higher – Conor Dougherty, New York Times
• Let the Affordability Bidding War Begin – Paul Glastris, Washington Monthly
• 'There'll Be Consequences': Trump WH Warns Defense Contractors – Philip Wegmann, RealClearPolitics
• Mike Johnson Promotes One of Trump's Most Laughable Election Lies – Daniel Dale, CNN
• Trump Demands $10 Billion in Taxpayers' Money – Harold Meyerson, American Prospect
• How to Get Kevin Warsh Confirmed – Wall Street Journal Editorial Board