Democrats Again Block DHS Funding Bill

Good evening. The war with Iran is now in its 13th day and the Department of Homeland Security has been partially shut down for almost four weeks. Oil prices jumped again today amid ongoing concerns that the vital shipping lanes of the Strait of Hormuz remain closed. Brent crude futures ended the day over $100, up more than 9%. "Oil markets are waking up to a new reality: Disruption to the [Persian] Gulf's prodigious energy supplies isn't ending anytime soon," The Wall Street Journal says.

Here's what else is happening.

Senate Again Votes Down Homeland Security Funding Bill

With Transportation Security Administration agents and other critical workers in the Department of Homeland Security facing the prospect of their first missed paychecks this week, Senate Democrats on Thursday defeated an effort to vote on a funding bill that would end a partial government shutdown now approaching the one-month mark.

The motion to proceed on a House-passed DHS funding bill failed 51 to 46, well short of the 60-vote threshold, with Sen. John Fetterman joining Republicans voting in favor. Senate Democrats have now rejected the funding bill four times.

Senate Minority Leader Chuck Schumer said Democrats continue to demand reforms at Immigration and Customs Enforcement and Customs and Border Protection in exchange for voting to reopen DHS. Democrats are calling for multiple changes at the agencies following a rash of violent and deadly incidents during the Trump administration's aggressive immigration crackdown in Minneapolis and other cities around the country.

"We all know that we do not have agreement on how to deal with ICE," Schumer said. "We know very simply that Democrats just want ICE to behave like any police department in America and use warrants and not wear masks."

Senate Majority Leader John Thune accused Democrats of failing to respond to White House offers of reforms that Democratic leaders have characterized as insufficient.

No to other options: As lawmakers expressed concerns about the effect the shutdown was having on the nation's travel infrastructure and security, Democratic Sen. Jacky Rosen offered a proposal for a bill that would pay TSA agents, to be passed by unanimous consent, but Republican Sen. Bernie Moreno objected, saying he wanted to see all DHS workers get paid.

On Wednesday, Republicans blocked a Democratic bill that would have funded all DHS agencies other than those focused on immigration enforcement, including TSA, the Federal Emergency Management Agency and the Coast Guard. Republican Sen. Katie Britt objected to the effort to pass the bill by unanimous consent.

Housing bill passes: Separately on Thursday, in a notably bipartisan effort, the Senate passed a housing reform bill written by Republican Sen. Tim Scott and Democratic Sen. Elizabeth Warren, with a vote tally of 89-10.

The largest piece of housing legislation in decades, the 21st Century ROAD to Housing Act aims to increase housing supply and affordability by modernizing federal programs, easing regulations and banning large investors from buying single-family homes.

"If we want to bring down the cost of housing, we've got to build a lot more," Warren said. "And what I love about this bill is that it has more than 40 different provisions in it, all of which aim in the same direction, which is to give a push toward building more housing."

The House passed a similar bill last month, but some House Republicans have complained that the Senate version is not conservative enough, with members of the Freedom Caucus saying it borders on "socialism." Conservative critics object to a provision that would ban the Federal Reserve from issuing central bank digital currencies until at least 2030 (they want a permanent ban), and the provision that would limit housing purchases by institutional investors.

President Trump has spoken in favor of the investor ban, and signed an executive order in January that set "the stage for legislation to ensure that large institutional investors do not acquire single-family homes."

What's next: Speaker Mike Johnson said this week that the housing bills may have to go to conference to iron out any disagreements, a process that could hold up the legislation for weeks.

But Republican Sen. John Kennedy said Thursday that he thinks lawmakers can hammer out a deal informally. "I don't think we'll need a conference. I think we'll get it worked out," he said, per Politico. "If one side, Senate or House, is being unreasonable, the White House may have to slap a couple of people to Pluto," he added. "But we're not there yet."

Johnson and Republicans Eye Another Party-Line Megabill

At their annual policy retreat in Florida this week, House Republicans again debated the possibility of following up on last year's One Big Beautiful Bill Act with a second party-line budget reconciliation package. It's not clear yet if they will try to do so, what would be in such a package and whether they can possibly pass another megabill given the narrow and fractious GOP majorities in the House and Senate.

Republicans have floated various ideas for what could be included in such a package, including supplemental military funding related to the Iran war and cuts Medicaid spending that were removed from last year's bill because, as written, they failed to comply with Senate rules. House Budget Chair Jodey Arrington reportedly eyed stiffer "fraud prevention" measures for federal and state safety-net programs.

Some Republicans are highly skeptical that the various factions in the party can unite behind a second big bill, especially during a demanding election campaign season. "I'd love to do a second reconciliation bill, but I'd also love to be Brad Pitt," House Ways and Means Chair Jason Smith told Politico this week. "It's never going to happen."

President Trump notably hasn't called for another reconciliation package, instead telling House Republicans this week that he wants the Save America Act election reform bill on his desk before he'll sign anything else.

Still, House Speaker Mike Johnson and many in the party continue to push for another bill, even if it is smaller than last year's, arguing that Republicans should try to make the most of their governing trifecta by pushing through another major bill. "I believe that reconciliation is the only option. Democrats are not going to vote for anything," Rep. August Pfluger, chairman of the Republican Study Committee, the largest conservative congressional caucus, said in a radio interview this week. His group unveiled a proposed framework for a party-line bill earlier this year.

Johnson has made clear he'd like to try another reconciliation bill and has been trying to determine what specific measures would bring all Republicans together. "I mean, look, let's be realistic, right? It will not be as big, but it can be just as beautiful," Johnson said this week.

Ernst pitches $93.5 billion in savings: Against that backdrop, Republican Sen. Joni Ernst of Iowa on Wednesday sent a letter to Johnson and Arrington, arguing that another reconciliation bill "provides a clear path forward to accelerate economic growth, deliver for rural communities, and root out fraud, waste, and abuse in federal spending."

Ernst, who heads the Senate DOGE Caucus, laid out 14 bullet-pointed proposals that she said could generate at least $93.5 billion in savings. Among her recommendations: Extending the statute of limitations on Covid-era unemployment insurance fraud; rescinding unspent Covid funding; requiring federal employee unions to repay the government the cost of taxpayer-funded union time; imposing higher penalties on states with high rates of SNAP food aid overpayments; selling empty federal buildings across the country; enacting a $250 annual fee for owners of electric vehicles; and rescinding remaining funding provided for the U.S. Postal Service to buy electric vehicles.

Politico, which first reported Ernst's letter, notes that it "signals that jockeying among Republicans has begun around what makes the cut in a second megabill - even if there's scant evidence congressional Republicans can pull one off."

Number of the Day: $100.46

Brent crude oil futures surged on Thursday, closing at $100.46, marking the first close above $100 since 2022.

Oil prices jumped after Iran's new supreme leader, Mojtaba Khamenei, said that the Strait of Hormuz should remain closed as a "tool to pressure the enemy." Six ships in the Persian Gulf have been attacked by Iran, bringing tanker traffic to a halt.

Energy Secretary Chris Wright said Thursday morning that the U.S. Navy is not ready to escort oil tankers through the strait. Later in the day, Treasury Secretary Scott Bessent said the U.S. and possibly other nations would start escorting ships "as soon as it is militarily possible."

Although there are reports that the White House is deeply concerned about the potential political fallout from higher energy prices, President Trump argued Thursday that there is a positive side to the issue.

"The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," he said on social media.

"BUT, of far greater interest and importance to me, as President," he added, "is stoping [sic] an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World."

Fiscal News Roundup

• Senate Rejects DHS Funding Bill as Shutdown Nears One-Month Mark – Politico
• Trump Bragged About Low Gas Prices. The Iran Conflict Has Him Doing an About-Face – Associated Press
• US to Ease Shipping Rule in Bid to Tame Spiraling Fuel Prices – Bloomberg
• Senate Passes Big Housing Reform Bill With Broad Bipartisan Support – USA Today
• Trump Tariffs: Martin Heinrich Bill Would Give Families Tax Rebate for Higher Import Costs – CNBC
• US Trade Deficit Narrows in January as Exports Jump to Record High – Reuters
• Americans Cut Back to Afford Health Care, Poll Finds – Semafor
• 48% of Americans Blame Trump for High Gas Prices - More Than Any Other Factor – Axios
• Under Pressure From Trump, Republicans Plan Long Talkathon on Voting Bill – Associated Press
• 'No Funds for Food.' TSA Agents Sleeping in Cars as Shutdown Continues – USA Today
• DHS Signs Off on World Cup Security Funding a Day After Trump-Infantino Meeting – Politico
• Trump Names New Head for VOA Parent After Court Rebukes Kari Lake – Washington Post
• Whistleblower Claims Ex-DOGE Member Says He Took Social Security Data to New Job – Washington Post
• Washington State Lawmakers Pass 'Millionaire's Tax' – Politico
• Former NFL Players Decry White House Video Mixing Big Hits, Airstrikes – Washington Post

Views and Analysis

• Why Oil Prices Surged Even After the Release of Strategic Reserves – Aaron Krolik, New York Times
• What It Will Mean for the Economy if the Strait of Hormuz Stays Closed – Neil Irwin, Axios
• What Could You Buy With the Money Spent by the US During the Iran War's First Week? – Phil Holm, Associated Press
• To Squeeze Iran, Trump Reaches Into the Geoeconomic Toolkit – Josh Lipsky, Wall Street Journal
• Trump's Voting Bill Fixation Strains Republicans to the Breaking Point – Burgess Everett, Semafor
• How Democrats Can Outplay the GOP on Tax Cuts – Timothy Noah, New Republic
• Democrats Get Serious About Taxing the Rich – Harold Meyerson, American Prospect
• Trump Pushes GOP to Focus on Health Care in Midterms, Which Would Be Fine With Democrats – Steve Benen, MS NOW
• Trump's Tour of States Is About More Than the Midterms – Luke Broadwater, New York Times
• Our Inability to Live Within Our Means Makes the U.S. Vulnerable – Kyla Scanlon, New York Times
• Washington State's Tax Folly – Washington Post Editorial Board