Good evening. It's Day 5 of the DHS shutdown and, well, nothing much has changed between the two sides. But read on to find out how the shutdown is starting to take a toll and how Democrats are fighting among themselves about a proposed billionaire tax in California.
Trump Admin Restricts FEMA Deployments as DHS Shutdown Drags On
White House Press Secretary Karoline Leavitt on Wednesday dismissed Democrats' latest proposal on DHS funding and reform as "very unserious." Speaking to reporters at the White House as the DHS shutdown was in its fifth day, Leavitt said President Trump still has not spoken to Democratic leaders directly, though negotiations are occurring at a lower level.
Leavitt's comments were yet another sign that the two sides remain far apart as they battle over proposed reforms to Immigration and Customs Enforcement, with little to suggest that the DHS shutdown will end any time soon. Senate Minority Leader Chuck Schumer said on social media Wednesday that Democrats are "not giving DHS a cent until ICE is reined in." He highlighted a U.S. citizen who had been "violently assaulted, arrested, and detained by ICE agents" in Minneapolis.
Feeling it at FEMA: In the wake of the shutdown of the Department of Homeland Security, the Trump administration has suspended the upcoming deployments of hundreds of aid workers on duty with the Federal Emergency Management Agency.
As CNN's Gabe Cohen reports, DHS leadership told FEMA to "stop all travel," effective Wednesday. Any travel now requires explicit approval from DHS, which has overseen FEMA since 2003.
The suspension of travel, which affects more than 300 workers preparing for assignments, comes even though most aid workers are paid through a disaster relief fund that has not been affected by the shutdown. FEMA's Disaster Relief Fund reportedly had about $7 billion in it as of December.
It is too soon to tell if the travel suspension will affect ongoing or emerging FEMA operations. DHS said in a statement that the travel restrictions are "not a choice but are necessary to comply with federal law." A former FEMA official who served under the Obama and Biden administrations disagreed, telling CNN that DHS is "desperate to show consequences of the shutdown, but the DRF [Disaster Relief Fund] is not affected by the lapse in appropriation."
The Billionaire Tax Dividing Democrats
Sen. Bernie Sanders is set to take the stage this evening at a Los Angeles rally to drum up support for a proposed one-time 5% wealth tax on billionaires in California - the latest sign of an escalating battle over Silicon Valley wealth, income inequality and affordability. That fight now pits Sanders, the democratic socialist from Vermont, against Gov. Gavin Newsom, who has opposed the tax initiative and worked to keep it off the ballot in the upcoming November elections.
What this clash is about: A healthcare workers' union, the Service Employees International Union - United Healthcare Workers West, has proposed a ballot initiative calling for California billionaires to pay a one-time, "emergency" tax of 5% of their total assets over five years to help fund healthcare, public schools and food assistance programs.
The union argues that the tax is necessary because of deep federal spending cuts enacted under the Republican "One Big Beautiful Bill Act" that are expected to cost California roughly $100 billion in healthcare funding over the next five years. The tax would target Californians worth more than $1 billion - about 200 people in total, who collectively have $2 trillion in wealth, according to the union. The initiative is intended to raise about $100 billion to replace the federal dollars being cut. Fully 90% of the money that would be raised by the tax would go to funding healthcare through Medi-Cal, the state's Medicaid program.
"This would protect healthcare jobs and ensure working people and families can get the care they need," the union said in a statement.
Supporters of the proposal, titled The California Billionaire Tax Act, are working to collect the nearly 900,000 signatures needed to get it on the ballot. Sanders, who won the Golden State's 2020 Democratic presidential primary, is the featured speaker at an event tonight kicking off the campaign to promote the initiative.
Newsom, who is considering his own presidential run in 2028, has raised concerns that the tax would harm innovation and that billionaires would flee California and potentially leave a future hole in the state budget - though the California proposal would apply retroactively and cover worldwide assets, not just those in the state. Newsom has argued that any wealth tax should only be considered at the national, not state, level.
Some of Silicon Valley's tech titans and other business leaders in the state have already taken steps to cut their ties to the state - and some opponents of the billionaire tax have ramped up efforts to defeat the proposal or are spending millions to push competing measures that would block it. Other opponents of the plan worry that it directs too large a share of its revenue to healthcare, leaving little for other funding needs.
Why it matters: The battle over the billionaire tax is one high-profile example of the pressures states will face and the decisions they will be forced to make due to federal funding cuts. Beyond California's healthcare and budget concerns, the debate is dividing prominent Democrats and contributing to tensions between progressives and centrists at a time when the party is trying to come together, hone its messaging and position itself for success in the 2026 and 2028 elections.
Gateway Tunnel Project Back on Track as Trump Admin Releases More Funds
Work on the $16 billion Gateway rail tunnel between New York and New Jersey is set to resume next week after the Trump administration fully paid the funds it owed to the commission overseeing the project.
New York Gov. Kathy Hochul said Wednesday that the Department of Transportation had released $127 million in overdue funding, making it possible to put 1,000 people back to work building a new rail tunnel under the Hudson River and rehabilitating the 116-year-old tunnel currently in use.
Last October, the Trump administration withheld a $205 million payment that was owed to the project, apparently for political reasons. Earlier this month, a federal judge ordered the administration to release the congressionally approved funds, which the administration has now done in three installments starting last Friday, though not before the project ran out of money two weeks ago. Wednesday's payment includes an extra $30 million to cover the cost of work completed in January.
In a statement, Hochul accused Trump of "illegally" withholding the funds, and vowed to maintain pressure on the White House to keep the funding flowing. "I have told the President repeatedly that when he targets New York, we will fight back and we will not back down," Hochul said. "Today's progress is significant, but we need certainty that Gateway funding will remain in place for the duration of the project. The federal government has a legal obligation to fully fund Gateway, and New York will accept nothing less."
Chart of the Day
The New York Times this week highlighted the extent to which Congress rejected the Trump administrations' proposed budget cuts for fiscal year 2026. While the shutdown fight over funding for the Department of Homeland Security continues, Congress has passed 11 of the 12 required annual spending bills.
In doing so, "lawmakers have systematically brushed off many of Mr. Trump's most severe cuts for this fiscal year, leaving intact a vast set of federal education, health, housing and research programs that the White House had tried to slash or eliminate," writes Tony Romm of the Times. "For Mr. Trump, the result is a set of annual government expenses that do not appear radically different on paper compared with what he inherited in January 2025. Overall, Congress is on track to approve more than $1.6 trillion in discretionary spending for 2026, amounting to little change from the previous fiscal year, according to a preliminary analysis of federal budget records by the Penn Wharton Budget Model, a nonpartisan research organization."
Here's a visual breakdown of how Congress's spending decisions lined up with Trump's plans.
Fiscal News Roundup
- Democrats Demand ICE Reforms on Day 5 of DHS Shutdown – Associated Press
- White House Says Democratic Proposal Is 'Unserious' – Associated Press
- DHS Shutdown Drags On as Both Sides Dig in Their Heels on ICE Reforms – Yahoo News
- Trump to Get DHS Shutdown 'Bully Pulpit' With State of the Union Address – Washington Examiner
- Democratic-Led Cities Move to Block ICE, Setting up Clash With Trump – Washington Post
- DOT Wants to Block Transit Money to States That Aid Migrants – Politico
- Trump Administration Releases Remaining Gateway Funds - and Then Some – Politico
- Trump Administration Restricts New FEMA Disaster Deployments During DHS Shutdown – CNN
- Fed Reveals Surprise Shift as Several Officials Ponder Hike – Bloomberg
- Hassett Says Fed Staff Should Be 'Disciplined' for Reporting the US Pays Tariff Costs – Politico
- Gorsuch's 'Told You So' Moment on Trump's Tariffs – The Hill
- Sanders and Newsom Clash Over Proposed Tax on California's Billionaires – Associated Press
- As Bernie Sanders Comes to California, Wealth Tax Opponents Intensify Efforts – New York Times
- Opponents of Proposed California Wealth Tax Ramp Up Their Campaign – Politico
- N.I.H. Director Will Temporarily Run C.D.C. in Leadership Shake-Up – New York Times
- FDA Will Drop Two-Study Requirement for New Drug Approvals, Aiming to Speed Access – Associated Press
- F.D.A. Reverses Decision and Agrees to Review Moderna's Flu Vaccine – New York Times
Views and Analysis
- What Is the Endgame in the DHS Shutdown? – Joel Mathis, The Week
- DHS Shutdown: Real Harms – Kimberly A. Strassel, Wall Street Journal
- Inflation Is Down, But Americans Still Feel an Affordability Squeeze – Mark Niquette, Jennah Haque and Jade Khatib, Bloomberg
- Billionaires' Low Taxes Are Becoming a Problem for the Economy – Carol Ryan, Wall Street Journal
- How Not to Build Infrastructure Projects – Gabrielle Gurley, American Prospect
- The MAHA Coalition Is Falling Apart – David Wallace-Wells, New York Times
- The FDA's Damage to Medical Innovation Will Be Hard to Repair – Washington Post Editorial Board
- How Trump Put Veteran Care in Crisis – Jasper Craven, American Prospect
- One Man Stole $660 Million. He'll Never Pay It Back – Brendan Ballou, New York Times