Senate GOP Advances $70 Billion Plan for ICE and Border Patrol

Sen. Lindsey Graham
ZUMA Press Wire
By Yuval Rosenberg and Michael Rainey

Good evening. President Trump today announced that he would extend the two-week ceasefire in the war with Iran that had been scheduled to end on Wednesday. In a social media post, Trump wrote that he had agreed to hold off on renewed attacks at Pakistan's request because the Iranian government "is seriously fractured" and still needs to "come up with a unified proposal." He said the ceasefire - and a naval blockade of Iranian ports - would continue until "discussions are concluded, one way or the other." Trump made his announcement after Vice President JD Vance postponed a planned trip to Pakistan for another round of peace talks due to uncertainty about Tehran's participation.

Here's what else is happening.

Senate Republicans Advance $70 Billion Immigration Plan to End DHS Shutdown

Senate Republicans on Tuesday unveiled a budget resolution meant to set the stage for a roughly $70 billion package of funding for immigration enforcement agencies through President Trump's term, the first step in a two-pronged GOP plan to end the shutdown of the Department of Homeland Security. The Senate then voted 52-46 along party lines to open debate on the budget blueprint.

As they look to fund Immigration and Customs Enforcement and Customs and Border Protection without help from Democrats, Republicans are using the same complex budget reconciliation process they used to pass their One Big Beautiful Bill Act last year. Democrats have blocked new funding for those agencies for months as they demanded reforms to the Trump administration's immigration policies following the fatal shootings of two protesters in Minneapolis.

The Senate last month passed bipartisan legislation by voice vote to fund all of DHS except for the two contentious immigration agencies, but House Republicans have refused to take up that measure until new funding is secured for ICE and border patrol.

"The sequencing is important. We've got to make sure that we don't isolate and, as I say, 'orphan' key agencies of the department," House Speaker Mike Johnson said, adding that some in his party are concerned that addressing the rest of DHS first could leave ICE and CBP without new funding.

The new 58-page Republican plan, released by Senate Budget Committee Chairman Lindsey Graham, instructs Senate and House committees to draft legislation providing funding for ICE and CBP. Technically, the resolution allows for up to $140 billion in new funding, but GOP leaders are aiming to keep the total cost of the bill at around half that level. The committees have until May 15 to deliver the legislation, and President Trump has set a June 1 deadline for the bill to reach his desk.

"Republicans are doing something that must be done quickly, and that our Democrat colleagues are trying to prevent us from doing. That something is simple: fully fund Border Patrol and ICE at a time of great threat to the United States," Graham said in a statement. "With this budget resolution, we are moving forward - not backward - on rational immigration policies that secure our border."

Democrats slammed the Republican measure.

"Instead of doing literally anything to lower costs, Republicans are spending their time working hard to cut another massive blank check for ICE and Border Patrol-without any reforms, or even basic guardrails," said Sen. Patty Murray, the top Democrat on the Appropriations Committee. "Families want relief from sky-high prices, not more of their tax dollars thrown at a rogue agency that doesn't respect their rights. Republicans are moving heaven and earth to cut yet another blank check for ICE, but they won't put a cent toward making health care or housing more affordable."

What's next: The Senate is heading for a vote-a-rama, in which an unlimited number of amendments may be considered. While Republican leaders are pushing to keep the reconciliation bill narrowly focused, others in the GOP want to include other elements of their agenda in the legislation, warning that this might be their last chance to push through certain priorities.

The process is expected to take time - and could leave DHS workers without paychecks again. Under executive orders from the president, the Trump administration has used other funding to pay DHS workers while Congress fights over funding. But Homeland Security Secretary Markwayne Mullin warned that those other funding options will soon run out and his department won't be able to cover employee salaries the first week of May. DHS has now been partially shut down for 66 days.

Trump's Fed Pick Pledges Independence as President Calls for Lower Rates

Kevin Warsh, President Trump's nominee to lead the Federal Reserve, sought to reassure lawmakers Tuesday that he would be an independent leader of the nation's central bank.

Testifying before the Senate Banking Committee amid questions about his fealty to Trump, his views on monetary policy and his extraordinary personal wealth, Warsh pushed back against speculation that he would acquiesce to the president's repeated demands for the Fed to lower interest rates.

"The president never once asked me to commit to any particular interest rate decision, and nor would I agree to it if he had," Warsh said. "I will be an independent actor if confirmed as chair of the Federal Reserve."

At the same time, Warsh made it clear that he wants to shake up the way the central bank currently operates. Among other things, Warsh suggested that he may change the way the Fed measures inflation, reduce the Fed's use of policy tools other than interest rates, and limit press access to the bank. "Status quo practices and policies are especially harmful when the world is changing this fast," Warsh said.

Who is Warsh? A financier with a personal fortune of well over $100 million, Warsh served as a member of the Federal Reserve Board of Governors from 2006 to 2011. He is affiliated with the conservative Hoover Institution at his alma mater, Stanford University, and has served as an executive director at Morgan Stanley and worked alongside famed investor Stanley Druckenmiller, with a focus on the tech sector.

Inflation hawk or dove? Warsh has been a critic of Fed policy, arguing that it has been too dovish on inflation as officials focus more on the second part of its mandate, the labor market. He blamed the Fed for the inflationary wave that surged through the economy in the wake of the Covid crisis, saying, "Inflation is a choice, and the Fed must take responsibility for it."

With Americans still feeling the "fatal policy errors going back four or five years," Warsh called for "a regime change in the conduct of policy ... a new and different inflation framework."

At the same time, and perhaps contradictorily, Warsh suggested that the Fed might take a more dovish approach on inflation, telling lawmakers that officials should focus on underlying inflation while highlighting the "trimmed-mean" measure that shows inflation running close to the central bank's 2% target - much lower than the recent headline number of 3.3%. To some observers, it sounded like Warsh was laying the groundwork for dovish rate cuts sooner rather than later.

Democratic Sen. Chris Van Hollen noted the sharp change in perspective. "You seem to have swung 180 degrees to the opposite direction to embrace lower rates, a view that conveniently aligns with the president who nominated you," Van Hollen said.

In another point of disagreement with the current Fed approach, Warsh said he did not think Trump's tariffs have been inflationary. Powell has argued that Trump's tariffs have been a driver of inflation in recent months, and the primary reason that the inflation rate has remained above target.

A smaller balance sheet: Warsh has called for the Fed to shrink its balance sheet, which the central bank has used since the financial crisis to provide stimulus and calm financial markets by purchasing assets such as mortgage bonds and Treasuries. Warsh has argued that the expanded balance sheet helps Wall Street more than Main Street, raises short-term interest rates and pushes the Fed further into the political arena than it needs to be.

"Working with the Treasury Secretary, we're going to have to find a way in which we can take the balance sheet and make it smaller," he said. If the Fed can reduce its holdings, "interest rates could be lower, inflation could be better, and the economy could be stronger," he added.

Warsh did not, however, explain how he would go about shrinking the balance sheet.

Questions about wealth: Sen. Elizabeth Warren, the top Democrat on the committee, expressed concerns about Warsh's vast wealth, some components of which are opaque. Warren asked if his investments are "affiliated with President Trump and his family, companies that have facilitated money laundering, Chinese-controlled companies or financing vehicles established by Jeffrey Epstein?"

Warsh declined to answer directly, saying instead that he would sell all of his assets before taking office. He told Sen. Jack Reed that his investments will be "as plain vanilla as possible" and "sitting in something like cash."

More broadly, Warren said she was concerned that "having a sock puppet in charge of the Fed would give the president access to the Fed's powerful authorities to enrich himself, his family and his Wall Street buddies." Asked if he would be Trump's "sock puppet," Warsh said, "Absolutely not."

A point of resistance: Warsh testified before the committee despite a pledge by one of its members, Republican Sen. Thom Tillis, to oppose any nominee to lead the Fed until a federal investigation of the current chair, Jerome Powell, comes to an end.

The Justice Department is investigating Powell's management of a $2.5 billion renovation project at the Fed's headquarters that has gone over budget, and the probe has been seen by many observers as an abuse of power by Trump intended to pressure Powell into lowering rates.

Tillis told Warsh that he has no questions about his fitness for the office. "You have extraordinary credentials. They're impeccable," Tillis told Warsh. "The problem I have is where we are right now."

Tillis said he wants the Powell investigation to end, "so I can support your confirmation."

What happens next: Warsh appears to have enough support to win confirmation, but his nomination will remain in limbo until Trump brings the investigation of Powell to an end. The question is whether Warsh's appearance Tuesday will be enough to convince Trump to end the probe and clear the path for his new Fed chief to step in when Powell steps down on May 15. If not, Powell is expected to remain in place as he waits for his successor.

As Sen. John Kennedy said on Monday, "The president's current nominee will be ultimately confirmed. In what decade that happens, I'm not sure."

Goldman Sachs Sees Gas Prices Undercutting Consumer Boost From Higher Tax Refunds

Goldman Sachs economists forecast Monday that the boost to consumer spending that would have been expected after last year's Republican tax cuts will be largely eaten away by higher gas prices.

"What originally appeared to be a solid year for consumer spending has quickly become more challenging," Goldman Sachs economists Ronnie Walker, Alec Phillips and Jospeh Briggs wrote in a research note comparing the effects of tax refunds and higher energy costs.

Now that Tax Day has passed and a substantial amount of data on this year's filing season is available, the Goldman team projects that tax refunds, running 17% higher than last year, will be up $50 billion over last year by the end of May. Tax payments, fueled by a surging market and the resulting higher capital gains taxes, are on track to come in $40 billion to $55 billion higher than last year (though as much as $25 billion to $40 billion less than would have been expected without the One Big Beautiful Bill Act).

"Combined, these flows imply a total benefit of around $75-90bn from the OBBBA but roughly unchanged tax bills year-over-year-resulting in a limited tailwind for consumer spending," the Goldman analysts say.

They note that gas prices have risen by nearly 40% since the Iran war started - a jump that represents about $140 billion annual hit to household incomes. Even if benchmark crude oil prices drop to $80 a barrel by the end of the year, the economists say the economic toll would still be about $70 billion for 2026 as a whole.

Those price increases hit lower-income households the hardest. "Higher gasoline prices will disproportionately burden households in the lowest income quintile, who spend roughly four times as much on gasoline as a share of after-tax income compared with those in the top quintile," the economists write. They add: "We continue to expect underperformance for the bottom income quintile, reflecting tepid job growth, cuts to Medicaid and SNAP benefits, and now greater exposure to the increase in gasoline prices. We expect notably firmer income growth among middle and higher income quintiles, which are less exposed to the oil shock and accrue greater benefit from last year's fiscal package."

The bottom line: Higher gas prices are expected to have a major impact. "We expect weak real consumption growth over the coming months," Goldman's economists say. They now forecast 1.5% consumption growth for 2026 (or 1.2% on a Q4/Q4 basis, which they say is well below the 1.8% consensus estimate), with particularly weak results for those in the bottom 20% of income earners. Or as the Goldman team says: "The very uncertain outlook for oil prices implies significant uncertainty around consumer spending, especially for lower-income households that spend a larger share of their budget on gasoline." And if oil prices stay higher for longer, the consumer spending outlook would be commensurately worse.

Fiscal News Roundup

Views and Analysis