Washington Update - April 6
President Donald Trump addressed the nation Wednesday, promising a quick end of the U.S.-Israel war on Iran, after bombing them “back to the Stone Ages.” He said the Strait of Hormuz would then open naturally, ending a global energy and agricultural crisis spawned by the war. Markets responded negatively to the speech, with the spot price for Brent crude oil rising to over $141 per barrel, the highest since 2008.
President Trump based his outlook in part on U.S. and Israel having destroyed Iranian air defenses, a miscalculation demonstrated Friday when Iranians shot down two American fighter jets. Observers suggest that with the Revolutionary Guards in control, the country is capable of withstanding the military onslaught and inflicting chaos globally – making an end to war in two weeks seem like another miscalculation.
In an unusual pro forma session, the Senate on Thursday again passed its appropriation to fund the Department of Homeland Security, without new money for immigration enforcement, that the House had rejected. Reversing course, House Speaker Mike Johnson has promised to advance the legislation for President Trump’s signature but faces a revolt among his Republican caucus.
The situation bodes ill for the bipartisan appropriations process. The DHS funding plan anticipates funding immigration enforcement through the partisan reconciliation process, excluding Democrats. It could also be the vehicle for a $200 billion supplemental spending package for the Iran war.
On Friday, the White House published outlines of its 2027 budget proposal to boost defense spending by 42 percent and cut domestic programs by 10 percent. Analysts say the budget relies on wishful thinking and generous economic assumptions while doing little to rein in the $39 trillion national debt.
While inflation increases as a result of the war, the economy added 178,000 jobs in March, pointing again to no change in interest rates by the Federal Reserve.
