Washington Update - February 16

When appropriations lapsed for much of government in October, lawmakers and President Donald Trump engaged in angry blame-placing. Appropriations lapsed for the Department of Homeland Security Saturday without protests from Congress or the President. Action to restore the department’s funding is unlikely before President Trump’s State of the Union address scheduled for February 24.

The quiet may reflect sincere negotiations between Democrats and the White House as the parties exchange offers, or it may be neither side has any idea what compromise is politically achievable to end the stand-off.

While Senators wrestled with shutdown politics, Representatives voted to overturn the President’s tariffs on Canada and passed legislation requiring voters to prove citizenship at registration.

The tariff setback reflects President Trump’s dwindling political capital. His ability to persuade Congress to support his policies relies in part on public support – the more popular a president is, the more likely Congress will back his policies. President Trump’s job approval has declined to around 40 percent among all voters and about 30 percent among independents who will have an outsized role deciding the November mid-term elections.

Unlike his predecessors, President Trump’s theory of governance emphasizes executive action, not passing laws, making comparisons with other presidents’ use of political capital difficult. So far, the theory seems to have misfired with few first-year achievements likely to endure, notwithstanding his budget reconciliation bill. Many of his executive actions, from spending cuts to birthright citizenship, have been stymied in courts. His tariff policies are pending Supreme Court review, leading Speaker Mike Johnson to plead with colleagues last week to let the judicial and executive branches work it out – despite the Constitution’s assignment of tariff authority exclusively to Congress.

Economic data last week shows inflation is slowly cooling while the labor market remains steady, suggesting the Federal Reserve will continue its wait-and-see approach to interest rates.