Washington Update - June 8

House Republicans are feeling more hopeful about their prospects in the mid-term elections. Following a series of U.S. Supreme Court decisions, Republicans have emerged the victors in the 2026 redistricting initiated by President Donald Trump. Republicans probably added 10 House seats in the November elections if redrawn voting districts perform as intended. To keep their majority, they would need to win about one-third of the most contested seats and keep more districts out of the vulnerable category.

Senate Republicans, lacking a redistricting windfall, are more worried about the political environment, despite flawed Democratic nominees in states that should favor Republicans.

The two outlooks are evidenced in both muscling important legislation through the floor and giving the most endangered Republican incumbents some grace to vote against the party on less important proposals.

Last week, Republican senators passed partisan immigration enforcement funding without reforms or limits on the President’s $1.776 billion weaponization fund – taking the Administration’s word that legislative limits are unnecessary. The House passed a partisan Agriculture appropriations bill, while Republican support enabled approval of a War Powers Resolution on Iran that lacks an enforcement mechanism and the Ukraine Support Act, which has an uncertain future in the Senate.

Part of the House Republican hope is based on the economy: payrolls grew by 172,000 in May, keeping unemployment at 4.3 percent.

The political atmosphere is influenced by an unpopular President that would prove a drag on Republican candidates if the election were today. A stronger labor market makes interest rate cuts unlikely, and U.S. Treasury bond yields have been climbing – a problem for the $8 trillion in bonds that will rollover this year. Although employment is growing, inflation is taking a larger share of paychecks, making real wages shrink.

With Iran war talks inconclusive, inflation is likely to remain sticky, probably the greatest political liability for Republicans.