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OUR PERSPECTIVES

4 Simmering Issues to Watch 

There are plenty of issues that Republicans, Democrats, and the White House will never align around.  But there are a handful of emerging issues that could further disrupt the landscape in DC, add political risk to policymakers, and even create political opportunity for some:

 

Fed Chairman Powell:  There is a growing echo chamber around the President’s less-than-discreet messaging campaign around the Chairman of the Federal Reserve. MAGA loyalists, Republican policymakers, and senior Administration officials have pushed that message forward, and it is getting louder by the day.  Should the Chairman be pushed out by the White House, the response by Democrats will be significant, and the economic response uncertain.  If current messaging transforms to reality, the path forward is somewhat unknown, at least in the short term. 

 

The Rescissions Package:  Senate Republicans just took a tough vote on the One Big Beautiful Bill.  Just a week later, they are being asked to rescind $9.4 billion in funding, some of which is for fairly popular and successful programs.  Moreover, it would be a stamp of approval for the work of DOGE, which comes with various levels of support and disapproval by constituents back home.  This is significant because if it does pass (and it would need to before July 18), it will open the door to more of these rescissions down the road.  This could be a moment of Republican independence or one of Republican alignment - either brings some risk. 

 

New Tariffs:  Polling overwhelmingly shows concern for broadly increasing tariffs. The latest tariff announcements seem to have some level of flexibility built in, although that has yet to be proven.  If the higher tariffs stand, policymakers will spend the summer and Fall being forced to talk tariffs…something they do not want to do given that they had nothing to do with creating them.  Republicans are in an awkward position here because many of them have concerns about high tariff rates.  Democrats are in an awkward position here because many support tariffs, as do many of their allies (including unions).  The complexity here is deeply rooted in Congress only playing a spectator role, but owning all of the fallout.  

 

Funding Bills:  As the House and Senate have kicked off the annual appropriations process, it is hard to ignore the September 30th deadline, which will likely require a continuing resolution (and Democratic support).  Many promises were made during the last funding cycle around many aspects of this process that seem tough (if not impossible) given the political climate and overall growing divide between Republicans and Democrats (and influential groups within each).  In a miracle scenario, both sides come together to pass a funding package at the end of the year…in a nightmare scenario, the government shuts down.  Stakes are high here, and this will be a big opportunity for Democrats to leverage the moment.  

 

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