Senate Democrats Reject Republican Bill to Fund DHS

On Tuesday, Republicans offered a plan to fund DHS and end the partial government shutdown. It would fund all of DHS except ICE. Once the bill passes and is signed into law, Republicans would then fund ICE using the budget reconciliation procedure. That bill would also include the SAVE America Act, which would disenfranchise 21 million Americans who don't have proof of citizenship and also ban trans girls from girls sports. In this way they could theoretically get full funding for the Department without making any concessions about reining in ICE. Not entirely surprisingly, Democrats have rejected the Republicans' kind offer. Senate Minority Leader Chuck Schumer (D-NY) said: "You know what we've called for all along. I'm not going to get into specifics but we need strong, strong reforms and we need to rein in ICE. We've been consistent in what we've been asking for from the get-go."

Schumer said the Democrats would come with a counteroffer. He promised that it would contain significant reform elements. However, the Democratic counteroffer is sure to run into trouble. Sen. Patty Murray (D-WA), ranking member of the Senate Appropriations Committee, said that the negotiations have been made difficult by Donald Trump "making new and unreasonable demands over social media." By this she meant Trump's insistence that he would not sign any funding bill until the House and Senate had approved the SAVE America Act, one way or another.

While it seems unlikely the SAVE America Act will pass Congress, red states are busy implementing state versions of it, in some cases using ballot measures. Six states are likely to vote on it this year. In West Virginia, for example, the ballot measure would change the state's Constitution from "citizens of the state shall be entitled to vote" to "only citizens of the state who are citizens of the United States are entitled to vote." Of course, this is completely unnecessary since non-citizens are already forbidden from voting in federal or state elections. Other states definitely holding a vote this year are Arkansas, Kansas and South Dakota. Initiatives may also make it in Alaska, Arizona and Michigan.

Why is this even an issue? It could be that Republicans are planning to try to increase turnout by making the midterms about undocumented immigrants voting rather than about affordability. Distracting the voters with some shiny object like this is a long-standing Republican ploy. During the presidency of George W. Bush, Karl Rove used ballot initiatives banning same-sex marriage very effectively to increase Republican turnout. It has worked well in the past, so why not try again?

When the Democrats offer their proposal, which will contain provisions to rein in ICE, Republicans will reject it. When will this finally end? Our guess is that as the situation at airports gets worse and worse, with more TSA agents calling in "sick" (actually working part-time jobs to put food on the table and pay the rent), eventually constituent pressure will grow so great that some kind of bill will pass, possibly reining in ICE to some extent, but not everything Democrats want. But it could be a while. (V)

Republicans' Dream of Another Reconciliation Bill Is Probably a Pipe Dream

Not all Republicans are on board with their own plan for funding the easy stuff via the regular order and the stuff the Democrats hate via a reconciliation bill. Sen. Rick Scott (R-FL) has said that the Senate parliamentarian, Elizabeth MacDonough, would never approve stuffing the SAVE America Act in a reconciliation bill because it is not primarily about the budget. This is a requirement (called the Byrd bath) for reconciliation bills. In the past, MacDonough has rejected attempts by both parties to pass reconciliation bills containing nonbudget provisions. For example, in 2021, Democrats attempted to give Dreamers permanent status in a pandemic-related reconciliation bill and MacDonough said: "Nope!"

Scott also noted that getting the BBB through was a huge struggle because each senator wanted to throw in his or her pet projects and the only reason it passed was the uniform support within the caucus for tax cuts for millionaires (which includes nearly all the Republican senators).

Sen. Thom Tillis (R-NC) said a reconciliation bill might be possible, but the key would be to keep it as narrow as possible. He is against what he calls "scope creep." By this he meant if the only thing in the bill is funding ICE, it might pass, but if changing election laws and throwing in girls sports for good measure, it wouldn't have the votes, even in the unlikely event that Parliamentarian approved.

Sen. Susan Collins (R-ME), who is facing a tough reelection bid, said that reconciliation is not a "good approach." Sen. Lisa Murkowski (R-AK) was asked what she thought about another reconciliation bill and she said: "You know me. I'm not a big fan of reconciliation."

Although it takes only a majority to pass a reconciliation bill, the Senate currently has 53 Republicans, so a bill could tolerate only three defections, in which case President of the Senate J.D. Vance would break the tie. But with Scott, Tillis, Collins, and Murkowski skeptical of a reconciliation bill, that sounds a lot like four votes against it.

In addition, Republicans currently have an ultra-thin 218-214 House majority, so getting anything through the House will also be tricky. This is especially problematic as conservatives have promised/threatened to cut billions of dollars from social safety net, a change moderates don't want to have to defend in the fall.

The bottom line here is that another reconciliation bill is very unlikely and the only way to fund all of DHS is for the parties to come to some agreement both of them can live with, however grudgingly. (V)

What Happens If the Disruption in the Oil Market Continues for Months or More?

On his podcast, Ezra Klein interviewed global energy expert Jason Bordoff about what would happen if the Strait of Hormuz stayed closed for a long time, keeping 20% of the world's oil and gas (20 million barrels/day) from the market. Here is a summary of what Bordoff had to say.

To start with, it is a very asymmetric situation, in which a weak country, like Iran, can keep the Strait closed with cheap drones. And there is nothing that multiple countries with huge powerful navies can do about it, at least short of occupying the country, finding all the drones and drone factories and destroying them. All it takes is for one tanker to be destroyed by a drone and the insurance companies will cancel coverage and without insurance, no oil company will put a $100-million tanker at risk.

Meanwhile, the oil and gas producers are running out of space to store their products and will soon have to shut down production, which could take weeks or months to restart once the Strait is safe. Currently, many industries around the world are running on inventory. In some cases, it takes 2-3 weeks or more for a tanker to get to its destination. That means that some tankers that passed through the Strait on Feb. 27 may still be underway or in the process of unloading their cargo. But at a certain point, all pre-Feb. 28 inventory will be used up. Then the shortfall of 20 million barrels a day will hit.

The effect is nonlinear. It is not the case that a 20% shortfall means a 20% price increase. Countries and companies that can afford it will bid the price up to get what they need. Oil at $150 or $200 per barrel or more is realistic in a long-term shutdown of the Strait. The equilibrium price is the one that eliminates demand (in the sense economists mean it) for 20 million barrels a day. That could be quite high. At a microeconomic level, how much would the price of gas have to go up before someone would decide not to go to work? Would someone who needs, say, 40 gallons/mo. to commute to work, stop going to work at $6/gal.? At $8/gal.? At $10/gal.? For people with public transportation options, there is a point at which they would switch, but many people don't have that option.

At a macroeconomic level, at what price point would electricity producers decide to shut down and not produce any electricity for millions of not-so-happy customers? It is probably pretty high, so each power company will just keep raising its bids to get enough, and that "auction" could drive prices to unheard of levels. Ditto, entire countries bidding against each other. China is not going to shut down its industry and will pay whatever it has to in order to keep the lights on. The nonlinearity comes in because demand is extremely inelastic and none of the customers want to do with less oil or gas.

A factor that is rarely discussed is that oil and natural gas are the feedstocks for many products besides gasoline. Think: diesel, jet fuel, fertilizer, petrochemicals, even some pharmaceuticals. If jet fuel goes up too much, airlines will simply cancel their least-profitable flights, which may cut off many smaller cities and will certainly affect commerce in many ways. Remember, the airlines transport a lot of cargo, including perishable food and medicine, not just people.

Although the U.S. is a net exporter of oil, that doesn't make it immune to a long-time worldwide shortage. If an oil company has a long-term contract to deliver some product to another country, it will be very hesitant to break the contract and use its oil domestically. Not only would it get sued, but in the long-run it would lose business permanently as foreign buyers would not see it as a reliable supplier. Additionally, the effects of a shortage would not be uniform. Oil companies and their stockholders would make out like bandits, but consumers and some industries would be hit very hard. From a GDP standpoint, having consumers and industry pay $[X] billion/day more and having the oil companies getting $[X] billion/day more revenue (with no extra work) is neutral, but from a political standpoint, it is not neutral at all.

Classic capitalism says that if the price of something goes up, companies will produce more of it and new companies will spring up to produce it. That is not true of oil because huge investments are needed to bring oil wells online and environmental regulations can make the process take years. Also, oil is not found everywhere. Japan can't suddenly become self-sufficient in oil because there is almost no oil in the ground there. The only country with excess capacity that could ramp up production quickly is Saudi Arabia, But it exports most of its oil via the Strait of Hormuz. It does have a pipeline to the Red Sea port of Yanbu, but that has a capacity of only 7 million barrels/day. And to get to Yanbu, tankers would have to pass through the Bab al-Mandab Strait, which is only 10 miles wide and bordered by Djibouti on the west and Yemen on the east.

The largest ethnic group in Djibouti is the Somalis, a group that Trump dumps on daily. The U.S. does have a military base in Djibouti and USAID provided a lot of medical and other help to the country until Elon Musk and his DOGEys didn't see any point to providing aid to countries whose name they couldn't pronounce. Saudi Arabia has been bombing the hell out of Yemen for 12 years. Trading the Strait of Hormuz for the Bab al-Mandab Strait is probably not a winner.

If the U.S. would just get rid of the sanctions, Russia could up its oil exports easily. Then it could help Iran more and conquer Ukraine. Also, not the best idea.

China imports about half its oil through the Strait of Hormuz, but it still gets a lot of its electric power from (domestic) coal. It is electrifying at a dizzying pace. Currently half the cars sold in China are electric (vs. 6% in Q4 2025 for the U.S.). China also has a stranglehold on the green-energy world, from magnets to solar panels to rare earths. Joe Biden's Inflation Reduction Act was a small step to making the U.S. more competitive, but Trump killed it all off. He sees the U.S. as a future petrostate, like Saudi Arabia.

All in all, a long-term shutdown of the Strait of Hormuz would probably lead to a worldwide depression and inflation at the same time. The folks selling those Donald Trump "I Did That" stickers for gas pumps will make a killing, though. (V)

Missouri Supreme Court Upholds New Map

During the midcycle redistricting festival, Missouri redrew its House map to change the balance from 6R, 2D to 7R, 1D. Naturally that led to lawsuits. On Tuesday, the Missouri Supreme Court ruled that the state Constitution required the legislature to redraw the map after every census but did not prohibit it from redrawing at additional times, as it wished.

The court decision was 4-3, with all four judges in the majority having been appointed by Republican governors. One Republican sided with the two Democratic appointees in the minority. The key word in the case was "when." The sentence in question in the state Constitution directs the legislature to draw new maps "when ... the census of 1950 and each census thereafter is certified by the governor." The legal opinion said: "Simply put, 'when' does not mean 'only when.' "

The new map broke up the D+12 MO-05 district of Rep. Emanuel Cleaver and absorbed enough Democrats in Kansas City into surrounding districts to make it virtually impossible for him to win anywhere. The MO-01 district of Wesley Bell in St. Louis is D+29, so the legislators tried to stuff as many Democrats into it as they could.

Expecting this decision, Democrats pursued another route as well. They are trying to put a referendum to overturn the new map on the ballot. State officials are doing their absolute damndest to thwart this. However, on Monday, the group People Not Politicians announced that the secretary of state's office conceded that they had enough valid signatures to force a referendum. Secretary of State Denny Hoskins (R) has until July to decide when to hold it. Here are the 691 boxes of petitions and a petition-smelling dog. The dog has apparently been trained to sniff out invalid signatures:

The Missouri secretary of state gets to write the summaries of referendums that appear on the ballot. Naturally he did his best to discourage people from voting for this one. The supporters went to court again and won. The new language, written by the judge, is neutral: "Do the people of the state of Missouri approve the act of the General Assembly entitled 'House Bill No. 1 (2025 Second Extraordinary Session),' which repeals Missouri's congressional plan, and replaces it with new congressional boundaries that keep more cities and counties intact and are more compact?"

The next battle is whether the old map or the new map will be used for this year's elections. (V)

Trump's BBB Is Hurting Red States' Budgets

The BBB that Congress passed last year is starting to be felt—by red states. And it is making their budget problems worse. The new requirements for Medicaid and SNAP are costing some states as much as $450 million this year, squeezing their already-tight budgets. This is forcing them to make cuts in services, many of which will not be popular.

National Republicans were already facing blowback on the bill, which cut many programs for ordinary Americans in order to provide a big tax cut for millionaires and billionaires. Now state politicians are having to make unpopular decisions that they will have to defend in November. Idaho state Sen. Jim Guthrie (R) said: "The feedback I'm hearing from citizens is that extra few bucks on their [return] at the end of the year, because of the taxes they didn't have to pay, comes secondary to wanting us to take care of the things that government needs to be invested in. Which is your infrastructure and your roads and bridges and schools and also your Medicaid population." In other words, the BBB didn't bother Guthrie so much because he couldn't be blamed for it. Now that he will have to vote on state-level cuts forced by the BBB, he can be blamed for it. He doesn't like that.

States have some flexibility here. For example, workers who get tips or overtime pay don't have to pay federal income tax on them (subject to many restrictions). However, states don't have to give workers the same break on state income taxes, and some are not doing so. Nebraska, for example, is continuing to tax tips and overtime as it had been doing. Indiana is following the feds, but that is going to cost the state $251 million in revenue. And unlike the federal government, states have to balance their budgets, so Indiana will have to find $251 million in spending to cut. The people on the receiving end of that will probably not like it. Missouri, for its part, is working on cutting addiction services and aid to people with disabilities. The general principle is to find programs that mostly affect people who vote Democratic anyway and cut them.

Iowa is taking a somewhat different approach. The state House just passed a bill increasing taxes on HMOs (Health Maintenance Organizations). The problem is that HMOs are popular in Iowa and the result will probably be cuts in services, complete with an explanation why they are being cut and whose fault that is. (V)

Republicans May Hold a National Convention in Dallas in September

Republicans are desperate to do something to generate some enthusiasm among their voters and get them to the polls in November. One plan is to hold a midterm national convention and hope that their voters watch it. Since they can't guarantee that the networks will cover it, people may have to watch it on some form of streaming, which will probably reduce the audience considerably. The location will probably be Dallas. This could be a good choice with a contentious Senate election and some competitive House races as well. The goal would be to give some House and Senate candidates in tight races a chance to show off their stuff. The most likely time is in September, just before early voting starts.

The Democrats considered also holding a convention but the DNC killed the plan for financial reasons. The DNC has $15 million in the bank and $17 million in debt. In contrast, the RNC has $102 million in the bank and no debt. It can afford to blow tens of millions on a convention.

The RNC convention won't be a real convention for several reasons. First, the attendees won't be delegates elected in primaries. They will be party regulars chosen by the state parties. Second, the convention has no legitimate purpose. In presidential years, the national convention picks the presidential and vice presidential nominees. This convention won't pick anyone or do anything. It will just be a long series of speeches by politicians the RNC wants to showcase. Given that the convention means nothing and will probably be viewed only by strong partisans who were going to vote anyway (and probably not so many of them), one can ask: "What's the point of it?" But with $102 million in the bank, the RNC doesn't mind throwing a few tens of millions away for a pointless party. It could be that the National Association of Balloon Manufacturers' big donation to the RNC did the trick. And, if nothing else, Kid Rock can use the work. (V)

Why Do Democrats Insist on Taking Positions the Voters Hate?

Thomas Edsall's always interesting column this week addresses the issue of why Democrats often take stands that costs them many votes and sometimes even the election. For example, Kamala Harris' position on the trans issue clearly weakened her and may have even cost her the election. Donald Trukp's campaign manager, Susie Wiles, thought this issue was so potent that she ran $65 million in ads about it. She is very experienced and would never have done that without a lot of polling data backing her up.

The 2024 election was not a teaching moment for Democrats. In Jan. 2025, the House took up a bill to ban transwomen from being on women's sports teams and all but two Democrats voted against the bill, despite a huge majority of voters being for it. They could easily have defended a vote for the bill by saying they were protecting women from unfair competition from bigger, faster, and stronger men. Protecting women is why sports teams are gendered in the first place.

Why do Democrats do something that hurts them so much in elections? One of the reasons is that small donors tend to prefer extreme candidates with extreme positions. They don't like the mushy middle. The donors tend to reflexively support every minority group, no matter how small and how unpopular with the voters.

Another factor is the extreme gerrymandering of House districts. The Cook Political Report rates 399 of the 435 districts as not competitive. That means the only threat a sitting Democratic representative has is a primary, generally someone more extreme than the incumbent, as it is tough for a moderate to generate a lot of excitement against an incumbent in a D+10 district. Consequently many Democrats are worried about their left flank in a primary, not a Republican in a general election. But when all Democrats do the same thing, it becomes part of the party's brand, including in the few competitive races that there are. And there it hurts.

The Senate is a gerrymander of the whole country, but it is not as extreme as the House. Still, a Democrat in California, or Illinois, or New York need not worry about losing a general election, only losing a primary to someone more extreme than himself or herself. Senate candidates then behave accordingly.

There is plenty of data to support this view. For example, this paper shows that in competitive races, being a moderate helps, but in all other races it hurts. Partisans in both parties prefer more extreme positions.

State legislative races are even worse than House races. In 2022, 41% of seats weren't even contested. That is, only the incumbent (and possibly some primary challenger) filed to run. The nonincumbent party didn't even bother to field a candidate. What's the point of being a moderate if you will be the only candidate on the November ballot?

Another factor at work here is the demographic changes taking place in the Democratic Party. The typical Democrat used to be a blue-collar white man with a working class job, like a construction worker or a bus driver. These people were very sensitive to economic issues, like minimum wage laws and fights to unionize companies. Now the Party is packed with affluent, college-educated liberals who don't care as much about wages or unions. They have the luxury of focusing on previously irrelevant issues like who plays on which sports team, who uses which bathroom, and which prisons trans criminals are sent to. In FDR's time, it would be unthinkable for Democrats to focus on stuff like that. Bread-and-butter issues mattered the most. Not as much anymore.

A new centrist Democratic think tank, the Searchlight Institute, has called for Democrats to support protecting trans people in employment, housing, health care, and access to credit (issues that are popular with voters), but to downplay the contentious stuff. They know that even liberal women may support a trans woman's right to get a job, but still don't want her in the locker room at their gym. It doesn't have to be all or nothing. The problem is that if all the Democrats in noncompetitive races are saying the same thing, that becomes the Party's toxic brand with voters and then they are stuck with it in competitive races. To win elections, that needs to change.

While Edsall's column this week is focused on trans issues, there are plenty of other issues where the Democrats are not on the same page as the voters. These include affirmative action, basing college admission in part on race, giving Black small business owners priority for loans and grants over white ones, teaching LGBTQ themes in elementary schools, and welcoming asylum seekers. In 2020 in California, there was a ballot initiative to reverse a constitutional ban on race-conscious college admissions and thus allow race to be a legal factor in admissions decisions. Every major Democrat in the state supported the initiative, including the governor, both senators, the mayors of San Francisco and Los Angeles, and Speaker Emerita Nancy Pelosi. The only people against it were the voters. It got 43% of the vote and lost. If popular incumbent Democrats can't convince voters in a very blue state, what chance do nonincumbents have riding this kind of issue to victory in swing districts and states where voters see the Democrats as "weak and woke"? If Democrats are with Henry Clay and would rather be right than be president, fine, but then they have no basis for complaining when somebody else gets to be wrong and president. (V)

Mayor and City Council Members in Oklahoma Face Recall over Data Center

Data centers (especially for AI) have become very unpopular. First, because AI threatens many jobs. Second, because data centers use massive amounts of electricity and water, can harm local property values, and are ugly and look out of place everywhere. For a lot of voters, they see little to no value in them (especially if they are nearby) and a lot of harm in them. That is starting to become very political and is one of the few issues Democratic and Republican voters agree on.

This hatred of data centers has become an issue in an unexpected place: Oklahoma. There the city council of Sand Springs (Pop. 19,900), a suburb of Tulsa, welcomed a Google data center. Two weeks later a group of local residents marched into city hall with the paperwork for a ballot initiative to recall the mayor and every member of the city council. They also filed a lawsuit. They did not want the data center, no matter what Google promised. So far, they have half the signatures needed to put the measure on the ballot. If small towns in deep-red Oklahoma are now up in arms about data centers, that should be a warning to the tech industry. Recall petitions are also being circulated in several other states.

The council was well aware of Google's plans. The land Google purchased was zoned for agriculture, so the company had to ask for it to be rezoned industrial, which the council did. That is what triggered the recall effort. One of the opponents of the data center is Rick Plummer, whose 165-acre quarter horse ranch is only 300 feet from where the data center will be. He is worried that construction and sound from the data center will spook his horses. A local real estate agent told him to be prepared for his property to go down in value by seven figures. Locals are putting up yard signs opposing the data center.

Google is fighting back. It offered a $250,000 donation to the local volunteer fire department. However, the department refused it, even though it is more than its annual budget. The people in it value their peace and quiet more than they value the money. (V)

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