Congress
Congress is on summer break. Funding ‘chaos’ awaits.
When the House and Senate return from their month-long August recess, lawmakers will have just four weeks to avert a government shutdown — and some kind of kick-the-can funding patch is all but guaranteed.
Before the Senate adjourned Saturday evening, the chamber passed the first bipartisan spending package of the year. But on the other side of the Capitol, House Republicans have yet to welcome government funding negotiations with Democrats, after spending the summer stiff-arming them by advancing bills with steep cuts and conservative mandates.
The mood on Capitol Hill already wasn’t ripe for a major bipartisan breakthrough this fall on government funding, given the Republican capitulation to President Donald Trump’s moves to undercut billions of dollars Congress has already approved. Now fiscal conservatives say House GOP leaders promised them no funding will be increased, while dozens of Republicans are demanding earmarks and Democrats are weighing ultimatums like re-upping Obamacare funding as a condition of passing legislation in September to keep federal operations afloat.
“It’s a lot of uncharted territory here in terms of the posture of the minority and the majority, and the president’s priorities,” Sen. Thom Tillis (R-N.C.) said in a brief interview. “If you like chaos, then you’re seeing a lot of it.”
Adding to the bedlam on Capitol Hill ahead of the Sept. 30 shutdown cliff, White House budget director Russ Vought is vocalizing plans to sabotage the bipartisan funding negotiations he openly scorns. His tool of choice could be to send more requests to claw back funding lawmakers previously enacted after reaching cross-party compromise.
Vought is privately strategizing with members of the House Freedom Caucus and the right flank of the Senate GOP conference, while Democrats and even some Republican senators warn such a move would poison the well before the Oct. 1 shutdown deadline.
“It’s hard to imagine someone being more disruptive of the appropriating process than the current OMB director,” Sen. Chris Coons (D-Del.), a top appropriator, said in an interview. “If he is determined to drive us into a partisan shutdown, he ought to just tell the country. In the meantime, on a bipartisan basis, the senators of the Appropriations Committee are continuing to try and do our jobs and keep the government open.”
The best-case scenario for lawmakers rooting for a bipartisan compromise is that the Senate’s passage of a three-bill package on Friday ends up spurring a deal with the House this fall. Then Congress could clear a hybrid bill that provides a full year of fresh funding for some agencies and runs the rest of the government on autopilot budgets for a few weeks or months, buying more time to wrap up the full slate of a dozen bills that fund the government each year.
The top Senate and House appropriators, Sen. Susan Collins of Maine and Rep. Tom Cole of Oklahoma, are expected to negotiate over the next month, and Senate Majority Leader John Thune said he will be in touch with Speaker Mike Johnson to prepare for the fall funding fight too.
GOP leaders are also talking with the White House. But nobody has locked in a government funding plan they can present to congressional Republicans for buy-in.
House conservatives would likely harangue Johnson if he agrees to go along with any package that doesn’t cut or at least freeze funding. They are also demanding that funding clawbacks are not counted toward topline spending reductions.
Rep. Chip Roy (R-Texas) said on social media last month that the “deal” to get House fiscal conservatives to support final passage of the GOP domestic policy megabill in July was that funding for the new fiscal year would be “at or below” current levels. “That is already negotiated,” insisted Roy, a member of the House Freedom Caucus.
The House and Senate are already endorsing drastically different funding levels in the appropriations bills they have been able to advance so far. The funding measures House Republicans rolled out earlier this summer would meet spending-cut demands by cleaving non-defense agencies by almost 6 percent overall and keeping the Pentagon’s budget flat. Senate lawmakers, on the other hand, have proposed $20 billion more for the military and at least modest funding increases for most non-defense agencies.
If House conservatives get their way in September, Senate Minority Leader Chuck Schumer will be under intense pressure from his base to threaten a government shutdown unless the GOP agrees to some concessions. Republicans need Democratic votes in the Senate for any legislation to clear the 60-vote procedural hurdle to move forward, and the New York Democrat already endured a political drubbing in March after helping advance a Republican funding bill days before the start of a shutdown he worried would end up empowering Trump.
“If we have to swallow a House-only radical Republican bill, that’s going to be a problem,” said Sen. Peter Welch (D-Vt.).
Schumer has to balance the desires of his progressive base with the demands of his more centrist flank. In a floor speech Saturday morning, he praised the Senate-passed funding package as “an example of how the funding process could work if the other side is willing to work in good faith, instead of listening all the time to Donald Trump and Russell Vought and the extreme right.” But he also warned, “the onus is on the Republican Majority … to ensure this process stays bipartisan in the fall.”
And least one member of his caucus said he’s not interested in Democrats playing hardball: Sen. John Fetterman (D-Pa.) has vowed, “I’m voting to keep the government open.”
In the meantime, Thune is already mulling how to pass a second tranche of funding bills. That next bundle could include some of the largest, and most contentious, appropriations measures containing money for the Pentagon, as well as dollars for key Democratic priorities like labor, education and health agencies. He is also predicting that the Senate bill will, on the whole, freeze or cut funding compared to current levels — a possibly winning pitch to his own fiscal hawks and those in the House.
Yet even with signs pointing to future conservative strong-arming, Senate Democrats are warily leaning into bipartisan funding negotiations after Republicans burned them last month by passing Trump’s request to claw back $9 billion from public broadcasting and foreign aid.
“We have been demanding bipartisanship, and we’ve been demanding to mark up bills,” said Sen. Brian Schatz (D-Hawaii), a top appropriator. “That’s not to say that Republicans have done everything right, or that we’re not still angry about various things. But when they behave well, I think it’s on us to reward them.”
Though Democrats are worried that any bipartisan agreement will be undermined by the Trump administration clawing back more funding, many are skeptical they could get Republicans to swear off approval of more rescissions packages as a condition of Democratic support.
“I think that is probably a bridge too far for them,” Sen. Mazie Hirono of Hawaii said.
Instead, Democrats are discussing how they might net more tangible wins, such as extending soon-to-expire health care subsidies that help millions of low- and middle-income Americans and are set to expire at the end of the year. Senate Democrats are going to use the summer recess to preview their messaging strategy, including holding health care events.
Congress’ fiscal conservatives are beginning to hone their strategy for demanding conditions too. Members of the House Freedom Caucus are now pushing to fund the government at current levels for a year and are willing to allow earmarks in the final package as a way to avoid a massive year-end spending package filled with extraneous items they would otherwise oppose. Those earmarks are a priority of the business-friendly Main Street Caucus and its 83 GOP members.
“We’ve been very clear with the speaker: An overwhelming majority of our members want community project funding in this budget,” Rep. Mike Flood (R-Neb.), the new chair of the Main Street Caucus, said in an interview.
Republicans who are typically reluctant to vote for a funding patch are now making it clear that the vehicle for funding the government — a continuing resolution or a long-term package — doesn’t matter as much as what concessions Republicans can extract.
“I think you better not call it a CR, let’s put it that way,” Rep. Rich McCormick (R-Ga.), who warned in March that he wouldn’t support another stopgap, said in a brief interview before leaving town for August recess. “It’s got to have some wins in it for us.”
Mia McCarthy and Meredith Lee Hill contributed to this report.
Congress
Democrats sue Trump administration over mail-in-voting order
Democratic Party leaders filed suit Wednesday to block President Donald Trump’s attempt to limit voting by mail ahead of the midterm elections.
Democrats argue that an executive order Trump signed at the White House on Tuesday, which creates an approved list of absentee voters among other actions, is an unconstitutional interference in the power of states to regulate elections.
Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries joined the Democratic National Committee, the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee and the Democratic Governors Association in suing to challenge the order.
“President Trump possesses no such authority to order such a sweeping change to American elections,” the suit argues.
The White House did not immediately respond to a request for a comment on the lawsuit, but Trump dismissed the possibility of legal challenges to his order at the signing ceremony for the order.
“I don’t know how it can be challenged. … You may find a rogue judge,” he told reporters in the Oval Office. “You get a lot of rogue judges, very bad, bad people, very bad judges. But that’s the only way that can be changed, and hopefully we’ll win an appeal.”
Trump’s executive order also threatens to withhold federal funds from states that don’t comply and directs the attorney general to investigate anyone who wrongfully distributes mail-in ballots.
It’s the latest escalation in Trump’s longstanding complaints about the way Americans vote as he pushes Congress to pass the GOP-backed SAVE America Act, which has cleared the House but faces an uphill battle in the Senate. He has falsely claimed on several occasions that voting by mail is uniquely vulnerable to voter fraud, despite the fact that he cast his own ballot by that method last week in a Florida congressional election.
Republican states have pushed ahead with their own plans to add citizenship requirements to voting laws, but the measures have also drawn swift legal challenges.
Democrats argued the executive order violates the First, Fourth, Fifth and Tenth Amendments and “dramatically exceeds his highly limited constitutional and statutory authority when it comes to regulating elections.” The lawsuit also argues that the Postal Service is being asked to go beyond its domain in building a list of eligible absentee voters.
Democratic attorneys general have been bracing for the possibility of the Trump administration interfering in this fall’s midterm elections, huddling in hotel conference rooms and over Zoom calls to war-game strategies to push back.
Congress
Hill staffers brace for their boss’s ‘TMZ moment’
TMZ has launched an effort to shame members of Congress into ending their recess early and funding the Department of Homeland Security — and many congressional aides are quietly delighting in the celebrity gossip site’s interest in covering Congress.
“I am super stoked,” said one Hill staffer granted anonymity to speak candidly. “I think a lot of offices, particularly ones who aren’t in major media markets, are in for a rude awakening.”
“My attitude is any new press that forces members to be sharper and for comms staffers to be more nimble is a good thing,” the staffer added.
Staffers whose bosses end up splashed across the infamous website are likely feeling less stoked about the spottings. Sen. Lindsey Graham (R-S.C.) was seen by a TMZ tipster at Disney World over the weekend, and Rep. Robert Garcia (D-Calif.) was caught on camera at a Las Vegas casino.
Garcia said he was visiting his father who lives in Las Vegas, while Graham followed up Tuesday with photos of himself in his home state.
The publication has been soliciting photos of lawmakers anywhere but Washington as the DHS impasse hurtles toward day 50. Other shots the site has obtained include Sen. Ted Cruz (R-Texas) at a Florida airport, Rep. Jared Moskowitz (D-Fla.) at his son’s basketball game and a slew of House Republicans — including Reps. Derrick Van Orden (R-Wis.), John McGuire (R-Va.) and David Rouzer (R-N.C.) — roaming around Scotland.
Van Orden said in a Wednesday X post that he was participating in “high level” meetings with the Irish government.
“I would like to thank @TMZ for pointing out that even though our US Senate colleagues can’t figure out how to vote to fund our entire government, and that the House voted 4 times to do so, that I will not stop working for the 3rd congressional district of Wisconsin and every American,” Van Orden said.
A second Hill staffer, also granted anonymity to speak candidly, said “there are definitely conversations on how to engage and prepare for your boss’s TMZ moment.”
While TMZ has long had a footprint in Washington, founder and executive producer Harvey Levin said in a statement Monday he is redoubling coverage of national political players — and said the ongoing DHS shutdown was an important moment to pounce.
“Last week, we interviewed a TSA worker who is struggling to survive without a paycheck, and it outraged us so much we wanted to use our platforms to show how Congress — Dems AND Republicans — have betrayed us,” Levin said. “We spontaneously came up with the idea to juxtapose members of Congress on their Spring Break against federal workers who are losing their homes, their cars, their livelihoods.”
“Short story — our D.C. presence will sometimes be fun, sometimes intensely serious,” he added.
Congress
How prediction markets landed in Congress’ crosshairs
Lawmakers are quickly coming to a realization: Odds are, Congress is going to have to do something about booming prediction markets.
The online platforms where people can bet on the outcomes of future events like elections, sports and the Oscars had already attracted attention in Washington as the industry garnered backing from Wall Street giants, Silicon Valley investors and even Donald Trump Jr.
That scrutiny has exploded in recent weeks, however, after unusual trading patterns around markets related to the U.S.-Israel war with Iran suggested possible insider profiteering. The result has been an uptick in legislation targeting the industry amid new questions about the policing of its major players.
At the center of the fight is a debate over who should regulate and tax transactions that take place on sites like Kalshi and Polymarket, which operate as financial exchanges but have become best known as sports and political betting platforms. The clash pits states and tribes against an increasingly powerful new industry that has won over key presidential appointees.
Lawmakers of both parties are also eyeing various ways to crack down on insider trading on the platforms — including by members of Congress themselves and their staffs.
“There seems to be a growing consensus that the status quo is unsustainable,” said Rep. Ritchie Torres, a New York Democrat who was an early entrant into Congress’ prediction market debate.
The platforms, once considered niche, are poised to get new scrutiny across Capitol Hill this year. Senate Commerce Committee members have discussed holding a hearing focused on the industry, according to four people granted anonymity to discuss the private conversations. The House Agriculture Committee, which oversees commodities trading, has been holding bipartisan briefings on the issue, with more expected.
Discussions about the industry largely haven’t reached the GOP leadership level on Capitol Hill, where bigger clashes such as the Department of Homeland Security funding fight have taken precedence. Asked about banning elected officials from trading on prediction markets, Senate Majority Leader John Thune said he “hadn’t thought about that” and said he’d “take a look at it.”
House Minority Leader Hakeem Jeffries — after referencing the markets’ high odds that Democrats would win the midterms — told reporters last week it was “reasonable for us to take a look at what can be done in this space and to try to find a bipartisan path forward.”
Washington is getting a crash course on the prediction markets just as the companies have broken out from obscurity to become one of the hottest areas of investment — thanks in part to President Donald Trump, whose regulators have allowed them to offer a larger menu of wagers to their customers.
Kalshi and Polymarket, which operate the largest prediction market platforms, have recently snagged mammoth valuations and inked partnership deals with everyone from BLN and CNBC to Major League Baseball. Kalshi is federally regulated by the Commodity Futures Trading Commission, a small but powerful financial watchdog. Polymarket is best known for its larger offshore prediction market, which is not regulated by the CFTC, but the company is also pushing into the U.S. with a separate, regulated venue.
Congress’ interest is rising as the fight over industry regulation plays out in the courts. State officials from Arizona to Massachusetts have argued that the prediction markets should be subject to the same rules as traditional sportsbooks and casinos. But the companies have rejected those claims, arguing that they are exclusively overseen by the CFTC. Attorneys following the legal fight expect it to eventually reach the Supreme Court.
A bipartisan group of lawmakers is backing the states’ push to regulate the platforms. Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah) have introduced legislation that would ban CFTC-regulated entities from offering products that resemble sports betting or casino games.
They are echoing concerns from state and tribal officials who say prediction markets are threatening critical tax revenue and usurping state-level consumer protections for sports bettors. Notably, Senate Agriculture Chair John Boozman (R-Ark.), whose panel oversees the CFTC, has expressed concerns about sports betting on the sites.
“What I would like to see is an economic purpose in regulated derivatives markets,” said Rep. Bill Foster (D-Ill.). “Anything that has no economic purpose, I think, should be taxed like gambling, regulated like gambling.”
The prediction market companies are fighting back, saying that the so-called events contracts they offer are sophisticated financial products — not a form of gambling. They have key allies in the fight, including Trump’s CFTC chair, Mike Selig — who, like the companies, says the agency has “exclusive jurisdiction” over prediction markets. GOP senators including Dave McCormick of Pennsylvania and Bill Hagerty of Tennessee have applauded Selig’s posture on the issue.
But esoteric arguments about the nature of gambling have only gotten so much traction in Congress. What has instead galvanized public attention is the specter of insider trading — including possible profiteering from government officials with foreknowledge of geopolitical events such as the U.S. military intervention in Venezuela or the administration’s strikes in Iran.
Possible insider bets related to the war in Iran have spurred several new bills. Reps. Nikki Budzinski (D-Ill.) and Adrian Smith (R-Neb.) introduced bipartisan legislation last week to ban members of Congress and executive branch officials from participating in prediction markets related to policy decisions and political events.
That bill has attracted support from a handful of House Democratic and GOP lawmakers, and a bipartisan group introduced similar legislation in the Senate. The Coalition for Prediction Markets, which has Kalshi as a member, endorsed the legislation soon after introduction.
But there are even broader efforts afoot. Rep. Alexandria Ocasio-Cortez (D-N.Y.) has called for stricter regulations on prediction markets, comparing them to the tobacco industry. And Sen. Chris Murphy (D-Conn.) and Rep. Greg Casar (D-Texas) are aiming to entirely ban a wide range of prediction market trading, including anything predicated on government actions or any event “where an individual knows or controls the outcome.”
The CFTC has already promised to go after insider trading on the prediction markets, and both Kalshi and Polymarket recently unveiled new measures designed to head off the improper use of inside information on their platforms.
Kalshi also recently rolled out ads across Washington highlighting that it blocks insider trading on its platform and bans trading directly related to war and deaths. Polymarket has also expanded its presence in Washington — most notably with a pop-up bar on K Street.
“Prediction markets are an emerging technology, yes, but they’re not all the same, and we want to highlight those big distinctions,” Kalshi spokesperson Elisabeth Diana said. A Polymarket spokesperson declined to comment.
If Congress does take action on the issue, it will end up with the Agriculture panels, currently led by Boozman in the Senate and Rep. G.T. Thompson (R-Pa.) in the House. Thompson promised “bipartisan hearings and member meetings” on prediction markets in a recent interview.
“It definitely is a focus,” he said. “I don’t know what the conclusion will be.”
But Republicans could be put in a tough spot as prediction market legislation gains momentum. The Trump family has had close ties to prediction markets: Donald Trump Jr. is an adviser to Kalshi and Polymarket, and Trump’s social media company announced last year plans to create Truth-Predict, a new prediction market service.
Some Democrats are skeptical Republicans will actually move to address the issue given the Trump family’s ties and their overall friendliness to the firms.
“I don’t think the Republican-led House or Senate will seriously take this on,” Sen. Jeff Merkley of Oregon said.
Jordain Carney contributed to this report.
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