— President Donald Trump's pick for fed chair is in but don't expect a speedy nomination process.
— The White House's demand for a massive hike in defense spending faces political and budget obstacles.
— The Treasury is working on specific licenses for oil companies that want to work in Venezuela. |
Agriculture— Farm bill path forward: House Agriculture Committee Republicans are moving forward with plans for legislation to address industry priorities that weren’t included in last year’s massive GOP reconciliation package.
Chair G.T. Thompson (R-Pa.) has tentatively scheduled a farm bill markup for the week of Feb. 23. The text hasn’t been formally introduced, but it is expected to be largely similar to the version that the committee advanced in May 2024. It will be updated to incorporate changes made in the One Big Beautiful Bill Act.
Committee staff is awaiting cost estimates from the Congressional Budget Office, which could delay the markup.
It’s not clear how willing Democrats will be to advance the legislation, as many are still angry about Republicans’ unilateral cuts to the Supplemental Nutrition Assistance Program in the OBBBA. Some Democrats say they won’t come to the table unless Republicans consider undoing SNAP cuts. GOP lawmakers say that is a non-starter.
— Farm aid incoming: The Trump administration’s $11 billion in aid for major commodity producers is expected to be doled out by the end of February, Agriculture Secretary Brooke Rollins pledged in December.
That money will be allocated to producers of row crops like corn, soybeans, wheat, rice and cotton. USDA announced payment rates at the end of December — with shares going to rice and cotton producers — prompting other agriculture groups to ask for more aid to help farmers stay afloat.
Another $1 billion has been reserved for growers of fruits, vegetables and other so-called specialty crops, as well as other commodities like sugar. USDA has not announced payment rates or a timeline for distributing that money, and specialty crop producers are publicly lobbying for at least another $5 billion this year.
— Another round of farm aid: As USDA distributes the first round of farm aid, Capitol Hill Republicans are responding to the agriculture industry’s pressure for more economic relief.
Senate Agriculture Chair John Boozman (R-Ark.) and Sen. John Hoeven (R-N.D.), who chairs the Senate Appropriations Ag-FDA subcommittee, have put together a plan for a $15 billion farm aid package this spring. They unsuccessfully pushed to include that aid in January’s funding bills and are now looking to pass a Senate-led supplemental appropriations package in February or March.
The second tranche of farm aid would include money designated for specialty crop producers. Thompson said he would also like to include money for producers of forestry and lumber products in the plan.
Lawmakers looking to pass a supplemental appropriations package face long odds this Congress, as leaders have struggled to get support for spending bills in regular order — especially from fiscal hawks who are unlikely to support further subsidies for farmers.
— Ongoing ethanol talks: A congressional working group co-chaired by Reps. Randy Feenstra (R-Iowa) and Stephanie Bice (R-Okla.) is working to draft an energy deal to allow year-round E15 fuel sales while incorporating oil industry interests, after Republicans failed to get the provision included in the January government funding package.
E15 backers believe they’ll get a vote on ethanol policy by late February. President Trump has called on Congress to resolve differences on the issue and finalize an agreement that would be a boon for struggling corn farmers ahead of the midterm elections.
Some oil companies and refiners remain concerned about allowing increased ethanol sales, and lawmakers from big oil states could block the plan. — Grace Yarrow |
Trade— Tariff threats: President Trump backed away from promised tariffs over Greenland last month, reigniting the TACO taunts (for Trump Always Chickens Out).
But that hasn’t stopped the president from wielding the threat of tariffs against multiple other countries in the ensuing days.
On Jan. 26, Trump posted on Truth Social that he will raise duties on South Korea because its legislature hasn’t passed legislation holding up its end of a trade deal struck over the summer. Three days later, he warned Canada that he will impose a 50 percent tariff on Canadian aircraft sold into the U.S. unless its government certifies the sale of Gulfstream jets. And he signed an order declaring a national emergency over Cuba, which could ultimately allow the U.S. to raise tariffs on Mexico over its sale of oil to the communist island.
The White House has not move forward with the new tariff hikes on Canada or South Korea, but it’s nonetheless set off a scramble in Ottawa and Seoul.
The South Korean government dispatched senior economic officials to Washington to meet with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer and the ruling party said it was looking to speed up passage of the bill related to their trade deal.
Trump’s threat caught Ottawa and Canada’s aerospace industry by surprise, triggering a flurry of meetings and discussions. “Transport Canada officials are in communication with their U.S. counterparts, and our government is actively working on this situation,” Transport Minister Steven MacKinnon said in a social media post. — Emily Cadei, Ari Hawkins, Zi-Ann Lum, Daniel Desrochers |
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Financial Services— Fed Chair: The Senate will begin its vetting of Kevin Warsh, Trump’s long-awaited pick to be chair of the Federal Reserve, though the timing of a formal vote could drag out. Sen. Thom Tillis (R-N.C.), who sits on the committee that has jurisdiction over the Fed, has said he won’t advance any nominees to the central bank until a Justice Department probe into outgoing Chair Jerome Powell is resolved. Tillis has warned that investigation runs the risk of endangering the Fed’s political autonomy.
The president has relentlessly attacked Powell, whose term ends in May, for not lowering borrowing costs enough. The Fed last week voted to keep interest rates on hold, following three consecutive rate cuts.
— The bear case: Amazon, Walmart and McDonald’s are among the major companies that will hold earnings calls this month, which will offer insights into how they view the economy. Trump’s interventionist trade and foreign policy stances revived the “Sell America” market narrative that has hurt U.S. stocks, the dollar and other assets. While stocks have recovered from Greenland-related tumult, the dollar has continued to sink and yields on long-term Treasury securities — used to price everything from mortgages to corporate loans — remain elevated. The market’s fluctuations suggest that investor patience with Trump’s tariff threats is wearing thin.
— Crypto-market: Senate Banking Committee Republicans are pushing to revive the panel’s portion of cryptocurrency market structure legislation, after Chair Tim Scott postponed a markup scheduled for last month. Lawmakers must overcome differences over whether crypto exchanges should be allowed to offer rewards programs that pay an annual percentage yield to dollar-pegged stablecoin holders.
— Housing: The ROAD to Housing Act could receive a floor vote in the Senate, and the Housing in the 21st Century Act could receive a floor vote in the House this month.
— Private-equity: February should shed more light on the president’s executive order to block private equity investors from receiving government support when purchasing single-family homes. The Jan. 20 directive gave Treasury’s Bessent and National Economic Council Director Hassett 30 days to define which large institutional investors and single-family homes will be subject to the policy.
— Bessent-Congress: Bessent will testify early this month before the House Financial Services Committee for the annual report of the Financial Stability Oversight Council, a body of uber-regulators who examine potential risks to the markets. — Cassandra Dumay, Jasper Goodman, Victoria Guida, Katherine Hapgood, Sam Sutton |
Tax— Ready or not: Much of the tax world will be focused on how tax season unfolds. Republicans have high hopes that a surge in refunds, fueled by their 2025 tax cuts, will help sell voters on their biggest legislative achievement ahead of this fall’s midterms.
It comes amid big questions about how ready the IRS is for a crush of returns, in the wake of successive budget cuts that have dramatically reduced the agency’s workforce. Democrats will be watching closely for signs that taxpayers are not getting their questions answered or that people’s refunds are not being turned around quickly.
A partial government shutdown will continue through at least Tuesday, as lawmakers try to move funding legislation for the IRS and other agencies, but the tax department should be unscathed. The agency says its employees will be exempt from any furloughs through Feb. 7. “Employees should report to work on their regular schedules,” the IRS says on its website.
— Guidance: At the same time, many are keeping an eye out for the latest installment of guidance from Treasury on how to interpret Republicans’ tax cuts. Many in thebusiness world are particularly eager for policymakers to allow companies to claim catch-up R&D breaks approved as part of the One Big Beautiful Bill without getting ensnared by a corporate minimum tax. Others are anxious to see which financial firm(s) Treasury selects to help run the new Trump account savings program for kids.
— Crypto watch: It’s worth keeping tabs on Congress as well to see if they can make progress on updating the tax code’s treatment of digital assets like cryptocurrencies. Some are watching to see if an incipient push by Republicans for a second reconciliation bill can go anywhere, though that appears to be a longshot. — Brian Faler |
Employment and Immigration— Shutdown watch: Federal labor-related agencies are in better shape to withstand a government shutdown than they were during the 43-day funding lapse that shuttered Washington last fall.
The Bureau of Labor Statistics, which was unable to release key economic reports during the stoppage that started Oct.1, will continue to release some data thanks to the Commerce, Justice and Science appropriations bill that President Trump signed into law last month. That legislation funded the Census Bureau, which collects some data used by BLS.
The Equal Employment Opportunity Commission also received funding through the CJS bill and will continue operations.
The Labor Department and the National Labor Relations Board will still be required to release shutdown plans because their funding is tied to the $1.2 trillion spending package that has been stalled by a dispute over funding for the Department of Homeland Security.
— EEOC kicks into gear: The Equal Employment Opportunity Commission, which spent much of last year sidelined without enough members to form a quorum, launched into action in January with two votes that gave Chair Andrea Lucas greater control over the panel’s agenda and rescinded its Biden-era harassment guidance.
The latter move drew backlash from Democrats and legal groups after the EEOC rescinded guidance on preventing harassment based on sexual orientation and gender identity without the public input that had been promised.
The agency is expected to move soon to rescind its 2024 Pregnant Workers Fairness Act regulation, which conservatives argue exceeds congressional intent by requiring employers to accommodate abortion as a medical condition.
— House stumbles: Education and Workforce Chair Tim Walberg’s (R-Mich.) legislative agenda hit a speed bump in January after several bills that cleared his committee stalled on the House floor amid resistance from fellow GOP lawmakers.
A group of Republicans joined Democrats to block the Flexibility for Workers Education Act after voicing concerns that the bill would allow employers to avoid paying overtime for workers' job training. House leadership then pulled a broader package of committee-approved bills, including the Save Local Business Act, which would narrow the joint-employer standard and roll back a Biden-era rule expanding liability for franchisors and contractors. — Lawrence Ukenye |
Education— GOP prods students to pay back loans: Republicans say millions of people need to start paying down their overdue student debt, with nearly 12 million borrowers behind on their loans. But that message is on a collision course with economic reality as Americans struggle to pay the rising costs of food, health careand housing.
The Trump administration has already retreated from some of its efforts to collect on student loan debt, including plans last year to seize Social Security benefits from borrowers in default. And in a surprising reversal, the Education Department said last month it is pausing its plans to nab wages and tax refunds from people with past-due student loans.
Republicans insist their overall approach — combining a proposed settlement by the Trump administration to end a Biden-era student loan repayment plan and an array of new loan policies from the GOP’s domestic policy law — will help borrowers get back on track in paying off their debt.
The GOP’s One Big Beautiful Bill Act established two new repayment options — the Repayment Assistance Plan, which is based on income, and a standard plan based on the size of their debt. Those new plans are expected to be available in July.
The new income-based plan is less generous than the Biden administration’s student loan repayment plan, which offered monthly payments as low as $0 and a quicker path to debt relief. Republicans say their new income-based plan helps the borrowers they think will have the most trouble paying back their loans: poorer Americans. The new plan offers payments as little as $10 for borrowers earning $10,000 a year or less.
Democrats had panned the Education Department’s planned move to seize paychecks as borrowers default on their loans — as well as the GOP’s broader loan strategy.
— Shutdown: A partial government shutdown would see the Education Department largely cease operations. The department typically halts new grantmaking activities and pauses civil rights investigations, and the agency furloughs most of its staff. It’s unclear if the agency would move to layoff department staff during this partial shutdown, as it did during last year’s funding lapse.
Federal student aid activity usually continues during a shutdown, such as disbursing the Pell Grant, which is mandatory funding that helps low-income students pay for college, and direct student loans.
Head Start programs funded by the Department of Health and Human Services could experience a lapse in grant funding during the shutdown. Grantees for the early childhood education program receive their funding on different cycles, but a prolonged shutdown without federal funds could see some Head Start programs with limited reserve cash struggle to pay educators and other bills to keep their doors open. — Mackenzie Wilkes |
Defense— The $1.5 trillion pivot: Even as lawmakers try to resolve a government shutdown and enact a Pentagon funding deal as soon as today, they have another goal looming: Trump's demand for a mammoth $1.5 trillion defense budget in the 2027 budget.
The president's proposal would mean a staggering 50 percent hike in defense spending. And while many hawks on Capitol Hill rejoiced at Trump's ambitious announcement last month, it will face political and budgeting hurdles.
The effort to increase military spending by about $500 billion in a single year will prove tough. Doing so in the regular appropriations process, which would require Democratic support, is unlikely to succeed.
Congressional Republicans could pursue another party-line reconciliation bill or seek to achieve that goal over several years. This would reflect defense hawks' desire for steady annual defense increases that reach 5 percent of GDP.
Rep. Rob Wittman, for instance, has argued for funding that would hit $1.5 trillion budget by 2030. But the senior House Armed Services Committee GOP member questioned whether such a massive increase could get spent in a single year.
“You’d have real problems getting that much money in the pipeline and using that efficiently,” he said. — Connor O’Brien |
Health Care— Obamacare subsidies: Sen. Bernie Moreno (R-Ohio) proposed a last-ditch plan to revive subsidies that help people afford Obamacare plans on Jan. 29.
Moreno’s proposal would extend the subsidies, which expired at the end of last year, for one year and add new anti-fraud measures. It would wind down the subsidies over the following two years but offer to help Obamacare customers fund tax-advantaged health savings accounts. HSAs can be used to cover medical expenses, but not insurance premiums.
Moreno called it a final offer and Democrats, who’ve backed legislation to extend the subsidies without changes for three years, said it couldn’t be if Republicans really want a deal.
The Congressional Black Caucus, a key bloc in the House, said it objected to some of the anti-fraud measures, such as the elimination of zero-premium plans.
Democrats created the subsidies in a 2021 pandemic relief law, the American Rescue Plan Act, and extended them in 2022’s Inflation Reduction Act but set them to expire at the end of 2025 to keep the costs of the legislation down.
Without them, Obamacare customers with incomes below 400 percent of the poverty level continue to get government help paying for coverage, but it’s not as generous. Those earning more than 400 percent of the poverty level get nothing. That means the average out-of-pocket premium cost for all Obamacare customers has more than doubled this year.
Democrats hope to use the issue to hammer Republicans on health care affordability during the midterm elections. That concerns some in the GOP, like Moreno, but conservatives in safe seats are not keen on voting for legislation that buttresses Obamacare, a program they’d prefer to repeal.
In conversations with reporters, Moreno hasn’t sounded optimistic that lawmakers will coalesce.
— Fiscal 2026 funding for HHS: Congress rejected President Trump’s plan for a 25 percent budget cut at the health department, offering flat funding instead.
It was an indication that despite the upheaval at the Department of Health and Human Services driven by Secretary Robert F. Kennedy Jr., Democrats continue to support its mission — in contrast to their position on the Department of Homeland Security.
Kennedy has promised to spend the money Congress gives him. He’s already indicated he’ll use money set aside for grants to study issues of interest to him, such as the causes of autism and the health impacts of eating more meat. Kennedy thinks those impacts are positive.
National Institutes of Health Director Jay Bhattacharya, who will continue to manage the world’s largest budget devoted to health research, some $49 billion, has said he plans to spread the wealth more broadly, away from the research megalopolises on the coasts to the heartland. — Health Care Pro Team |
Transportation— The government is shut down — again: We are in the early stages of a partial government shutdown and as long as it doesn’t drag on beyond a few more days, the DOT will continue to do its work. That means air traffic controllers will be staffing towers and TSA workers, who are funded by DHS, will be manning airports. A couple days into the previous shutdown, employees at FHWA, FMCSA, NHTSA and FTA were not furloughed, but some at FRA, PHMSA and MARAD were. The longer the shutdown goes, the more painful it will be. And if it veers into weeks, flight cuts could again be on the table.
— The $85 billion wedding between Norfolk Southern and Union Pacific is delayed: The two railroad giants must resubmit their application to the Surface Transportation Board after the regulator determined their submission was lacking crucial details necessary to evaluate the merits of whether a consolidation would improve competition in an industry that is already down to a handful of Class I railroads. Union Pacific and Norfolk Southern plan to refile their application in the coming weeks.
— ROTOR Act momentum? The NTSB recently recommended, during a hearing about the DC air crash, that the FAA mandate ADS-B In technologies for aircraftthat need ADS-B Out, a vote of confidence for the ROTOR Act which has stalled in the House since the Senate passed it last year. ADS-B Out provides an aircraft’s location, altitude and speed to air traffic controllers and other aircraft can get those if they have ADS-B In. That requirement would be imposed under the ROTOR Act, but House Transportation Chair Sam Graves (R-Mo.) has said he wanted to wait until the NTSB’s recommendations. Now that the NTSB has spoken, it will be interesting to see how Graves, and others in the House, respond. — Chris Marquette |
Technology— Defiance Act 2.0: Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Laurel Lee (R-Fla.) have pushed House Speaker Mike Johnson for a House vote on their bill allowing victims to sue the producers and distributors of nonconsensual deepfake pornography. The bill sailed through the Senate in January following backlash over the use of chatbot Grok to generate nonconsensual, sexual images of women and children on Elon Musk-owned X.
The DEFIANCE Act failed to progress in the House last Congress despite clearing the Senate. Now, the cosponsors are taking the fight directly to Speaker Johnson, who seemed “quite receptive” to the proposal when Ocasio-Cortez met with him.
Paris Hilton also visited the Hill in January to draw public attention to the legislation. The TAKE IT DOWN Act, a related proposal that criminalizes the spread of nonconsensual intimate imagery, became law after receiving a boost from First Lady Melania Trump’s endorsement last year.
— Bipartisan chip export policy advances: The House Foreign Affairs Committee overwhelmingly advanced legislation giving Congress increased authority over approving or denying future proposed AI chip exports to China and other foreign adversaries. Now, all eyes are on how the legislation performs in the full House and Senate.
The committee voted 42-2-1 to move the AI OVERWATCH Act forward last week, which was introduced by Chair Brian Mast (R-Fla.) in December. The amended bill also includes a two-year ban on selling Nvidia’s Blackwell chips in China, the second most advanced chip in the company’s lineup.
This is the first bipartisan effort from Congress to limit exports following the Trump administration’s approval to sell Nvidia’s H200 chips — and similarly advanced chips — to China last month. Previous bipartisan efforts on related legislation were introduced in the Senate last year, but the question now is whether members of the Senate Foreign Relations Committee are poised to take up Mast’s bill. The bill could be overshadowed by the Trump administration’s Venezuela takeover and efforts to block further military action in the country.
— Congress turns to public safety communications: Key lawmakers intend to use the coming months to prioritize reauthorization of FirstNet, a secure wireless network used by first responders that has a congressional mandate set to expire in February 2027.
Rep. Richard Hudson (R-N.C.), who chairs the Energy and Commerce telecom subcommittee, recently told POLITICO he is preparing draft legislation to reauthorize FirstNet, and that he’s comfortable with AT&T’s role in operating it.
His Senate Commerce Committee colleagues, meanwhile, also put the issue center stage in a hearing in late January. Several rival wireless carriers, like Verizon and T-Mobile, have competing services to AT&T, which could become a political flashpoint during Hill negotiations.
Hudson told POLITICO he believes Congress should reauthorize FirstNet this year, well in advance of the expiration and avoiding the risk of cutting off the millions of first responders who use the network now. — Gabby Miller, Kat Long and John Hendel |
Cybersecurity— Nominations: The Trump administration is moving to fill key cyber leadership vacancies in the month ahead.
Lt. Gen. Joshua Rudd, Trump’s pick to lead the National Security Agency and U.S. Cyber Command, cleared his first of three confirmation votes in the Senate last month.
The Senate Armed Services Committee approved Rudd, who currently serves as deputy commander of U.S. Indo-Pacific Command, last week for the dual-hat role. He faces two more Senate votes to be confirmed. The next step will be getting approval from the Senate Intelligence Committee, where Rudd testified on Thursday morning. And if confirmed by the full Senate, Rudd will be the first Senate-approved leader of Cyber Command and the NSA since Trump abruptly fired former dual-hat head Gen. Timothy Haugh in April.
Trump also resubmitted Sean Plankey’s nomination to lead the Cybersecurity and Infrastructure Security Agency last month, shutting down questions about whether Trump was considering another candidate to helm the nation’s cyber defense agency.
Plankey was tapped to head the agency early last year and faced a Senate Homeland Security Committee hearing in July. But the Senate failed to hold a confirmation vote before the end of year, restarting the process for Plankey, a former senior National Security Council and Energy Department official during Trump’s first term.
It’s unclear if Senate Republicans will rally around Plankey, who currently serves as a senior adviser to DHS Secretary Kristi Noem for the Coast Guard. Sen. Rick Scott (R-Fla.) reportedly blocked Plankey’s nomination last year over a Coast Guard ship-building contract. Sen. Thom Tillis (R-N.C.) has also vowed to block all DHS nominees until Noem commits to appearing before the Senate Judiciary Committee. Plankey will have to face the Senate Homeland Security Committee for a second confirmation hearing, though the panel has yet to schedule it.
— All eyes on CISA: Plankey’s renomination comes as CISA’s interim leadership is receiving increased scrutiny from lawmakers. Madhu Gottumukkala, the agency’s acting director, testified before the House Homeland Security Committee last month, where he was hammered by Democratic members about POLITICO’s reporting that he failed an intelligence polygraph exam last summer, resulting in the suspension of at least six career staffers at CISA.
POLITICO also reported last week that Gottumukkala uploaded sensitive contracting documents into a public version of ChatGPT last summer, sparking automated security warnings meant to stop the unintentional disclosure or theft of government material from federal networks.
— On the Hill: Meanwhile, members of Congress temporarily renewed two bedrock cybersecurity policies — the 2015 Cybersecurity Information Sharing Act and the State and Local Cybersecurity Grant Program — before they expired again on Jan. 30, providing the laws with a temporary lifeline through the DHS funding package that narrowly passed the House.
Under the agreement between Trump and Senate Democrats to avoid a government shutdown, lawmakers have two weeks to debate the DHS funding bill, which also includes around $2.6 billion in funding for CISA.
CISA 2015 incentivizes private companies to share cyber threat information with the federal government through liability protections, while the SLCGP provided $1 billionin funding for states and localities to beef up their cyber defenses.
Both laws briefly expired at the end of September but were given temporary revivals in Congress’ continuing resolution to reopen the government in November.
Lawmakers are also continuing to assess the Foreign Intelligence Surveillance Act’s mass foreign surveillance power, Section 702. The authority lets the government require U.S. tech firms to gather foreigners’ communications abroad without first obtaining a warrant. Section 702 has recently come under fire by data privacy advocates and members of Congress over reports that the authority has swept up Americans’ data.
— Cyber strategy watch: And at the White House, National Cyber Director Sean Cairncross has yet to drop the White House’s national cybersecurity strategy — which will outline Trump’s top cybersecurity priorities for his second administration.
POLITICO has previously reported that the strategy, which was originally anticipated for release in early January, is around five pages and focuses on shaping adversary behavior, aligning regulations for more uniformity; securing critical infrastructure; boosting the cyber workforce; modernizing and securing federal networks; and emerging technologies, including artificial intelligence, according to two industry representatives.
The strategy has since been delayed without a clear timeline for release. We’ll be watching out for it in the coming days, where Cairncross is set to speak at the Information Technology Industry Council’s Intersect conference on Feb. 3 about the Trump administration’s cyber priorities. — Dana Nickel |
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