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Balance of Power
Weekly Washington Policy Pulse: Dividend Restrictions, New Tariffs (July 20, 2026)
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IBM Representative
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Joe Matthew
this is your weekly Washington Policy Pulse on the Balance of Power podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence, senior policy analyst and friend of the show, Nathan Dean, shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most recent and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.
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Nathan Dean
Good afternoon, everybody. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in the Washington, D.C. bureau. Want to say welcome to the Washington Policy Pulse. Thank you very much for joining and also thank you for those of you who are listening to us via the Balance of Power podcast, we always appreciate you listening. Today is July 20th. It is 10:02am Eastern Time, and what we want to talk about is the House's last week in Washington before the August recess. This is the last week that the House and the Senate will be here together pretty much for the rest of the month of July, all of August, and for a little bit of September. And the House actually has quite a bit of things that it wants to do this week. And I first want to start with the National Defense Authorization act, also known as the ndaa. Now what I Even though the House is the one that's currently teed up to vote on the ndaa, I want to talk about the Senate side first. So the Senate has its own version of the ndaa, and there is a section in here. This is section 815. The reason why it up is because, largely speaking, this provision would ban any contractor with the Department of Defense from offering stock buybacks and or dividends. And the way that it reads, it's fairly broad. And this would actually probably encompass just about any company that's working with the Department of Defense, whether you're a bank, that you're offering an ATM or if you're offering food services or anything like that. Essentially it says any goods or services. That's a fairly broad provision. So something to put on your radar. Now, the reason why I'm bringing it up is because the House is voting on their NDAA at this point and then if it passes, it will go to the Senate and the Senate's going to say thank you very much, they're going to throw it over the shoulder and they're going to continue to work on the Senate version. Now we have plenty of time to work through this provision. So there's nothing you really need to do in the way yet. I'm going to do a little bit of homework and come back on the terminal with a little bit more in depth piece of where the Senate is going to go. Senate's not expected to address this before they go on August recess. So I think this is more of a September issue. But As a reminder, September 30th is the date in which a lot of these bills have to be passed by including a government funding bill or a continuing resolution that would keep the government open. Now you started to hear chatter about shutdowns. In fact, the Senate or so the House this week is one of their three things they're doing. Three major things they're doing is they're going to vote on a short continuing resolution that would keep the government funded from September 30th through December 4th. So essentially kick the candidate after the midterm elections. Get this into the lame duck cycle. And during the lame duck, it's very unlikely you're going to have a shutdown. There is a shutdown threat out there. Now I said last week that I didn't think there would be one and it's look, I still don't think there's going to be a shutdown. I'm going to have my more in depth odds out on the terminal this week. But there is a threat out there because the last shutdown that happened, the Democrats, I think largely can be argued the Democrats were the one that rejected the clean CR and decided to go into the shutdown. They didn't really pay much of a political price and you don't pay much of a political price for causing a shutdown. Then the question has to be asked, are we going to have another shutdown? Again, shutdowns right before the elections aren't really good business. Really good political strategies. So again that's why I don't think we're going to have one. But again, more in depth discussions. But the House should pass that one. It'll then go to the Senate. Senate's not anticipated to look at it until September. And then we also have the budget resolution. Now this was, this is reconciliation 3.0. Now this is as you remember, reconciliation 1.0 was, was the one big beautiful bill. Reconciliation 2.0 was the package that passed earlier this year. And then reconciliation 3.0, is this another additional package which is going to be up to $95 billion. This is what the instructions has. This is up to 95 billion dollars. 60 billion of it would be up for Department of Defense tied to the conflict with Iran. So if you're looking at this from an investing standpoint, look for those companies like RTX and Northrop Grumman that are actually exposed anti missile technology, additional drone technology. You know, think of the munition side of defense. It would have $11 billion worth for farmers. This would also have $10 billion in savings or $10 billion in grants tied to the Save America Act. Now, save a $95 billion package. It's going to come up for a vote this week. Now, this is the first of many votes. This is not a passing vote because what happens here is you first have to unlock the instructions, which is what we're going through. Right. Can write the legislation. So the instructions essentially say, okay, Congress, we are going to allow you mainly Republicans on the committee side here, we're going to allow you House Republicans to then write legislation authorizing up to $95 billion in expenditures. Now, the concern here from the Republican side is this, is that a, it forces a vote on Iran. The Iranian conflict, not very popular with Americans at the moment, especially right in advance of midterm election. Also, there's no offsets in here. Normally when you have a budget reconciliation bill, if you spend $100 billion, you got to cut $100 billion or have economic growth measures, but you have to have offsets. This bill doesn't include offsets. So if I'm a fiscal hawk Republican, I don't like this because you're just adding straight to the deficit here. So that's another issue. The third issue is that the Save America act is not in this as President Trump desires it to be. Now, remember the Save America act, this is the one that has to do with identification for voting, et cetera. The reason why it's not included here is because a the Senate will most likely strip it out anyway. Senator Murkowski came with an op ed over the weekend how she's not going to vote for this ever. And secondly, it's not going to fly the Senate parliamentarian. As a reminder, when you get into reconciliation bill, everything you do has to go to the Senate parliamentarian. And the Senate parliamentarian has to say, does this actually meet the spirit of what's called the Byrd Rule, AKA does this have a budgetary impact? And if you're putting new restrictions or new requirements on voting, the southern parliamentarian most likely is going to come back and say, no, you can't do it. Now, for what it's worth, some of the Republicans out there say that this could fly with the Senate parliamentarian. Republicans can always say, look, we're just going to get rid of the Senate parliamentarian and get a new Senate parliamentarian. But you need 50 votes for that. And Senator, Majority Majority Leader Senator John Thune has not made any insuasion that he has any interest in replacing the Senate parliamentarian. Because if you do so, you're essentially saying, look, I'm going to essentially just get rid of the filibuster. For what it's worth, the last time the Senate parliamentarian, I don't know why I can't speak today. The last time the Senate parliamentarian got was fired was actually under Senator, former Senator Trent Lott back in 2001. That was, that was a different type of situation. So it wasn't really exactly the same apples to apples. But because of all these reasons I laid out, plus the fact that has no tax cuts, I mean, Senator, you know, the chairman of the House Ways and Means Committee, Jason Smith, has already said, look, if you're going to play in this, I want to be in here in terms of tax. But he wasn't giving any instructions to do so. All the reasons is why I put on the terminal last week. I think it's 30% chance of that this package actually goes through. Now if it does go through, it's going to be very small, very curtailed. It will go through in September. So you don't really have to worry about this right now from a operations or July point of view, if the House passes its vote this week, and I don't, I think there's a chance it could pass. So if the House passes votes this week, all it does is it allows them to write legislation and then they'll come back in September and they'll try and get it done then. So that is what's going on with Budget Reconciliation 3.0. Really a couple of other things. Last thing to keep in mind really is tariffs. So the deadline for section 122 tariffs, if you remember, President Trump lost with the IAEA case and as a result he threw down 10% tariffs on almost everybody and they called them section 122 tariffs that only had 150 day window. That window ends Thursday night. At midnight Eastern. So anticipate the U.S. trade Representative later this week announcing essentially one of two things. One, the more likely scenario is he's going to say, okay, we've conducted all these section 301 investigations into forced labor. So now we're going to take these 122 tariffs and we're going to transfer them to a Section 301 tariff. Now, will it remain at the 10% that we're currently at? Probably it'll either be 10, maybe 12.5%. But I don't think you're going to see anything going back to like 25% or 40% or President Trump's 50%. So again, keep in mind that's going to come later this week. Now, if they don't decide to announce Section 3011 tariff, it could be potentially that they decide to re up another round of 122 tariffs if that happens. Paul Hawley from our litigation analyst, because most likely that's going to get hit with a lawsuit. And in fact, Holly put out a note later, earlier this morning detailing all of this in greater detail. So if you do want a copy of that, send me or Holly and IB and we will get a copy of that to you. Now, the last thing I want to say is, is that as we get into the August recess, the regulatory side of business will continue. So even so, Congress is largely going to disappear. For what it's worth, the Senate is still here for two more weeks. They don't leave until early August. So the Senate, we still have clarity. We still have other things that we have to track in the Senate, which is why we will be having a call in two weeks. We will not have be having a call next week. I will be out of town, so we will not be doing that. But the Senate is still here for a couple more weeks, but the regulatory side continues. And so the one thing that we're looking for right now is a liquidity coverage ratio proposal from the Federal Reserve. We're also looking for additional movement on the CFTC's AMPR on prediction markets. The comment period for that is ending fairly quickly. And we have also seen a couple more comment periods end as well. So look for maybe on the regulatory, maybe we'll get some nuggets over the August recess of what's happening on the regulatory side. So I'm going to stop there. I'm going to say thank you very much for attending. We really appreciate and if we can ever be of service, please don't hesitate to reach out. Thank you.
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Joe Matthew
Our thanks to Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, bringing you the latest installment of his weekly Washington Policy Pulse. For more from BI or to join this call live each week, you can email nathan@ndeanloomburg.net that's n d e a n@bloomberg.net and come back to the podcast later today for the latest edition of Balance of Power.
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The Hartford Representative
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