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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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Good afternoon everybody. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in the Washington, D.C. bureau. Welcome to the Washington Policy Pulse. And welcome to those of you who are coming to us via the Balance of Power podcast. We always appreciate you listening. Today's December 15th we're recording this at 10:02 Eastern. We timestamp this just because obviously things change. And what I wanted to do today is just run through a lot of the topics of how you should be thinking about how Washington is approaching the end of the year and how Washington will come back next year. Some of this will be a little bit similar to what we had last week, but again, I just wanted to give you an update of where we are and what can you expect from Washington in 2026. Now the first thing to talk about is the ACA subsidies, the Obamacare vote that's going to most likely fail this week. My colleague Dwayne Wright continues to publish on the Bloomberg terminal and continues to use words like skeptical and long odds. Where we are at the moment is the Democrats are continuing to push for a three year extension of the Obamacare subsidies. Republicans, well, they have variety of different ideas. Moderate Republicans are some of them are pushing a two year extension. Some of them are pushing an alternative to Obamacare where money goes into HSA accounts and individuals then have to spend will be able to spend that money into some of their health care. The issue is, from the Republican perspective is that there's just too many ideas that are being floated around. There's not enough support for any of these ideas to get a majority vote in the House of Representatives. And we've always said, and this has been Dwayne's number one message is that if something was going to get done, it had to be from President Donald Trump. And President Donald Trump doesn't really seem to be interested at the moment in terms of pursuing additional goals or ideas related to Obamacare. And in fact, over the weekend, you saw some of the Republicans try and shift some of the ideas of do we need to get now or do we need to get something done by January 15th, which is when open enrollment ends, or January 31st, which is when the government shutdown would, quote, unquote, begin. So look for this debate to go beyond December, go into January. But ultimately we don't see there's going to be a solution found this week. The number one goal for Washington at this point for this week is to get out of Washington and go home for the holidays. I just mentioned shutdown, so I think I should talk about just again where we are with this potential shutdown in January 31st. Nine out of the 12 appropriation bills are funded through January 31st. And if Congress doesn't come to an agreement, all executive branch agencies under those nine would then shut down and we'd have something very similar to what played out earlier this year. Now we're at a 30% chance of government shutdown because even though the situation politically hasn't really changed from in terms of messaging or. Sorry, let me rephrase that. Even though the situation hasn't really changed in terms of these Obamacare subsidies or being able to get legislation across the line, things have changed politically. The Republicans have, you know, if you go back and look at the polling data, the Republicans largely got the blame for the shutdown. And if you look at the example of the Virginia, New Jersey, the Miami elections and so forth, Democrats have been doing decently since then in terms terms of their off cycle elections. So from the Republican perspective, you don't want to have a shutdown in case this actually goes worse for you. And from the Democratic perspective, you don't want to have a shutdown because you really don't want to change where the current polling trends are. And so I do think that you are going to see an agreement or another kick of the can, if you will. Senate appropriators failed. They were going to try and pass a package this week that had five bills in it. They failed or at least they're not going to be able to do so. So look for them to come back in January. But again, kicking the can is the most likely option here. We're at a 30% chance. Also going on this week is the Senate will most likely finalize the National Defense Authorization Act. The House passed the NDA last week. This is $900 billion in additional funding or in annual funding for the Department of Defense. The majority of it goes to the Pentagon. There is one small hiccup on the Senate side. It's actually a provision related to military flights over Washington, Reagan Airport. Not enough to actually get things derailed. But you are going to see some senators maybe cause a little bit of a headline around that. But ultimately, I think the Senate watchers that we've been spe to says that the Senate is bipartisan, you know, in a bipartisan manner, is going to overwhelmingly vote for this, send it to the president's desk. So if you're in the defense industry, you are going to get some clarity for 2026 spending. So obviously you can take that and work with that for next year. My colleague Wayne Sanders, our senior defense analyst, actually just released a deep dive on the state of play for weapons systems in 2026. For those of you with Bloomberg terminals, that's available at bi deep, otherwise you can contact Wayne. I'll put you in touch with Wayne to get a copy. He's also putting out in the terminal some of his winners and losers from the ndaa. So again, if you're in the defense industry and you want to talk to that, let us know and we'll put you in touch with Wayne. A little bit of crypto news. I think I talked about this before, but I just want to reiterate that we are awaiting a proposal from the FDIC and the Fed on stablecoins. It's with the oira, the Office of International, sorry, Inter Agency Affairs, Regulatory Affairs, Inter Regulatory Affairs. Essentially it's with the White House. And so if you remember, President Trump changed things a little bit. When regulators finalized proposals, they had to send it to the White House for its review. This proposal is over there. This is a proposal that would be the first proposal implementing the Genius act for stablecoins. And this is a proposal that actually allows stablecoin issuers the process to register with authorities like the Federal Reserve or the fdic. Not exactly the most exciting proposal out there. I think. You know, this is one of those where if you're on the legal side or compliance side, you're probably a little bit more excited than if you're a crypto investor. But again, it's the first of several proposals. Will they get it out before the end of the year? We'll See, you know, like I've said before, regulators love to get stuff out before they leave for the holidays, but I'm anticipating and I'm going to be doing some work over the, over the holidays. So I'll try and put out a policy watch note on that one. So again, if you have any questions, just reach out. Also on the terminal, just note it's outlook season. If you know somebody who's in the research, research space or if you're a research person, you know that we are doing our outlooks right now. Everybody's doing their outlooks. The same can't be said or the same can be said for bi. I've released six outlooks all tied to the financial services industry last week. Our macro outlooks are going to be going out later this week and next week and then we're going to have a report in early January. So again, if you want a copy of that, please feel free. The last couple of things I want to talk about is for those of you in the broadcaster space or if you're in the media space, FCC Chairman Brendan Carr is going to have a hearing testifying at center and Commerce. This could be a little bit of hiccups. Our colleague Matt Shettenholm is going to be looking at this, a little bit of headlines just because obviously, as you President Trump has spent a lot of time on Truth Social blasting the broadcasters, specifically ABC and Disney. But again, you know, we'll have to see on Wednesday that hearing takes place. So it's the only interesting hearing that's really going on this week. So I wanted to highlight it. And let's talk about farm aid. So, you know, last week, let me just check here, I thought I saw a question. Oh, oh, yeah. Yep. I'm getting there. I'm getting there. Cannabis. I'm coming. I'm saving that one for the last. So farm aid, let's talk about farm aid. So last Monday, President Trump released $12 billion, $11 billion for 20 commodities, 1 billion held to be in reserve in terms of specialty crops and sugar. But this aid, think of it as a band aid, not a solution. And we've talked about this on the call about high crop prices. I'm sorry, low crop prices, high production costs, you know, China, U.S. soybean purchases. But the reason why I wanted to tell you again of why I think aid is coming next year is that this was $11 billion in aid. And I just did. So we did some back of the envelope math where we went to the USDA website and they estimate how much Losses per acre per crop. So if you take in corn, for example, the average loss per acre in 2025 was $93. There are 98 million acres of corn out there, which brings you to about $9 billion worth of losses. And so $11 billion in aid for 20 crops, $9 billion in losses for one crop. There's more farm aid coming, so stay tuned. It's most likely going to come via either a light farm bill, maybe in January. You'll see some additional funding. This is actually what happened at the end of 2024. They earmarked $10 billion in extra funds for the farmers. But again, more farm aid is coming. So to the client you just asked about cannabis. We're going to get to cannabis now. So last week, Washington Post and then other agency or other reported that President Trump had a meeting with CEOs of the Marijuana companies and vowed that he would reschedule marijuana from Schedule 1 to Schedule 3. In that reporting, there was a call with Speaker Johnson, speaker of the House Mike Johnson, where Speaker Johnson said that he was actually against this move. President Trump then had the CEOs rebut Speaker Johnson's statements. And it's been reported that President Trump potentially as early as today, which is why I timestamped this at 1000. Now we're at 10:11am Will issue an order to reclassify marijuana. Now, if you look at these marijuana equities, you saw the MSOs, the ETF is up 58% at least. Last time I checked this morning, it was up 58% on the news. Now, this is what you need to know. The president does not have the authority to unilaterally write, by the scope of a pen, the ability to reschedule it from Schedule 1 to Schedule 3. Schedule 1 is a hard card narcotic drug. Schedule 3. Think of Tylenol with codeine. The biggest impact here from Schedule 1 to Schedule 3 is something called 280 tax two 80e tax relief. So for a lot of these mom and pop marijuana companies, their tax rates right now are around 40 to 45%. With 280E tax relief, you're getting down to about 10%. It differs, but that's just the ballpark number. Now, what will President Trump most likely do in this executive order? I think, and this is what my note on Friday says, is that President Trump will most likely direct the Department of Justice and the DEA to restart the process of where they were in rescheduling because this process started under the Biden administration and they're about 60 to 70% chance of the way through. So it's not going to be all that long. If President Trump says, I want you to do this and I want you to do this in an expedient manner, the DOJ and the DEA can do it. They don't have to go back to the beginning. So if this order comes out and says to the Department of Justice, I want you to go do this and I want you to go quickly, meaning, like forego a hearing and just get straight to it. The DOJ can, and they most likely can get it done by mid-2026. The reason why I'm not at 90% chance of this happening, I'm more of a 70% chance or a 60% chance of this happening, is because we have seen time after time after time where President Trump goes out there with these positive statements and then the process slow walks and the process slows down. And the ultimate question that marijuana investors should ask themselves about whether or not President Trump should do this, and I think President Trump doing this should be the base scenario here. But the reason why I'm at 60 or 70% rather than 90% is because the question is, will this help President Trump politically in mid-2026? If they need to drive out younger voters, then you potentially move forward with this. If you need to help drive out Republican based voters that are overwhelmingly against marijuana, then maybe not. So again, that's the question I'm gonna be asking myself. But right now, my base scenario is that this does get done. Because at the end of the day, the president usually doesn't put out an order saying, I want this done. And then 11 months later in an election, nothing actually happens. So again, we'll stay tuned. But again, keep in mind, so I hope to the client I got, I answered your question in terms of where we are in terms of cannabis. The last thing I want to do is really just give you some thoughts of how to think about 2026 coming from Washington, because then it's an election year. And I've said this before, and I'll say it again for all 435 members of the House and one third of the Senate, for every day they spend In Washington in 2026 is a day that their opponent is back home campaigning against them. And Congress largely does not want to be here in election years. And with the Democrats doing exceedingly well in Virginia and New Jersey, I heard this tidbit and I have to give this a shout out to Henrietta Trey's of Veda Partners because she said that this morning on Bloomberg surveillance is that the average polling right now for the Democrats is around + 14.4. That's tremendous for these off cycle elections. And the rule of thumb going into a midterm cycle is that any Republican member needs to win about plus 7 in order to keep their seat. That's something I hadn't heard before. That's pretty powerful message because plus seven, there's a lot of Republican districts out there that are plus four, plus five, plus six. And if you need to get plus seven just to have a decent chance, that suggests the Republicans are gonna want to spend a lot of time on the campaign trail next year. And that's where I think President Trump goes in 20, is that there's going to be less focus in Congress, there's going to be less focus on legislation in terms of a reconciliation 2.0. We'll have our thoughts out in the beginning of early next year. Really the high level message, I can tell you is that if it was easy, they would have done it in reconciliation 1.0. But yes, there is a chance for a reconciliation 2.0 bill next year, but Congress largely is going to be silent and they're going to be on the campaign trail. So 2026 will be a story of deregulation. Most of the regulatory leadership is in place. Most of the regulatory leadership have already started doing proposals, releasing proposals, those proposals are gonna be finalized, and then additional rounds of proposals are coming out next year. So lots of regulatory work that's gonna be done. And then finally, on the executive orders and tariffs, well, look, it looks like we're not gonna get an IAEAPA decision from the Supreme Court in 2025. It's always feasible that they could. But if they don't look for that in early 2026. And then the question comes, yes, President Trump has the ability to direct Section 232 and Section 301 investigations to replace these IPA tariffs. And Congress does have the ability to bring IA back via reconciliation. Again, a question for reconciliation 2.0, but the political question is this. Will President Trump want to actually move forward with these tariffs because of how much they prove to be unpopular in 2025? You know, President Trump can always launch these investigations and then have these investigations play out long term. We don't have a view on this, but it's something I want all my clients to just keep in mind. Because, yes, President Trump has the ability to replicate a lot of these tariffs, but the question is, will he? We'll have better answers for that in 2026 as we do our outlooks, so forth. But again, I want to say thank you very much for attending. We really appreciate it. I wish you happy holidays and a Happy New Year. If you have any questions in the interim, I'm actually not going anywhere. We're staying in D.C. for the holidays this year. I'll be working for a bunch of that. So again, and feel free to reach out. Feel free to contact us. If not, we'll see you in 2026. Thank you.