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Balance of Power
Weekly Washington Policy Pulse: Trump's Budget, Defense Supplemental (April 6, 2026)
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Okay, before we get into it, little side note for the IT leaders listening in, I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready it. That sets you up for operational efficiency as well as long term resilience. Upgrade to Windows 11 Pro at Windows means business.com
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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. We want to say welcome to the Washington Policy Pulse and thank you. For those of you who are attending via the Balance of Power podcast, we always appreciate you listening. Today is April 6th. We're timestamping this at 10:01am Eastern, and we don't have a ton to talk about today, so I'm hoping I'm going to get some time back to you, but I do want to talk about the budget request that came from the White House on Friday. Now, I spent a couple of hours on Friday looking through the budget trying to find if there's any little nuggets or anything that's worthwhile to report about. And honestly, I didn't find all that much. You know, the big news headline that I think everybody is aware of is that the Defense Department, or at least the White House, has proposed a $1.5 trillion ask for national security. The bulk of that is going to the Department of Defense slash war. You know, there's been some reporting that a lot of this is going to be for new F35 and F22 fight. What you need to know is if you're in the defense industry, April 21st there's going to be another release that actually spells out many programs in much more granular detail. So if you're trying to work the process of what actually is going into that $1.5 trillion ask, it's important to note more information is going to be coming out on April 21st. And that's how I view the budget last Friday because like I said, last week's call and like you've heard Many, many people, you know, the budget asks, never get implemented. It's Congress has the power of the purse here and not the President. So every president, whether it's Republican or Democrat, they come out and they say here's the budget request. And everybody says thank you very much. And you know, last week I threw this over my shoulder. But you know, just it's indicative of where things are going in the process. So how does that play out from here? Well, actually before we get to process, let me just call it a couple other things. So you know, the increase was obviously through 1.5 trillion for defense. This is a significant increase. It's a 42% increase. It's the largest increase ever requested. But the White House has also requested a $73 billion decrease for non discretionary programs through the rest of the agencies. Just to cut through a little bit of it right now. I mean Agriculture looking at a 4.9 billion decrease. Commerce, defense goes up. Education only down 2.3 or 2.9%. I was surprised about that. Energy increase, EPA down 52%. HHS down 12.5. You know, the bulk of this was going to Homeland Security and the Department of Def. You know, even treasury, for example, down NASA down 23%. A lot of the changes of NASA, NASA was actually put more towards moon bases, you know, rather than some of the other projects. Transportation 1.6. So if you're looking at the highway authorization bill later this year. And so this is how I would actually think about the budget in terms of process. So the request has come out. The appropriators are looking at it. The appropriators, remember this is the, you know, this is starts in the House. The appropriators over at the House committees are going to come back and say, right here's the work that we need to do between now and September 30th to get the fiscal 2027 budget approved. Remember, as of right now, everything is approved and funded through September 30, 2026, minus homeland security. That's related to the DHS shutdown. But for everything else, you go through September 30th. Now, it doesn't sound like the appropriators are anywhere close to releasing any idea of. So more likely than not, come September 30, we are going to have a continuing resolution that funds us probably until right after the congressional session and maybe they can come up with something that funds us through the rest of 2027's fiscal year. So out of that 1.5 trillion that came from the Department of Defense, 350 billion of it is earmarked for reconciliation. The rest of it is for appropriations. And this is where you're getting into, away from the appropriations process, which as a reminder requires democrats, you know, seven of to get past the 60 vote threshold for the filibuster. It's moving it away from appropriations and they are now moving it into reconciliation. Now, under the rules of reconciliation, you're not supposed to, and I'm putting this in air quotes, you're not supposed to do appropriations via reconciliation. But again, that's an air quote supposed to, you know, under the one big beautiful bill, you know, they gave ICE and the Customs and Border Patrol $75 billion through fiscal year 2029. And that's where the Republicans heads are at the moment. And this is where it ties the DHS shutdown. Now, I think the last time we talked, you know, the Democrats over the Senate and I, let me rephrase, let me stop and pause here because I think I'm all over the place. Let me just reset the story. So when it came to the DHS shutdown, the Senate Democrats agreed with the Senate Republicans on a deal that would fund everything at dhs, minus ICE and minus portions of Customs and Border Patrol. They sent that over to the House Republicans. The House Republicans were jammed. They said no, absolutely not. And they refused to support the deal. They sent back on the same package a 60 day extension of everything related to Department of Homeland Security. That is not, that is not going to go anywhere with the Democrats. So they've been in lost, they've been in recess, they've been traveling. If you've been watching tmz, TMZ is trying to catch them everywhere. Senator Lindsey Graham was at Disney World. Senator Rick Scott actually proactively outed himself at Disney World. There were a lot of folks over in Scotland. Anyway, where I'm going with this is that they are not coming back this week, but they are going to come back next week. And President Trump's plan, and this is what the agreement is on the Senate and the House side, is that they are going to accept the Senate deal. They're going to fund everything except for ICE and customs and Border Patrol. There's still a couple of Republicans in the House saying they don't want to do this and then they're going to implement everything else via reconciliation. So if they come back next week and they pass everything, then you're good. Minus ICE and certain portions of Customs Patrol, butter, Customs and Border Patrol. In the interim, President Trump has directed the director of hhs, the secretary, former Senator Mark Wayne Mullen, to pay out everybody at DHS using funds that they can reallocate. Now, this is, this potentially could be illegal, but the Democrats aren't going to sue on it. There's no political point in suing on this. So you know it's going to happen. So if they come back and if they fund this bill and they get everything but ICE and Customs and Border Patrol taken care of, then they move on to reconciliation. Now, this is where you enter Senator Lindsey Graham, who's the Senate Budget Committee chairman. He has a plan. His plan is two reconciliation bills. You can do one per fiscal year, so one before September 30th, and then you can do another one after September 30th. His hope is for the September 30th one before then is that it's going to be essentially the $350 billion ask from the White House on Department of Defense, plus Customs and border patrol and ICE funding. So call it somewhere north of $425 billion. Now, you'll probably get some other things added to it, maybe the $15 billion farmer aid, something else. But Senator, Majority Leader John Thune wants to keep that price tag under $500 billion. That's my, that's my number. And that's not Senator Thune's number, but that's my number. You keep it small, you keep it targeted, you probably can get the Republicans on board with this. Sorry, but the one issue for the Republicans is that everybody else has to want, has their own additional ideas and you got to figure out how to pay for it. And it also doesn't implement the Save America Act. So that's Senator Graham's next step, is that the next reconciliation bill, which would come after September 30, would include the Save America act and everything else. Now, if you're a senator looking at this, you've got and you want the Save America act to move forward. And I'm specifically going to call out here Mike Lee from Utah, because he's already commented on this online. He's got two issues with this. One is he's not convinced the Senate parliamentarian is going to allow it because remember, as under reconciliation, it can really only impact the budget. Something like Save America act is very similar to what the Democrats tried to raise the national minimum wage to $15. It didn't work. And so Senator Mike Lee knows the Senate parliamentarian is most likely going to step in and say it's not going to work. And then the other issue. And Senator Rick Scott from Florida just said this yesterday. You're not going to get everybody from the Republican Party on board if you're trying to pass a reconciliation bill right before the election of the midterms, especially when, you know, there are 17 seats right now that are considered toss up by Cook Political Report, and the majority of those are Republicans. And some of the estimates out there, it looks like the Democrats could pick up as much as 35 seats in the House. So you're going to lose those moderate votes for something like that. And so, you know, this is where the pro the challenge is now. They want to get the reconciliation bill done by July 1st. I'm sorry, July 4th, because President Trump wants to sign it as part of the America 250 celebration. So look to see what happens over the next couple of weeks. But we haven't even talked about deficit impacts. We haven't even talked about economic growth. We haven't talked about tax changes or Obamacare changes, all of which is part of this debate. So, again, this is my way of saying is that you'll probably see the DHS funded if those other Republicans go along with it. You'll probably see the bulk of DHS funded next week and this shutdown, quote, unquote, ending. But then you're going to have a reconciliation fight. So let's just set the stage right there. And I hope I made it clear I apologize is over. I have like maybe eight bullet points. And so I was jumping over a little bit. But anyway, that's that. So I will gladly take any questions or anything like that that you may have. The one other thing that I would point out before I say thank you very much for attending, is that Kevin Warshaw's nomination is probably going to be April 16th. That's the date that's been floating around out there. Senator Thom Tillis has not changed his position when it comes to Kevin Warsh. And I would also just say that Senator Tillis sits on the Senate Judiciary Committee and has also not changed his position or at least has announced a new position when it comes to the attorney general replacement for Pam Bondi. Senator Tillis has said that he's going to ask this individual, do you believe in January 6th that, you know, January 6th convictions should be, you know, confirmed or overturned or anything like that. And so you're going to be in this situation where I think Senator Tillis is going to really slow walk a lot of these nominees. But from the Trump perspective, it may not be the worst thing in the world anyway, because you can certainly have acting chairs, you can certainly do other things around. But again, keep that in mind. I'm gonna stop there. Just real briefly, other things that I'm gonna be looking for when Congress gets back next week. It's gonna be straight to the gas pedal on this crypto bill. I'm still at a 60% chance of passage. If you look at Kalshi out there in the prediction markets, they're a little bit under 50%. So I'm probably out of consensus. We'll talk next week on that one. We're still looking at the housing bill. We're still looking at a lot of SEC proposed rulemakings that we talked about last week that are most likely going to come out. Duane Wright has actually a very important Medicaid advantage rule that's coming out later today. So if you're in the health care space, I hope I really recommend Sorry to the attendee, Kevin Warsh. This would be April 16th for the Senate Banking Committee hearing. So the nomination hearing, not the actual confirmation. So the hearing would most likely. So just apologize. The question was what was that worst date for confirmation? No, it would be for the Senate Banking Committee nomination. Senator Tillis has already said that he thinks Kevin Warsh is an absolutely great nominee. But in that confirmation hearing, you'll just go through it, you'll have the questions, you'll have some answers, and then Senator Tillis will essentially stagnate it and he won't allow it to go to a vote. So anyway, I'll stop there. Thank you very much for attending. We really appreciate it. We're going to also do a lot more on the War Powers Resolution this week. I'm also going to have a call later this week with one of our experts from Bloomberg Government to go even more in depth on the rules of the reconciliation package. You're going to hear something called the bird rule. It's named after a senator, not the animal, but it's essentially the rule that dictates what can go into reconciliation or not. I'm going to bring in an expert for Bloomberg Government, so if you want a copy of that, please let me know. And then we're also going to be doing a lot more work on Iran. If you want to find out any of our research related to Iran, look at BI Iran or Bloomberg Intelligence is named a coordinator of all of our Iranian research. His name is Rob Barnett. He's our. If you've been in on this program, you've been, you've seen Rob before. He leads our energy exchange on Wednesdays, he's leading the coordination for BI on Iran. So as we approach this 8pm deadline tomorrow night, and for what it's worth, from my point of view, just I think from a market uncertainty, it's going to continue after tomorrow. Either you're going to see an escalation or you're going to see a status quo of the changing of the of the deadline. But again, as we approach this deadline of Tomorrow night at 8pm Eastern, we'll see what happens on Iran. But thank you very much for attending. We really appreciate it and we will talk soon.
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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 come back to the podcast later today for the latest edition of Balance of Power.
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