House Funding Push Shifts Pressure to Senate

[00:00:00]It's late July. The midterms are on the horizon.

[00:00:03]Yeah. Everybody is posturing themselves for those midterms. So yeah, that's kind of the dynamic that we're in right now. It's um, it's not so much on policy.

[00:00:12]It's about all about November. Brian, I say this to, uh, to everyone involved. I'm in the amateur because I really don't believe money matters. You're going to tell me money matters?

[00:00:21]Does the Republican ginormous amounts of money matter in the midterms?

[00:00:28]Yes, absolutely. Um, so it's it's a nuanced situation, Tom. So Democratic candidates, their campaign funds are very well-funded. And in some of those key races, uh, in the House and the Senate, Democratic candidates probably have raised more and have more on hand, cash on hand then do their Republican rivals.

[00:00:49]It's at the committee level where Republicans, the Republican National Committee, DNC. On the other side, Republicans have an enormous advantage, and I expect we're going to see a carpet bombing once, use me of ads in the fall. Um, that could hold down Democratic gains. I think there are going to be Democratic gains. I think they're going to be enough to flip the house. I don't think there's any question about that, but I think what the Republican firepower can be can mitigate their losses. How about the Senate here?

[00:01:18]There was talk at some point, given President Trump's relatively low polling numbers, that maybe the Senate was even in play here.

[00:01:25]How do you view that at this point? I've never been on that side, Paul.

[00:01:29]Um, I realize that, you know, a couple of months ago, you could look at the situation and say that Senate candidates, um, had some momentum, but there were always danger signs on the horizon for Democrats.

[00:01:41]First of all, they have to sweep the table, um, in order to regain the Senate, they need for, uh, net, uh, for seat net gain.

[00:01:48]Um, they're fighting on Republican territory in many of these states.

[00:01:52]So it's an uphill fight. And then when you look at the candidates, and I think more so in Senate races than in House races, candidate quality matters. And when you look at some of the candidates on the Democratic side, I think they're they're flawed.

[00:02:07]I think they have weaknesses. I think those weaknesses can be exploited by their Republican, um, opponents.

[00:02:14]And I've always been on the side that Democrats have a shot at the House.

[00:02:17]I actually met the Senate. But it's not what?

[00:02:20]As good as people thought it would be. So then, if you have a, I guess, a Democratic House, a Republican Senate and a Republican White House, then what happens? Yeah, we're back to gridlock.

[00:02:30]I would argue we've been in a form of gridlock ever since the Trump administration started. I mean, Republicans have very narrow margins in both the House and Senate. It's very difficult to get anything done. And so we're going to probably go through two years of of posturing. And I'll go back to the word I used early on, performative about getting ready for 2028.

[00:02:51]Um, it's going to be difficult to watch for those of us who observe this for a living. Um, but that's what I think.

[00:02:58]That's the likely outcome of the midterm elections.

[00:03:00]And maybe, you know, for in terms of, you know, markets, I think we're probably heading to at least to a situation of more likely lengthy government shutdown. So I think last year was just a precursor of walking down the horizon. This came up yesterday.

[00:03:15]Somebody, I think, in a restaurant asked me this, Brian, is President Trump a lame duck yet? Yes and no.

[00:03:24]I don't think it's a clear cut answer. Um, legislatively?

[00:03:27]Yes. I think he's a lame duck.

[00:03:29]Um. Uh, I think it's very difficult for him to get through. Let's look at the Save act, the election integrity bill that he wants so badly. He has, um, limited leverage to get that through Congress. So I think that is a demonstration of the limits that he is now facing. But on the administrative side, on the regulatory side and the courts with their recent, um, uh, rulings, give him a much wider, uh, latitude in running the administrative state, um, within some parameters. There are other rulings that have gone against um, presidents, not just the not just President Trump, but presidents, the executive branch in general. Um, but, you know, I think he can still get a lot of what he done wants done through regulatory levers.

[00:04:15]So he's a lame duck legislatively, but regulatory wise boy, he still has a lot of authority. And I think he's going we're going to see him use that in the next two years. So, Brian, what's the next thing we should expect, if anything, from this Congress?

[00:04:30]Yeah. I, uh, not a lot, Paul.

[00:04:32]I think it's, you know, trying to get It's dotting the eyes and crossing the t's. Just the basic stuff.

[00:04:38]Getting a CR in place by the end of September.

[00:04:41]Continuing resolution so the government doesn't shut down.

[00:04:44]Um, one thing I'll be watching, you know, is how this debate over the National Defense Authorization Act plays out.

[00:04:51]I think this is it's important, obviously, every year for defense policy, but because of a provision in the Senate bill on stock buybacks with companies doing business with the Pentagon, this is something for markets to watch because it's not limited, as I read it, to just defense contractors.

[00:05:10]It's anybody it's any firm that does business with the Pentagon.

[00:05:13]It's very broad. So any vendor anybody providing advisory services. So I tech financials, uh, is is Congress about to pass legislation that would allow this administration, any administration to restrict stock buybacks from companies doing business with the government? Uh, that is something that is going to be resolved in the fall. This is not something that will be resolved before Labor Day, but it's something I think, right.

[00:05:42]Investors are not watching yet and need to watch.