Trump sidelines appropriators
IN TODAY'S EDITION:
EXCLUSIVE: A polite warning from the White House — Inside Congress this morning has a first look at Rachael Bade's Playbook Deep Dive interview with White House deputy chief of staff James Blair, who oversees legislative affairs. In a clip we're bringing you this morning — the full interview will be out Friday — Blair says the administration strives to resolve Capitol Hill clashes privately, but 'will not be bashful' about other methods to advance the president's agenda. Check out Playbook for another scoop from the interview later today.
APPROPS PROBLEMS — The Senate and House Appropriations Committees have long held enormous influence and power. But Hill spending leaders are losing their clout in President Donald Trump's second administration.
Things started going downhill for appropriators once Department of Government Efficiency chief Elon Musk and White House budget director Russ Vought made clear they intended to assume expansive power over government spending, typically directed by Congress. However, after last week's government funding fight — where House Republican leaders bypassed the Appropriations Committees' bipartisan negotiators and jammed through a partisan bill — morale among many appropriators is at an all-time low, Katherine Tully-McManus reports.
'You're talking to a pretty discouraged appropriator right now,' GOP Sen. Lisa Murkowski, a longtime member of the committee, told Katherine in an interview.
Still, appropriators insist their relevance will return. They'll have a chance to prove it in the coming months, since Republicans have set a lofty goal to return to 'regular order' and pass all 12 appropriations bills before the Sept. 30 deadline.
That hasn't been accomplished since the 1990s. But West Virginia Sen. Shelley Moore Capito, an appropriator and a member of Senate GOP leadership, told Katherine 'heads will explode' if Republicans don't meet that goal.
Republican appropriators are also being instructed to work Trump and Musk's cuts into the next batch of spending bills — moves that are sure to spark Democratic ire and could alienate some moderate GOP lawmakers, too.
If all Republicans can rally behind a strategy for writing the funding bills and codifying DOGE-ordered spending cuts, they might be able to pull it off. House Republicans managed to pass the stopgap funding bill last week without relying on Democratic support, putting enough pressure on Senate Democrats to get it to Trump's desk. The president got almost all fiscal hawks to support spending legislation they would typically oppose — perhaps the biggest sign of power shifting away from appropriators, who have long-relied on bipartisan cooperation.
Even Rep. Chip Roy, a vocal opponent of so-called continuing resolutions, called the spending bill Congress passed 'the right approach.'
GOOD THURSDAY MORNING. House votes are not expected on March 26 so members can attend the funeral of late-Rep. Raul Grijalva.
Email your Inside Congress scribes at mmccarthy@politico.com and lkashinsky@politico.com.
COMING SOON TO YOUR INBOX — We've re-imagined and expanded Inside Congress this year to give you unmatched reporting on Capitol Hill politics and policy. We're not done. In the coming weeks, we plan to send you extra editions when we have must-read scoops and intelligence. If you already get Inside Congress in your inbox, then you'll receive the updates automatically as news breaks. Thank you for reading.
THE LEADERSHIP SUITE
Trump will push for D.C. funding fix
Trump wants Congress to fix a big cut to the District of Columbia's local budget, triggered by the most recent stopgap funding bill. But he's leaving it up to Speaker Mike Johnson to figure out how to do it, two White House officials tell our colleagues Jake Traylor, Katherine and Meredith Lee Hill.
The president is ready to work the phones and wield his social media soapbox to get House Republicans behind a bipartisan bill that would restore Washington's ability to control its own previously-approved budget, after House Republicans omitted language from the stopgap funding bill allowing the city to do so. The Senate passed a bill fixing the issue on Friday, so it only needs to clear the House to head to Trump's desk.
Johnson will be responsible for bringing the measure to the floor, though he may have to appease some hard-line members who want to restrict Washington's spending powers. A White House official said the president has confidence Johnson will schedule a vote, though the official expected Trump's ask to the speaker will be 'behind-the-scenes.'
Chuck Schumer's bad week continues
More Democrats are piling onto the pushback against the Senate minority leader after he voted to advance the GOP-drafted stopgap funding bill last week. Rank-and-file Democrats are also facing the heat at town halls in their districts, fielding questions about whether Schumer should stay on as a party leader. Our colleague Brakkton Booker talked to Maryland Rep. Glenn Ivey on Wednesday, who said during a town hall on Tuesday night that it might be time for Schumer to call it quits.
'If he can get himself together and come — you know, get right on this vote and we get another shot at it, OK,' Ivey said in the interview. 'But if he's going to do the same thing again when this bill comes up six months from now, we can't afford that.'
Progressive Illinois Rep. Delia Ramirez said similarly in an interview with our Ali Bianco: 'This is a moment for Democrats to do more than just talk about fighting … but actually using every legislative authority to do that.'
Still, Senate Democrats — who actually get to vote on their leader — are staying largely quiet on whether Schumer should step down. Massachusetts Sen. Elizabeth Warren and Colorado Sen. Michael Bennet both declined to comment on Schumer's future during town halls in their states.
POLICY RUNDOWN
OPPOSITION TO MILITARY SHAKEUP — Two leading Republican experts in defense policy aren't on board with Pentagon plans for a dramatic shakeup of the military's command structure in Europe, our Connor O'Brien reports. Sen. Roger Wicker and Rep. Mike Rogers — the chairs of the Senate and House Armed Services Committees, respectively — said Wednesday that they will not sign off on proposed 'unilateral changes' to military posture that would include the U.S. stepping down from its longtime role as supreme commander of NATO forces.
Rogers and Wicker noted they support Trump's efforts to push U.S. allies to increase their defense spending. Still, their pushback signals the administration could be in for a struggle with GOP defense hawks over some of its most significant efforts to shake up the Pentagon. While the changes would save money, retired senior officers said they would hurt U.S. influence and impede military planning and operations.
CUTTING FROM THE CR — On Friday, Congress passed its funding bill that would appropriate about $77 million for Radio Free Europe, a nonprofit news organization that broadcasts in Eastern Europe, for the rest of the fiscal year. On Saturday, Kari Lake, a senior Trump administration official, sent a letter to the organization saying its funding would be canceled, our Kyle Cheney reports.
It was the precise scenario many Democrats cited in stating their opposition to the government funding measure: without guardrails to stop Trump from withholding congressionally approved funding, things like this were bound to happen.
And it transpired quickly, with Trump issuing an order the night the bill passed calling for reducing the U.S. Agency of Global Media to its minimum required level of function. Lake, a senior adviser to USAGM's acting director, told Radio Free Europe that its grant would be canceled 'in its entirety.' The organization's CEO, Steve Capus, has filed an emergency petition with Washington's U.S. District Court to restore its funding.
NPR AND PBS ON THE HILL — Rep. Marjorie Taylor Greene announced the CEOs of NPR and PBS will appear next week before the House Oversight Subcommittee on Delivering on Government Efficiency, our colleague Hailey Fuchs reports. The media leaders will face questioning on their outlets' news coverage during a hearing titled 'Anti-American Airwaves: Holding the Heads of NPR and PBS Accountable.'
'I want to hear why NPR and PBS think they should ever again receive a single cent from the American taxpayer,' Greene, the subcommittee chair, said in a statement, criticizing their lack of coverage of hot-button conservative issues like Hunter Biden's laptop and the origins of COVID-19.
TACKLING ONLINE SAFETY — A House Energy and Commerce subcommittee will meet Wednesday to discuss dangers for children online, as the committee looks to build bipartisan consensus on legislation to address potential social media harms against minors, our Ben Leonard reports. That discussion could include talks of reviving the Kids Online Safety Act, which has major bipartisan support and the public backing of both Musk and Donald Trump Jr.
Best of POLITICO Pro and E&E:
THE CARRYOUT
Sen. Ed Markey is a fan of having breakfast for lunch. His favorite place to have it at the Capitol is in the Senate dining room — scrambled eggs, bacon and toast with butter. 'Loads of it,' per his staff.
Think you or your boss has the best food recommendation on the Hill? Email it: mmccarthy@politico.com.
THE BEST OF THE REST
Musk Donates to GOP Members of Congress Who Support Impeaching Judges, from Maggie Haberman, Theodore Schleifer and Annie Karni at NYT
Even Tom Cole Is Defending DOGE, from Russell Berman at The Atlantic
'Have you seen our congressman?' Angry voters press GOP for answers, from Hannah Knowles at the Washington Post
CAPITOL HILL INFLUENCE
FLYING IN: Nearly three dozen members of the National Retail Federation's tax committee hit the Hill Wednesday to discuss extending the 2017 tax law. Retailers were slated to meet with senior staff from the offices of Johnson, House Minority Leader Hakeem Jeffries, House Majority Leader Steve Scalise, Senate Majority Leader John Thune, Sens. John Cornyn and Steve Daines and the Senate Finance Committee.
Scott Raab, a former top aide to Sen. Mitch McConnell, is launching Raab Government Strategies, a strategic consulting and government relations firm.
Matt Gallivan has left Leavitt Partners, where he's served as a principal, to launch Genesis Health Strategies. The firm will work to help health care clients weather what Gallivan said is a 'political reckoning' for the industry, in part by helping navigate the reconciliation process. Gallivan previously served as health policy director for now-Senate HELP Chair Bill Cassidy during the failed GOP effort to repeal and replace the Affordable Care Act via reconciliation.
Lauren Reamy is now an SVP at Penn Avenue Partners. She previously was deputy chief of staff and legislative director to former Sen. Marco Rubio.
Clay Armentrout is joining Allen Control Systems as SVP of government relations. He previously was chief of staff for Sen. Katie Britt.
Alexandria Phelps is now an EVP at BerlinRosen. She previously was director of strategic comms for USAID and is a Vivek Murthy, HHS, Kirsten Gillibrand and Schumer alum.
JOB BOARD
FIRST IN POLITICO: Rep. Carlos Gimenez is announcing new changes to his staff. Rey Anthony is now deputy chief of staff after previously serving as comms director and Roberto Lugones is now comms director after previously serving as press secretary.
Ellie Dougherty is now comms director for Sen. Jon Ossoff's reelection campaign. She previously was a regional press secretary at the DCCC.
HAPPY BIRTHDAY
Rep. Keith Self … CNN's Phil Rucker … Gloria Story Dittus of Story Partners … Mark Putnam of Putnam Partners … Arthur Scott … Michael Whouley of Dewey Square Group… Benjy Sarlin … Naomi Zeigler … Sally Aman … Results for America's Zac Coile … Jessica Carter … Abbey Welborn ... Gloria Totten ... Cory Gattie .… Ruth Osinski of BGR Group
TRIVIA
WEDNESDAY'S ANSWER: Jon Fisher correctly answered that 15 federal judges have been impeached.
TODAY'S QUESTION, from Jon: What President was the first to try to directly influence the Fed's monetary policies by asking it to tighten credit and raise interest rates?
The first person to correctly guess gets a mention in the next edition of Inside Congress. Send your answers to insidecongress@politico.com.
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Trading Day-London calling, stocks crawling higher
By Jamie McGeever ORLANDO, Florida (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Trade tensions, policy uncertainty and shaky economic data continue to cloud the near-term outlook for world growth, but they remain on the back burner for now as investors kick off the week by pushing global stock markets higher. In my column today I look at why the dollar has depreciated significantly this year regardless of how U.S. stocks and bonds have performed. The main reason? Hedging. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Defying debt warnings, Republicans push forward on Trumptax agenda 2. 'Blue' euro bonds to rival Treasuries?: Mike Dolan 3. Japan to consider buying back some super-long governmentbonds, sources say 4. Wall Street, Main Street push for foreign tax rethink inU.S. budget bill 5. Auto companies 'in full panic' over rare-earthsbottleneck Today's Key Market Moves * World stocks set a new record high. The MSCI World indexrises 0.3% to 895.60 points. * Wall Street closes in the green despite a flurry of lateselling, and the S&P 500 nudges further above 6000 points. TheRussell 2000 small caps index rises most, up 0.6%. * The dollar index slips 0.25%. But the biggest declinerin global FX on Monday is the Colombian peso, down 0.7% afterthe assassination attempt on Senator Miguel Uribe, a potentialpresidential contender. * The U.S. yield curve bull steepens, snapping four sessionsof flattening, with the 2- and 3-year yields down 4 bps. Nextup, a $58 billion auction of 3-year notes on Tuesday. * Oil rises for a third day, with Brent crude climbing 1%above $67/bbl, its highest level since late April. London calling, stocks crawling higher It was a fairly quiet start to the week across global markets on Monday, with strong equity gains in Asia followed by a grind higher on Wall Street which lifted the MSCI World index to a fresh record high. The main areas of focus for investors were China's economic 'data dump' for May, then the high-level U.S.-China trade talks in London. The two are connected - the U.S. is a less important market for China than it used to be, underscored in May's trade figures from Beijing and reflected in the lack of concrete progress from the negotiations in London. China's total exports rose 4.8% in May from a year earlier but this masks a huge split between the U.S. and the rest of the world. Exports to the U.S. plunged 34.4% year-on-year in value terms, the sharpest drop since February 2020 just before the pandemic, while exports to the rest of the world rose 11.4%. Monthly data are volatile, of course, and May's figures were also distorted by tariffs. Still, U.S.-bound shipments worth $28.8 billion last month were just 9% of the total $316 billion. Economist Phil Suttle notes that is less than half the average share in the decade leading up to President Donald Trump's first trade war. The London talks are expected to continue on Tuesday. But as was the case following Trump's telephone call with Chinese leader Xi Jinping on Thursday, there is little indication of a significant breakthrough, far less China bending to U.S. demands. "U.S. Treasury Secretaries who live in unbalanced economies might not want to throw barbs such as the 'most unbalanced in modern history' at China without first looking at some data," Suttle wrote on Monday. "The choice to fight an opponent should be conditioned on a clear-headed view of its strengths and weaknesses. The U.S. has done a marvelous job of (once again) deluding itself on this front," Suttle added. Still, divisions between the two countries and the threat to global supply chains are proving no barrier to rising stock markets. Japan's Nikkei and the MSCI emerging and Asia ex-Japan indexes rose around 1%, Hong Kong-listed tech stocks rose nearly 3%, and Wall Street closed in the green. Meanwhile, the dollar's trend this year of declining despite U.S. stocks and bonds rising was on full display on Monday. Wall Street closed slightly higher and Treasury yields fell as much as 5 basis points at the short end of the curve, yet the dollar slipped. Many analysts say one of the main reasons for this is non-U.S. investor hedging - more on that below. Dollar floored as investors seek that extra hedge All three major U.S. asset classes – stocks, bonds and the currency – have had a turbulent 2025 thus far, but only one has failed to weather the storm: the dollar. Hedging may be a major reason why. Wall Street's three main indices and the ICE BofA U.S. Treasury index are all slightly higher for the year to date, despite the post-'Liberation Day' volatility, while the dollar has steadily ground lower, losing around 10% of its value against a basket of major currencies and breaking long-standing correlations along the way. The dollar was perhaps primed for a fall. It's easy to forget, but only a few months ago the 'U.S. exceptionalism' narrative was alive and well, and the dollar scaling heights rarely seen in the past two decades. But that narrative has evaporated, as U.S. President Donald Trump's controversial economic policies and isolationist posture on the global stage have made investors reconsider their exposure to U.S. assets. But why is the dollar feeling the burn more than stocks or bonds? PENSION FUND-AMENTALS Non-U.S. investors often protect themselves against sharp currency fluctuations via the forward, futures or options markets. The difference now is that the risk premium being built into U.S. assets is pushing them – especially equity holders – to hedge their dollar exposure more than they have in the past. Foreign investors have long hedged their bond exposure, with dollar hedge ratios traditionally around 70% to 100%, according to Morgan Stanley, as currency moves can easily wipe out modest bond returns. But non-U.S. equity investors have been much more loath to pay for protection, with dollar hedge ratios averaging between 10% and 30%. This is partly because the dollar was traditionally seen as a 'natural' hedge against stock market exposure, as it would typically rise in 'risk off' periods when stocks fell. The dollar would also normally appreciate when the U.S. economy and markets were thriving – the so-called 'Dollar Smile' – giving an additional boost to U.S. equity returns in good times. A good barometer of global 'real money' investors' view on the dollar is how willing foreign pension and insurance funds are to hedge their dollar-denominated assets. Recent data on Danish funds' currency hedging is revealing. Danish funds' U.S. asset hedge ratio surged to around 75% from around 65% between February and April. According to Deutsche Bank analysts, that 10 percentage point rise is the largest two-month increase in over a decade. Anecdotal evidence suggests similar shifts are taking place across Scandinavia, the euro zone and Canada, regions where dollar exposure is also high. The $266 billion Ontario Teachers' Pension Plan reported a $6.9 billion foreign currency gain last year, mainly due to the stronger dollar. Unless the fund has increased its hedging ratio this year, it will be sitting on huge foreign currency losses. "Investors had embraced U.S. exceptionalism and were overweight U.S. assets. But now, investors are increasing their hedging," says Sophia Drossos, economist and strategist at the hedge fund Point72. And there is a lot of dollar exposure to hedge. At the end of March foreign investors held $33 trillion of U.S. securities, with $18.4 trillion in equities and $14.6 trillion in debt instruments. RIDING OUT THE STORM The dollar's malaise has upended its traditional relationships with stocks and bonds. Its generally negative correlation with stocks has reversed, as has the usually positive correlation with bonds. The divergence with Treasuries has gained more attention, with the dollar diving as yields have risen. But as Deutsche Bank's George Saravelos notes, the correlation breakdown with stocks is "very unusual". When Wall Street has fallen this year the dollar has fallen too, but at a much faster pace. And when Wall Street has risen the dollar has also bounced, but only slightly. This has led to the strongest positive correlation between the dollar and S&P 500 in years, though that's a bit deceptive, as the dollar is sharply down on the year while stocks are mildly stronger. Of course, what we could be seeing is simply a rebalancing. Saravelos estimates that global fixed income and equity managers' dollar exposure was at near record-high levels in the run-up to the recent trade war. This was a "cyclical" phenomenon over the last couple of years rather than a deep-rooted structural one based on fundamentals, meaning it could be reversed relatively quickly. But, regardless, the dollar's hedging headwind seems likely to persist. "Given the size of foreign holdings of both stocks and bonds, even a modest uptick in hedge ratios could prove a considerable FX flow," Morgan Stanley's FX strategy team wrote last month. "As long as uncertainty and volatility persist, we think that hedge ratios are likely to rise as investors ride out the storm." What could move markets tomorrow? * South Korea current account (April) * UK BRC retail sales (May) * UK employment (April) * Brazil inflation (May) * U.S. 3-year Treasury note auction Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever; Editing by Nia Williams) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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