- Congressional summer break approaches
- FY 2026 budget up next with risk of government shutdown
- Big week for crypto
- Chair Jerome Powell under fire
- Epstein: the story that won’t go away
When I was a Congressional aide, the end of July meant one important thing, the boss was headed home for a month. Congress has long held to a schedule where they returned home to family and constituents during the month of August. As Congress wrestled with issues such as the president’s One Big Beautiful bill legislation that at times seemed stuck, the House and Senate are approaching the finish line for the traditional August break. However, this past weekend President Trump urged Senate Leader John Thune to cancel the August break to push through more nominations. Many senators likely have family and constituent and campaign plans, but the Senate may be forced to spend some time during August in Washington, D.C., to meet the wishes of the president.
The next big action for the Congress is acting on the budget for FY 2026 that begins on Oct. 1. The Congress will head home without giving approval to any department of government for the new fiscal year. The House and Senate will return after Labor Day and will have four weeks to pass budgets in the 12 appropriation bills. Failure to pass any of the 12 leaves Congress with two options; the first is a so-called Continuing Resolution (CR) that continues spending at current levels or fails to act and forces a government shutdown for any department that does not have an approved FY 2026 budget.
Fundstrat’s Ken Xuan has done work that shows markets have little reaction to government shutdowns, but they do produce headline risk and can slow government services. Neither party tends to do well with shutdowns, and the Washington headlines after the summer break are likely to be dominated by the rush to fund the government.
Crypto
Last week was a big week for the crypto sector as the Congress passed the Genius Act and sent it to the White House. The president held a White House signing ceremony as the first major crypto bill became law with large bipartisan votes in both the House and Senate.
The Genius Act is designed to establish a regulatory framework for stablecoins requiring issuers to hold reserves of equal value to the coins. As seen by the large bipartisan votes in both the House and Senate Congress and the president want to make sure that the U.S. plays a leadership role in the emerging crypto currency space.
In addition to the Genius Act, the House also passed a bipartisan bill to clarify the regulatory split for crypto between the SEC and CFTC. This bill, the Clarity Act, along with legislation banning the Federal Reserve from issuing a Central Bank Digital Currency (CBDC) must now go to the Senate.
Chair Jerome Powell
The White House sent out conflicting messages on the future of Federal Reserve Chair Jerome Powell. A group of conservative Republican House members met with the president and emerged from the meeting reporting that they were told that Powell may be fired “soon.” The White House backed away from the comments but others in the president’s circle of advisors continued to talk about the need for lower interest rates and the fact that the Fed under Powell is not moving fast enough. Some administration officials have focused on the cost overruns that have occurred on the renovations of the two Fed buildings in Washington, D.C., and whether the cost overruns could provide the president the opportunity to dismiss Powell for “cause.”
With the next rate setting meeting approaching next week, the back and forth on Powell and Fed policy will likely be a focus of news reports in the coming week.
Epstein
The week’s news has also featured calls for release of Justice Department information on the late Jeffrey Epstein and any relationship he may have had with the president or other government officials. With the Friday news in the Wall Street Journal, this story is not likely to go away soon. The Journal story seems to have given MAGA Republicans a common enemy – the press – to go after supporting the president’s claim that the letter reported by the Journal doesn’t exist.
In addition to the Journal report, the president has directed Attorney General Pam Bondi to get judicial permission to release the Grand Jury records on the Epstein indictments. It’s not clear if this will happen in the coming week, or if it will quell the controversy, but it does indicate that Epstein is the story that won’t go away.
