Mashadipati: Washington Edition: The next big thing

This is Washington Edition, the newsletter about money, power and politics in the nation's capital. Every Friday, Bloomberg Intelligence senior analyst Nathan Dean gives his insights into what's been happening and what's coming up in the nooks and crannies of government and markets. Sign up here. Email our editors here.

No Easy Answers

Happy Friday! This morning the Senate agreed to fund most of the Department of Homeland Security, but the House is throwing a wrench into the works, as detailed here.

I know you care about one thing, though: When are the security lines at airports going to get back to normal? The answer is, soon, probably. President Donald Trump this afternoon directed the DHS to shift around money to pay Transportation Security Administration workers, no matter what happens in Congress.

On to bigger things, namely a Republican-only budget package under consideration that may contain $200 billion in supplemental defense spending. Here's what I am thinking. First, it's not going to be easy to get Republicans to come to a consensus on it. Would it include the Republican voter ID legislation known as the SAVE America Act? GOP Senator Mike Lee doesn't think that will work. Limit it just to defense spending? Some Republicans are beginning to question the president's Iran strategy.

But let's assume the $200 billion supplemental passes. My colleague Wayne Sanders and I looked at where the money would go. As we wrote on the Bloomberg Terminal, think funding for anti-missile and counter-drone technology favoring big defense contractors Lockheed Martin, RTX and Northop Grumman. And for those with defense portfolios, keep a look out for the April 3 White House budget request potentially with $1.5 trillion for national security.

We got a lot of client questions this week on bipartisan Senate legislation that would ban sports wagers on prediction market platforms like Kalshi and Polymarket. Our quick view is that it has little chance in 2026. But put prediction markets in your hip pocket for a 2027 or 2028 issue. As Christopher Beam writes here, "Rulescucks" are roiling the prediction markets. It feels like a space that will get messier before it gets cleaned up.

There's been lots of chatter about Democrats taking the Senate. Kalshi (speaking of prediction markets) has it at a 48% chance. And as Catherine Lucey, Nancy Cook, and Bill Allison write here, Democrats have advantages in messaging, polling and voter enthusiasm. But it seems they're lacking one thing: Fundraising.

What To Know This Weekend

For the Democrats to take the Senate, they must take Maine. Here's a great look at Graham Platner, the tattooed oysterman looking to upset Governor Janet Mills in the Democratic primary and, then, Republican Senator Susan Collins in the general election.
This weekend I am going to drag the kids to go see Project Hail Mary – my daughter wants to be a scientist so I'm kind of hoping that it spurs her intellectual curiosity. But she also added, she's never going to space. She's not alone. Here's Lorelei Smillie on the tourism slump for space travel.
If you are coming to Washington in April – great choice, great weather, 8th graders everywhere – there's plenty going on. Here's "43 Things to Do in the DC Area."

War With Iran

Gulf countries are increasingly frustrated with the US over the Iran war, privately questioning American security guarantees and expressing concern about the Trump administration's apparent lack of strategy.

The Trump administration is signaling to allies that it has no immediate plans for a ground invasion of Iran, even as it deploys thousands of troops to the Middle East, people familiar with the matter said.

The US and Israel bombed Iranian nuclear and steel facilities, while Iran retaliated across the Persian Gulf, causing markets to sink and oil prices to rise amid fears a protracted Middle East conflict will drag down the global economy.

A first responder inspects a building following a strike in Tehran, on March 27. Photographer: Vahid Salemi/AP Photo — A first responder inspects a building following a strike in Tehran today.

Secretary of State Marco Rubio and his Group of Seven counterparts traded barbs over the wars in Iran and Ukraine, casting doubt on Europe bowing to Trump's demand for military help in the Persian Gulf.

Ship traffic through the vital Strait of Hormuz oil channel appears to remain largely halted four weeks into the Iran war, despite efforts by Tehran to set up a system to charge for transits

A pro-Iran hacking group claimed to breach FBI Director Kash Patel's personal email inbox and posted some of the contents, mostly personal information, photographs and financial data, online.

Three Fed officials expressed growing anxiety over the US economic outlook due to the war, with one saying the spike in oil prices had shifted the balance of risks for now, leaving inflation as a bigger concern than employment.

Today's Top News

Trump announced new loan guarantees for farmers and food suppliers, a bid to bolster agricultural communities squeezed by the impact of the Iran war, tariffs and other adverse market conditions.

The administration unveiled long-awaited biofuels blending standards, imposing a stronger mandate than a plan proposed last year in a further show of support for producers and American farmers.

China started a pair of investigations into US trade practices, retaliating against similar probes by the Trump administration as the superpowers stake out positions before an expected presidential summit in May.

Consumer sentiment in the US slid to a three-month low in March and year-ahead inflation expectations jumped as the war in the Middle East drives up gasoline prices.

Anthropic won a court order blocking a Trump administration ban on government use of the company's artificial intelligence technology, after the Claude chatbot maker argued the move could cost it billions in lost revenue.

Federal and New York City authorities arrested a man this week who they allege plotted to firebomb the Staten Island home of a pro-Palestinian activist, the latest in a string of politically motivated violence cases in the city.

The White House pullback on vaccine policy is a key strategic decision ahead of the midterm elections and is sidelining Robert F. Kennedy Jr.'s Make America Healthy Again movement, according to a close ally of the US health secretary.

Must Reads From Bloomberg Government

Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, warned that states not cooperating with the agency's fraud investigations could lose federal funding as the agency eyes an expansion of its probes

Trump directed agencies to cancel federal contracts and subcontracts with businesses that engage in "racially discriminatory" diversity, equity, and inclusion activities or fail to adhere to new anti-DEI reporting requirements..

Florida Democratic Representative Sheila Cherfilus-McCormick committed more than two-dozen violations of House rules and ethics standards, the House Ethics Committee concluded.

Watch & Listen

Today on Bloomberg Television's Balance of Power early edition at 1 p.m., host Joe Mathieu interviewed Ivo Daalder, former US ambassador to NATO, about where things are headed in the war with Iran and Trump's relationship with the trans-Atlantic alliance. He also talked with Republican Representative Troy Downing of Montana.

On the program at 5 p.m., he talks with Representatives Sean Casten, a Democrat, and Mike Flood, a Republican, about the still unsettled fight over DHS funding as well as the war.

On the Trumponomics podcast, host Stephanie Flanders is joined by Bloomberg Economics Chief Economist Tom Orlik and Middle East Geoeconomics Lead Dina Esfandiary to assess the mounting global economic fallout from the US–Israel strikes on Iran. Listen on Apple Podcasts, Spotify or wherever you get your podcasts.

Chart of the Day

Here's yet another sign of how deeply divided the US is by political affiliation. In the University of Michigan's latest gauge of consumer sentiment, the spread between self-identified Republicans and Democrats was the highest on record in March amid the war with Iran. Sentiment among Republicans fell 5% while for Democrats it dipped almost 13% and are now near their record lows. The survey period includes responses from Feb. 17 to March 23, with about two-thirds of those collected after the Iran war began. — Alex Tanzi

What's Next

The House and Senate are scheduled to begin a two-week recess on Monday.

The Conference Board's measure of consumer sentiment and expectations in March will be released Tuesday.

Job openings and layoffs in February will be reported Tuesday.

Retail sales in February will be released on Wednesday.

ADP data on private-sector payrolls will be reported on Wednesday.

The Supreme Court is set to hear arguments on birthright citizenship on Wednesday.

The jobs report for March will be released next Friday.

US stock and bond markets will be closed for Good Friday.

Washington Edition: The next big thing