Policy Week in Review - August 14, 2026

This Week's Big Takeaways

• The Lame Duck Session Could Have a Big Price Tag

• Predicting What Republicans Will Prioritize Before the Midterms? 

• President Trump Tries Economic Pressure As Iran Makes Demands 

• Canada Hopes to Sell Trade Deal Before Tariff Deadline 

• Mixed Results In Primaries Between Establishment Democrats And Progressives

• Inflation Cooled in July as Elections Approach

The Lame Duck Session Could Have a Big Price Tag

Republicans will have to choose what bills to prioritize before the midterms (more below) as a final pitch to voters. The most expensive bills, however, wait for the lame duck session of Congress between the elections on November 3, 2026 and the end of the year. That is when Members of Congress who are either retiring or have lost their seats may come without political pressure to pass major bills and trillions in spending. 

FY 2027 Omnibus Appropriations: Discretionary spending is accounted for in the Congressional Budget Office's (CBO) debt projections, but the amount that Republicans in Congress are considering in 2027 appropriations ($1.855 trillion) is a staggering $225 billion increase above 2026 ($1.630 trillion).

Surface Transportation and Highway Trust Fund: The House passed a highway bill this year authorizing $580 billion in funding. According to CBO, the bill results in a $147 billion funding shortfall that would add directly to the debt.    

Farm Bill Reauthorization: Congress told CBO to add Farm Bill spending to the baseline years ago in order to make the $495 billion package easier to approve. Even with most programs on the baseline, this year's bill still adds $21.4 billion to federal debt projections. 

Reconciliation 3.0: The House budget resolution that passed in August included instructions to increase the deficit by $95 billion for new spending. That number will likely only grow. 

Any spending above the baseline would increase the deficit and debt. The U.S. national debt subject to the statutory debt limit is $39.758 trillion and is quickly rising. Just this week, the CBO reported that the FY 2026 annual deficit is expected to reach $2.1 trillion, which is $200 billion more than they projected in February. It is now likely that our government will reach the current $41.104 trillion debt limit in 2027. 

Predicting What Republicans Will Prioritize Before the Midterms? 

The House and Senate are in recess until the end of August. Republicans in Congress have expressed a desire to score additional legislative wins for voters before the midterms. The problem is that time is of the essence. There are only 15 legislative days in the Senate and 17 days in the House before the midterms.

Working in the tight timeframe, Republicans will try to send the following bills to President Trump’s desk to serve as accomplishments for voters before November.

SAVE America Act: The Senate is only one or two votes short of passing funding for states to implement the SAVE America voter ID requirements through state grants via reconciliation. 

Funding the Government: House and Senate Republicans have both passed different versions of a short-term funding bill that demonstrates their commitment to preventing a shutdown. 

CLARITY Act: The bill establishes one federal regulatory structure for digital currencies pegged to the U.S. dollar and another for cryptocurrencies traded as commodities, which could unleash significant investment into the U.S.

KIDS Act: This bipartisan effort combines multiple youth online safety, privacy, AI, gaming, messaging, and data-broker provisions into a single package and could help Republicans in Congress score points with parents. 

Russia Sanctions: Republican legislation to sanction Russia received overwhelming bipartisan support in the Senate and is going to the House in September. Any Democrat attempting to block the bill will demonstrate their willingness to put politics over their support for Ukraine. 

Military Funding: Republicans can force a vote on funding American troops. If Democrats block the measure, the GOP could then pass reconciliation with military spending. 

Spending for Farmers: The House GOP reconciliation budget included $12 billion in aid to farmers that would appeal to voters in states like Iowa, Michigan, Nebraska, and Ohio. 

President Trump Tries Economic Pressure As Iran Makes Demands

In an interview this week, President Trump expressed he was prepared to let Iran’s economic problems push Tehran to the negotiating table rather than using the more direct threat of military pressure, saying, “We are low-keying it … ​​We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money.”

The next day, President Trump rejected Iran’s new conditions for reopening the Strait of Hormuz, which included:

• Never again threatening Iran.

• Ending military action against Iran and its allies in Lebanon, Palestine, Yemen, and Iraq “forever."

• Lifting the naval blockade and withdrawing military forces.

• Paying damages.

• Lifting sanctions on Iran. 



• Releasing frozen assets.

These demands have previously been raised as conditions for reaching a nuclear deal with Iran, not for reopening the Strait. In rejecting Tehran’s demands, President Trump stated he was “likewise demanding compensation from Iran, for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts.” The U.S. is trying to force Iran to the table by tightening the grip on the strait and limiting the number of ships going through. 

Despite the hardened stances, Pakistani defense minister, Khawaja Asif, on Tuesday told reporters “things are shaping up again in favor of a peace arrangement or a deal … The signals in the last two to three days are that we are close to some sort of an arrangement.” Pakistan has been acting as a mediator between the United States and Iran.

Canada Sells Trade Deal Before Tariff Deadline 

With only days to go before additional 50% tariffs on Canada are scheduled to take effect on August 19, Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer met this week in Washington, D.C., for the third time in three weeks to continue negotiating a potential deal. Canadian officials hope to present President Trump with a deal ahead of August 19 to avert the additional tariffs on a wide variety of Canadian goods.

Items on the table for the potential framework include eliminating Canada’s retaliatory auto tariffs on American cars, lifting restrictions on the import and sale of U.S. alcoholic beverages, and loosening Canada’s protectionist dairy quotas - all measures cited by President Trump when signing the three Proclamations imposing the additional duties. The tariffs are estimated to impact $19.8 billion USD of annual Canadian goods exports to the U.S.

Primaries Again Pit Establishment Democrats Against Progressives

Tuesday saw a few critical primary elections take place, many of which served as a proxy fight between moderate Democrats and the progressive wing of the party that has been gaining steam over the last few years.

Connecticut

Representative John Larson (D, CT-01) lost his primary to former Hartford Mayor, Luke Bronin. Larson had the backing of the House Democratic leadership, but Bronin was backed by the state party. Bronin argued during the campaign for generational change (he is 47, versus the 78-year-old Larson) and “new energy and new direction.”

Minnesota

In Minnesota, Lieutenant Governor Peggy Flanagan - backed by Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) - beat out the more moderate Representative Angie Craig (D, MN-02) in the U.S. Senate primary. As of early Wednesday morning, Flanagan led Craig by 20 points. Flanagan will face off against Republican Michele Tafoya in the general election.

South Carolina

The special primary to replace the late Senator Lindsey Graham (R-SC) has resulted in a runoff election, which will be held on August 25. Graham’s sister, Darline Graham, who was appointed to serve out her brother’s term through the end of 2026, is advancing to a runoff against Representative Ralph Norman (R, SC-05). President Trump endorsed Darline Graham in the race.

Wisconsin

Meanwhile, in Wisconsin, progressives faced a loss in the gubernatorial primary. David Crowley narrowly defeated Democratic Socialist and state representative Francesca Hong in the primary for the governor’s mansion and will face U.S. Representative Tom Tiffany (R, WI-07) in November. Crowley had the backing of current Governor Tony Evers.

Inflation Cooled in July as Elections Approach

In good news for President Trump and Republican candidates, year-over-year inflation was almost nonexistent in July 2026. On Wednesday morning, the Bureau of Labor Statistics (BLS) released the Consumer Price Index for July. The CPI for All Urban Consumers inched up just slightly by 0.1%, with the energy index declining 1.5% in July due to lower gas prices.