Policy Week in Review - September 4, 2026
In This Week's Edition
What does Trump’s split from GOP candidates on data centers mean?
Government funding extended through December 11, 2026
Trump announces another round of drug price deals
Congress punts legislative priorities into the lame duck session
The details of the new oil deal between the U.S. and Venezuela
Canadian tariff deadline nears as both sides meet
Incumbents sweep Massachusetts primaries
List of Republicans announcing opposition to data center construction
Trump vs. Republican Candidates on Data Centers
This week, President Trump reaffirmed his administration’s commitment to “winning the AI race” when he posted a lengthy Truth Social missive outlining his support for the construction of data centers in the U.S. The topic has become a centerpiece of the midterm elections as the unpopularity of data centers has Republican candidates rushing to call for bans on their construction.
The mass exodus of Republican support for data center construction around the country signals that the political headwinds against AI infrastructure development are strong. Here’s a quick look at some of the GOP candidates who have abandoned traditional free market principles and now support federal restrictions on data center construction (full list at the bottom of the email).
Right now, Republican leadership in the House and Senate would serve as a firewall to prevent any major new regulations from coming to the floor. However, there are legitimate concerns within the industry that if Democrats win one or both chambers as expected, banning and/or highly regulating the construction and operation of data centers could become a bipartisan issue. One recent poll in Texas, for example, found that 48% of Republicans and 67% of Democrats support a permanent outright ban on data centers.
What President Trump is doing is signaling to AI firms and their investors that any bipartisan attempts to statutorily over-regulate or ban the construction of data centers will be vetoed. Even if Republicans and Democrats forge a majority coalition opposed to data centers in the 120th Congress, President Trump wants the private sector to know that he’s an ally of data centers.
Politico did a good job of explaining why the President and his closest advisers are sincerely supportive of AI infrastructure. The White House summed it up last year when they wrote that “Winning the AI race will usher in a new golden age of human flourishing.” President Trump, and perhaps more importantly, his political and economic advisors, are committed to fostering AI infrastructure growth.
The President and his team are highly aware that this infrastructure is currently unpopular. President Trump’s Truth Social post puts a number of GOP candidates in an awkward position. That has been the case this entire election season as the President has repeatedly put candidates in difficult positions with regard to Iran, inflation, Canadian tariffs, and now data centers.
In this case, it is our perspective that the President is looking past the election to assuage the fears of artificial intelligence companies and those investing in physical infrastructure. Data centers have a friend in the White House. The Trump administration will not only veto legislative attempts to regulate their construction but will increasingly use agency rulemaking to stop local efforts to slow down data center construction.
President Trump Signs Government Funding Bill
The President signed a spending bill to extend government funding through December 11, 2026, moving the threat of a government shutdown past the midterm elections. The “continuing resolution” (CR) carries over last year's funding for government agencies at the FY 2026 annualized spending level of $1.63 trillion. The legislation also temporarily extends spending from the Highway Trust Fund that was set to expire at the end of the fiscal year and will also require a long-term reauthorization.
Trump Announces Another Round of Drug Pricing Deals
President Trump announced a number of new agreements this week with private pharmaceutical companies to sell a number of prescription drugs at reduced prices. Companies included in the announcement include Astellas, BeOne Medicines, CSL, BridgeBio, Sun Pharmaceutical, and UCB SA. While the specifics of the agreements are not public, the companies will sell prescription medications to state Medicaid programs at discounted prices.
The White House is pursuing voluntary deals with specific companies instead of pursuing the most favored nation (MFN) price setting in Congress. The Administration's announcement was notable in that it is still focused on the notion of domestic price setting pegged to list prices in foreign. Clearly MFN is still a priority for the President after being rejected by Republicans in Congress. If Democrats win the majorities in the House and Senate, codification of MNF price controls would become a legitimate threat.
Congress is Officially Punting Legislative Priorities into the Lame Duck
After President Trump signed the bill to prevent a government shutdown, the House announced that it would cancel its final two weeks of session in September. This means that the House will meet for only one more week before the midterm elections. That leaves precious little time to pass any major legislation.
Below is a look at what is still on the agenda based on the shrinking likelihood that Congress will take action with its few remaining days before the November elections:
Russia Sanctions Bill: Sanctions against Russia had huge bipartisan support in the Senate, but now House Democratic Leader Hakeem Jeffries (D-NY) is casting doubt on its passage in the House. Democrats in the House will likely block the Russia sanctions because President Trump supports the bill and it gives him authority to impose financial punishments against Russia and their partners.
CLARITY Act: A bipartisan bill to clarify which federal agencies should regulate different cryptocurrencies will get a key Senate vote on September 15. Like other White House priorities, the legislation may face politically motivated opposition from Democrats trying to deny President Trump any victory.
NDAA: The National Defense Authorization Act (NDAA) sets the priorities and spending levels for military spending across branches. This key piece of legislation is stalled because Democrats have been unwilling to support defense spending due to opposition to the war with Iran.
Long-Term Federal Spending: Congress will try to negotiate the rest of 2027 in December during a lame duck to avoid a shutdown.
Reconciliation Spending in a Lame Duck: Funding for troops and weapons in the fight against Iran will now almost certainly have to wait until the lame duck. The chances for a reconciliation bill are still good during a lame duck because Republicans will have a number of key priorities after the midterms, especially if Democrats win a chamber of Congress.
SAVE America Act: Pushing a budget reconciliation bill into the lame duck is a loss for supporters of voter integrity policies in the SAVE America Act. It is now almost certain that this year’s midterms will be conducted without a national standard for voter identification.
Farm Bill: House Republicans were able to pass a Farm Bill, but it has been stalled in the Senate much to the frustration of farm groups. Republicans wanted to include funding for farmers before the midterms but once again, Democrats worked to block any progress that would appeal to a key voting demographic.
Highway Bill: Congress punted the five-year, $580 billion surface transportation spending bill until December 11, 2026, with the rest of federal spending.
Trump Administration Reaches Oil Deal with Venezuela
Last Friday night, President Trump announced an agreement between the United States and Venezuela for the U.S. to gain majority control of more than 65 billion barrels of Venezuelan oil reserves, describing it as the biggest oil deal in world history. Negotiated by Secretary of State Marco Rubio, Secretary of War Pete Hegseth, and Interim President of Venezuela Delcy Rodriguez, the deal would dramatically expand the current U.S. territorial proven reserves of 46 billion barrels. According to the terms of the deal:
Venezuela has granted North American Blue Energy Partners (NABEP) - a privately held oil company - 100-year concessions for 17 oil fields with proven reserves of 65 billion barrels.
NABEP has in turn granted the U.S. The Department of War’s Office of Strategic Capital has a 35% equity stake in its corporate parent.
NABEP has granted the U.S. Department of State the right to purchase at cost a guaranteed 20% of the off-take from all current and future fields operated by NABEP.
NABEP has granted the U.S. Department of STate the right of first refusal to purchase the remaining 80% of its production.
The U.S. government has a veto power over the appointment of any member of the board of directors, and a majority of NABEP’s board of directors must be U.S. citizens.
As the White House has highlighted, a majority of the oil fields at stake were previously controlled or operated by Russian and Chinese firms. Following this deal, millions of barrels of Venezuelan oil will eventually be processed through U.S. refineries.
U.S. and Iran Trade Strikes As Economic Pressure Ramps Up
The United States and Iran traded strikes earlier this week following Iranian attempts to lay sea mines in the Strait of Hormuz and targeting of American service members. U.S. Central Command (CENTCOM) focused its strikes on Islamic Revolutionary Guard Corps targets including air defense sites, radar systems, maritime assets and facilities, mine laying capabilities, and communications sites. In retaliation, Tehran launched a wave of attacks on U.S. allies in the region, including Iraq, the United Arab Emirates, Bahrain, Kuwait, and Jordan.
Meanwhile, reports indicate that Operation Economic Outcast - a “whole-of-government, economic campaign against the Islamic Republic of Iran and its enablers” announced by U.S. Treasury Secretary Scott Bessent just last week - is already taking hold, according to senior Iranian sources. U.S. pressure to keep Iran from accessing international financing networks and secondary sanctions on countries attempting to do business with Iran so far have been particularly effective. With the Iranian economy already under severe stress, this latest economic pressure campaign may prove to be decisive in forcing Iran to negotiate.
Canada Tariff Countdown
In retaliation for a 50% tariff implemented by the United States on August 22, 2026, Canada announced last week that it would impose 15%, 25%, and 50% tariffs on certain products, “dollar for dollar” with the U.S. tariffs. The tariffs will go into effect right after the Labor Day holiday, on Tuesday, September 8, 2026.
The counter tariffs will apply to products worth $19.8 billion USD and will focus on steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. The full list is available here.
Earlier this week, U.S. Trade Representative Jamieson Greer met with House Republicans about the impact of the ongoing trade dispute, particularly those in battleground states like Michigan and Iowa. Sources in the meeting seemed to indicate that the trade dispute would be eventually resolved, but the question is “when.”
There is a sense in Washington that a deal can be reached before Tuesday because both sides have already articulated their goals. A brief overview of the asks from both sides appears below:
Canadian Asks:
Avert the application of 50% tariffs.
Reduce certain Section 232 tariffs on Canada, including those on steel, aluminum, autos, and lumber, to 10% or lower.
Lower the U.S. auto tariff, currently set at 25% for Canada. In comparison, tariff rates for autos from Japan, Korea, and the EU are currently set at 15%.
Modify steel tariffs to exclude certain derivative products.
Commit to renewing the United States-Mexico-Canada Agreement (USMCA).
U.S. Asks:
Remove the 25% retaliatory tariff on U.S. autos.
End the provincial ban on the purchase, distribution, and retailing of U.S. alcohol.
Align the tariff-rate quota on U.S. cheeses to similar EU cheeses.
Give the U.S. preferential access to Canadian critical minerals.
Align Canadian trade policy on China with the U.S.
Massachusetts Primary Shows Power of Incumbency
The only primary this week was in the blue state of Massachusetts and brought few surprises. A number of experienced incumbents pulled out wins against their younger primary opponents:
Senator Ed Markey (D-MA) fought off a challenge from Representative Seth Moulton (D-MA), who argued to voters that Markey was too old to effectively serve in his role.
Representative Richard Neal (D-MA), Ranking Member of the House Ways and Means Committee, fended off a challenge from Jeromie Whalen. He will not face a challenger in the general election.
List of Republicans Pushing Back on Data Centers
Several vulnerable Republicans echoed concerns about data centers after returning to D.C.:
Representative Rob Bresnahan (R-PA) said, “My communities know what they want to live next to and what they want to co-inhabit with.”
Representative Brett Guthrie (R-KY), who also chairs the House Energy and Commerce Committee, is pressuring leadership to bring up legislation to address the impact of data centers on the electrical grid and water resources.
Representative Zach Nunn (R-IA) said, “If you want to come and build one of your data centers here, work with our local government, work with our states ... do it in a way that’s respectful.”
Representative Tom Barrett (R-MI) has been pushing legislation to give local communities more input in data centers coming into their communities, and told reporters he is “prioritizing local sentiment” on the issue over the President.
Representative Gabe Evans (R-CO) is the lead Republican sponsor of the Rate Payer Protection Act, which would “establish federal standards for state regulators to use when reviewing proposals for new large-load customers with an electricity demand of 100 megawatts or more.” At present, 28 of his Republican colleagues have cosponsored the bill.
On the campaign trail, Republican candidates also continue to face pressure on the data center issue. Last week, Texas Attorney General Ken Paxton (R) and Republican Senate candidate, released his plan on data centers, and supported Governor Greg Abbott’s efforts to curb data centers in the state. As we noted a few weeks ago, Governor Greg Abbott (R-TX) directed state audits of all data centers, with audit completion required before they can be connected to the Texas grid. Abbott has said he wants any AI data center coming to Texas “to bring their own money, bring their own power, reuse their own water, and do it in a way that reduces the cost of electricity for residents across our state.”
A brief recap of other candidates who have recently publicly stated opposition to data centers:
Michigan Republican Senate Candidate Mike Rogers (R-MI) called for a one-year moratorium on new AI data centers.
In Ohio, the National Republican Senatorial Committee (NRSC) has argued data centers are playing a huge role in close polling between Senator Jon Husted (R-OH) and former Senator Sherrod Brown (D-OH).
Vivek Ramaswamy, the Republican candidate for governor in the state, has also released an “Ohioans-First Data Center Pledge” calling for a moratorium on data centers in the state until legislation is passed.
Trump ally Representative Tom Tiffany (R-WI), who is running for governor in Wisconsin, has also come out against data centers in recent days, releasing campaign ads calling his opponent “Data Center David Crowley.”
Comments