Policy Week in Review - U.S. Ceasefire with Iran Extended Indefinitely, Reconciliation Funding for ICE Clears the First Hurdle

Key Takeaways

• The U.S.-Iran ceasefire has been extended indefinitely.

• Dueling blockades in Hormuz and Iranian uranium possession remain key issues.



• President Trump is under political pressure to try to end the conflict and look inward.

• Gas prices remain over $4 per gallon, and many of his legislative priorities are stalled in Congress.

• A deal that allows Iran to access certain frozen assets remains on the table.

• On the Hill, a narrowly focused reconciliation budget passed in the Senate this week that includes instructions to provide up to $140 billion for CBP and ICE.

• Senators intend to provide only $70 billion but wanted maximum flexibility. 

• A portal was launched, allowing companies to request refunds from IEEPA tariffs.

• Kevin Warsh was on the Hill this week for his nomination hearing, but the path forward for confirmation remains unclear.

• The Secretary of Labor resigned amid scandal, but little disruption is expected with Deputy Secretary Keith Sonderling officially taking the helm.

• A White House plan to provide a 90% ownership stake of Spirit Airlines faced some initial Hill resistance but lawmakers likely have few options to stop an agreement.  

President Trump Extends Iran Ceasefire

President Trump announced earlier this week that the ceasefire with Iran would extend until the talks between the two parties are concluded “one way or the other.” The President cited the fact that the government of Iran is “seriously fractured,” and the continuation of the ceasefire is intended to give Iran’s leaders and representatives time to rally behind a unified proposal. He went on to say that the U.S. would continue enforcing its blockade of the Strait of Hormuz as negotiations continue. The President has also directed the U.S. Navy to “shoot and kill any boat … that is putting mines in the waters of the Strait of Hormuz.”

On Thursday, the U.S. stopped a sanctioned oil tanker, the second such action taken this week. Meanwhile, Iran has alleged that the blockade is a violation of the ceasefire and remains one of the major barriers to a final agreement with the U.S. The extension of the Israel-Lebanon ceasefire for another three weeks will buy more time for a larger deal between the U.S. and Iran. Republicans in Congress who are facing tough elections and higher prices back home hope a final resolution will come together soon.

Negotiations between Iran and President Trump seem to be taking one step forward and two steps back. The President recently said there is “no time frame” to end the war. However, there are still significant reasons for the White House to want a deal soon. Gas prices remain over $4 per gallon nationally. The President's poll numbers are sagging. Much of the President’s legislative agenda is stalled in Congress while his administration’s wins have been overshadowed. 

Iran may view economic attrition as a long-term tactic. But if leaders decide they want an agreement that includes Iran giving up uranium enrichment in the short-term for the U.S. unfreezing of billions in assets, we believe that deal is out there. 

Reconciliation 2.0 Budget Moves Forward in the Senate

Late Wednesday night, the Senate approved a budget resolution that tees up the first reconciliation bill of 2026. The budget (S.Con.Res. 33) includes instructions requiring the Homeland Security Committee and Judiciary Committee to each report reconciliation legislation that would add up to $70 billion to the deficit. 

Although the budget allows for up to $140 billion in new spending, Senators said they intend to provide only $70 billion which would be directed to Immigration Customs Enforcement (ICE) and Customs and Border Protection (CBP). The larger topline spending limit is apparently meant to provide maximum flexibility to the committees. The spending is expected to fully fund both agencies through the remainder of President Trump’s term. 

The Senate passed the budget resolution 50-48, with two Republicans voting against the bill (Senators Rand Paul of Kentucky and Lisa Murkowski of Alaska). The budget now goes to the House where the plan still faces a legislative battle. Some House conservatives have expressed a desire to expand the scope of this reconciliation effort, doubting that another bite at the apple will be possible later in the year. 

Republican Leadership is very committed to keeping this reconciliation bill narrowly focused on immigration funding. That is because the funding for CBP and ICE is necessary to pave the way for passage of the rest of DHS funding. The more the budget expands in scope, the more difficult it would be for Congress to pass. That is why Senate leadership fought to defeat every amendment this week, including those offered by Republicans. 

Next Steps and Timing for Reconciliation 2.0

The House is expected to try to move this reconciliation budget – which is being called “Reconciliation 2.0” on the Hill – quickly. Clearing the legislation will finally end the DHS funding drama, give leadership a win, and allow Republicans to focus on larger priorities as a part of “Reconciliation 3.0” later this year. 

With the death of Democratic Representative David Scott (GA-13) earlier this week, the Republicans have an effective majority in the House of 218-212. Assuming full attendance, Republicans can lose only two votes on the budget resolution. Speaker Mike Johnson (R-LA)believes that will be enough to pass the bill next week. Here’s the goal for timing:

April 27 - 30: Pass the Senate Budget resolution early next week in the House with instructions for committees to draft bills with $140 billion in border enforcement under CBP and ICE. Following that vote, the House will pass the pending FY 2026 DHS funding that excludes CBP and ICE.

May 1 - 11: The Committees on Homeland Security and Judiciary will draft legislation to spend the money outlined in the budget resolution. 

May 12 - 21: The House and Senate must then pass identical versions of the legislation drafted by the committees before a scheduled recess beginning on May 21, 2026. There will be another Senate "vote-a-rama" with unlimited consideration of amendments to the bill before final passage.

May 22 - June 1: President Trump has publicly said that he wants to sign the enhanced spending for ICE and CBP under Reconciliation 2.0 by June 1, 2026. 

June 2 - August: Congress returns from the Memorial Day recess with Republicans presumably ready to begin working on Reconciliation 3.0, which will include many more GOP priorities. This will be a much more difficult process and is less likely to succeed.

DHS Funding Heading Towards Another Cliff

Senate Majority Leader John Thune (R-SD) expressed hope on Wednesday night that the passage of a budget kicking off the reconciliation process would encourage House Republicans to vote to reopen DHS, which as we noted above, has been shut down for weeks. Although the White House has put temporary patches in place (for example, paying Transportation Security Administration employees), DHS Secretary Markwayne Mullin said on Tuesday that the agency will run out of money to pay employees again in early May if Congress does not take action. 

Nearing a FISA Agreement

House Republicans expressed optimism earlier this week that they are nearing an agreement to reauthorize the Foreign Intelligence Surveillance Act (FISA), which is currently set to expire on April 30, 2026, after a short-term extension was passed last week. Compromise language was released today, and the hope is that the final bill will be ready for a vote early next week. The Senate previously passed a clean three-year extension of FISA, which was rejected by House Republicans.

Tariff Refunds Begin

This week, CBP began the process of providing refunds to companies impacted by tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The U.S. Supreme Court invalidated the tariffs in February, and the administration has now been tasked with refunding over $166 billion in tariffs to companies. Companies can now submit documentation to CBP to recover those tariffs, and the website estimates that refunds will generally be issued within 60 to 90 days after the company’s declaration is accepted. President Trump said that he would “gratefully remember” any U.S. companies that do not seek tariff refunds. 

While only companies, and not individuals, are eligible for the tariff refunds, a class action suit was filed earlier this week against Nintendo, saying that any tariff refund it receives should be passed to consumers. According to the suit, the company would be “unjustly enriching itself.” As the suit states, “Unless restrained by this Court, Nintendo stands to recover the same tariff payments twice—once from consumers through higher prices and again from the federal government through tariff refunds, including interest paid by the government on those funds.” Other consumers have followed suit with similar lawsuits against other companies, like FedEx and UPS. 

Warsh on the Hill While Nomination Remains Stalled

On Tuesday, the Senate Banking Committee held a nomination hearing for Kevin Warsh, who was nominated by President Trump to serve as Chair of the Federal Reserve (Fed). Current Fed Chair Jerome Powell’s term as chair will end on May 15, 2026. 

Some takeaways from the hearing:

• President Trump has hammered Powell over the past year for refusing to lower interest rates at a fast enough rate. One of the key Democratic talking points against Warsh is that he would not maintain appropriate independence from the White House when helming the Fed. Warsh told Senator Elizabeth Warren (D-MA) during the hearing that the Fed must remain independent of political influence and that “monetary policy independence is essential.” He also told senators that he had promised nothing to President Trump regarding future Fed decisions.

• Warsh said in his hearing that he doesn’t believe the Fed should project rates policy, and dislikes the idea of a press conference post-meeting. In general, Warsh suggested he would prefer fewer public speeches and interviews from Fed governors, and he may cut the number of annual meetings.

• Warsh signaled he’d bring “regime change in the conduct of policy” including a new inflation framework.

While Warsh has strong Republican support and could easily be confirmed, an ongoing Department of Justice (DOJ) probe into Powell has thrown up a roadblock as Senate Banking Committee Member Thom Tillis (R-NC) refuses to move his nomination forward until the probe is resolved. President Trump remains steadfast in continuing the investigation, leaving Warsh’s path forward unclear. Leader Thune has suggested that a congressional probe may be a potential off-ramp for the DOJ investigation, allowing Warsh’s nomination to proceed.

Department of Labor Leadership Shakeup

Facing multiple investigations into potential misconduct, Secretary of Labor Lori Chavez-DeRemer left her post on Monday for an undisclosed job in the private sector. A whistleblower report alleged that Chavez-DeRemer had an affair with a member of her security team and used official resources for personal trips, in addition to other allegations of unprofessionalism among some of her staff. Her husband had previously been prohibited from entering the building after female staff accused him of making unwanted sexual advances. 

Deputy Secretary of Labor Keith Sonderling is now serving as Acting Secretary. Sonderling previously served as a Commissioner on the Equal Employment Opportunity Commission (EEOC) from 2020 - 2024, and was Acting and Deputy Administrator of the Labor Department’s Wage and Hour Division under President Trump’s first term. Prior to his government service, he was a labor lawyer in Florida. Sonderling can serve as Acting Secretary for the remainder of the President’s term even if he is never officially nominated for the role.

President Trump Taps National Security Authority for Energy Production

On Monday, President Trump signed two presidential memos invoking the Defense Production Act (DPA) to boost American energy production:

• Grid Infrastructure, Equipment, and Supply Chain Capacity: The memo finds that U.S. capacity to “design, produce, and deploy large-scale grid infrastructure … is dangerously limited” and determines that grid infrastructure is essential to national defense.

• Development, Manufacturing, and Deployment of Large-Scale Energy Infrastructure: The memo recognizes that “financial risks, regulatory delays, and market barriers” hinder domestic capability of the development, manufacturing, and deployment of large-scale energy infrastructure.  

The White House said that these determinations will allow the Department of Energy to use OB3 funding “to strengthen our grid infrastructure and unleash reliable, affordable, secure energy.”

White House Reportedly in Talks to Save Embattled Spirit Airlines

Amidst filing for bankruptcy, Spirit Airlines is reportedly in talks with the Trump administration on a reported $500 million deal to prop up the struggling airline. Reports also indicate that the U.S. government would own a stake - potentially as high as 90% - in the airline as a result of the deal. On Tuesday, the President indicated he would love for another company to buy Spirit Airlines. Spirit Airlines seemed to confirm the negotiations were in advanced stages.

Israel and Lebanon Hold Second Round of Talks

On Thursday, Israel and Lebanese officials sat down for a second round of direct talks in an effort to reach a peace deal and potentially normalize relations, an outcome that Hezbollah has long opposed. The current ceasefire agreement, which expires at the end of this week, allows Israel to maintain its right to self-defense but precludes it from undergoing “offensive military operations” against Lebanese targets. Lebanon’s security forces may carry weapons in the closest region of the country to Israel. 

Lebanese Prime Minister Nawaf Salam favors extending the current 10-day ceasefire as talks continue but has warned that he will not sign any agreement under which Israel maintains the 10-kilometer deep territory in southern Lebanon that Israel controls as a buffer zone against Hezbollah. 

Rebalance of Power in the House

Representative David Scott (D-GA) passed away earlier this week, once again changing up the party balance in the House. With Scott’s death, the party breakdown in the House is 217 Republicans, 212 Democrats, and 1 Independent, giving Republicans a slightly larger margin at a time where margins have been thinner than ever. There are also five vacancies to be filled. Scott’s seat is safely Democrat, and the vacancy will be filled by special election.

Virginia Redistricting Update

Earlier this week, voters in Virginia passed a Democratic redistricting plan that could shift the balance of power in the House toward Democrats. If it stands, the new maps might change a six-to-five Democratic advantage in the Virginia Congressional Delegation to a ten-to-one landslide. Those extra four representatives from Virginia would make it very unlikely that Republicans can retain the House in the 2026 midterms.