Washington on One - 1/12/2026

THE LEDE:  Maduro pleaded not guilty in a New York courtroom to US charges in a narco-terrorism case against him, kicking off an extraordinary legal battle with major geopolitical ramifications…Trump a rare rebuke by voting to advance legislation opposing further military action in Venezuela without congressional authorization…The president’s closed-door meeting with oil industry CEOs Friday served up “absolute nothingburgers,” according to one industry official briefed on the confab…The president ramped up his rhetoric over Greenland, saying he’s willing to secure the territory “the hard way” if authorities are unwilling to cut a deal for the US to take over the island… The White House excluded Director of National Intelligence Tulsi Gabbard from planning to oust Nicolas Maduro because her past opposition to military action in Venezuela cast doubt on her willingness to support the operation… An Immigration and Customs Enforcement officer fatally shot a woman during a confrontation in Minneapolis, sparking anger from local officials over the presence of ICE agents in the city…Trump health officials released updated nutrition guidelines with a revamped version of the food pyramid, while urging people to eat less sugar and more protein…House passes 3 year extension of ACA subsides, Senate will work to construct a final deal…Significant cryptocurrency legislation is also due to be unveiled today in the Senate — and Coinbase warned that it might pull its support for the bill if it puts too many restrictions on giving rewards to people with stablecoins…Gallup’s annual survey of Americans’ political leanings shows the percentage of adults identifying as independent surged to a record-high 45 percent last year. Twenty-seven percent each consider themselves Democrats and Republicans. Ideologically, more Americans say they’re conservative than say they’re liberal, as usual — but the seven-point gap is the smallest it’s been dating back to 1992…Former House Majority Leader Steny Hoyer hangs ‘em up…

THE WEEK AHEAD:  The Senate returns today to advance a "minibus" funding package, though the schedule is complicated by a mandatory vote on a Venezuela war powers resolution—a measure President Trump fiercely opposes.  In the House, leaders plan to vote on a package funding Financial Services and National Security. Notable provisions include a mandatory Treasury report on the Strategic Bitcoin Reserve and new cost-analysis requirements for executive orders. However, recent attendance issues persist.  Critically, the Supreme Court issues opinions Wednesday, with potential rulings on Trump’s tariffs and the Voting Rights Act that could reshape congressional maps across the South.

NUMBERS:  Employers in the US added fewer jobs than expected in December, capping a yearlong slowdown in the labor market defined by cautious hiring and limited layoffs…Consumer sentiment in the US rose in recent weeks on slightly more upbeat views about the economy as tariff concerns fade, though it remains hovering just above a record low… The US trade deficit unexpectedly narrowed in October to the smallest since 2009 on a sharp pullback in imports, notably pharmaceuticals as companies frontloaded imports of drugs in September.

THE FED:  Federal prosecutors have opened an investigation into Federal Reserve Chair Jerome Powell regarding the central bank’s $2.5 billion headquarters renovation. The inquiry, confirmed by the Fed via grand jury subpoenas, reportedly focuses on Powell’s Congressional testimony about project costs. Powell condemned the probe as an unprecedented attack on the Fed's independence, calling it a "pretext" to punish the bank for not lowering interest rates to match President Trump's preferences.  Trump, who has relentlessly criticized Powell’s rate policies, denied involvement, telling NBC News he knew nothing of the Justice Department's actions. "I wouldn't even think of doing it that way," he stated.  The investigation has triggered immediate political fallout. Senator Thom Tillis (R-NC) vowed to block all Fed nominees until the matter is resolved. With Republicans holding a razor-thin majority on the Senate Banking Committee, Tillis’s opposition could paralyze the confirmation of Powell’s successor when his term as Chair expires in four months.

VENEZUELA:  The Trump administration plans to control all Venezuelan oil exports and hold the proceeds in US Treasury accounts. Energy Secretary Chris Wright confirmed the strategy involves marketing 50 million barrels of stored crude—valued at roughly $2.8 billion—followed by future production.  Wright emphasized that revenue is intended for the Venezuelan people and will not immediately be used to compensate US companies like ExxonMobil for past asset seizures. This initiative follows the removal of Nicolás Maduro and aims to revive the nation's energy sector. The administration is actively encouraging US oil majors to rebuild Venezuela’s decaying infrastructure, with President Trump scheduled to meet executives on Friday to discuss the undertaking.  While Venezuela’s state oil company, PDVSA, negotiates a formal sales framework, the US continues to enforce control over the sector, recently seizing two sanctioned tankers. Wright estimates production could increase by several hundred thousand barrels a day in the near term.

IRAN:  President Donald Trump stated Sunday that Iran has proposed negotiations following his threat to strike the nation over its violent crackdown on protesters, which activists say has killed at least 544 people. Speaking aboard Air Force One, Trump confirmed his administration is arranging a meeting but warned he might act beforehand if violence escalates, saying, "We will hit them at levels that they’ve never been hit before."  Internal sources report the White House is weighing options including cyberattacks and direct military strikes. Tehran, however, has threatened that U.S. and Israeli forces would become "legitimate targets" if attacked.  Protests sparked by the collapsing Iranian rial have intensified since late December, evolving into direct challenges to the theocracy. The U.S. government estimates over 10,000 detentions, though an information blackout makes independent verification difficult. Israeli Prime Minister Benjamin Netanyahu and Pope Leo XIV have both expressed concern, with the U.N. Secretary-General calling for maximum restraint.

ACA:  After months of deadlock and a recent expiration, Congress is showing signs of movement on extending Obamacare subsidies for over 20 million Americans. Today, the House passed a three-year extension, aided by four swing-district Republicans who broke with party leadership. While Senate Republicans previously rejected a similar measure, supporters hope this vote increases pressure on the upper chamber.  A bipartisan Senate group led by Susan Collins is currently crafting a compromise to revive the credits. However, significant hurdles remain. Republicans are insisting on stricter abortion coverage restrictions—a nonstarter for Democrats—and any deal must clear the Senate's 60-vote threshold despite widespread GOP opposition to the subsidies.  The political stakes for November’s midterm elections are high. With 24 million enrollees, health care costs could determine tight races, and Senate Democratic Leader Chuck Schumer has vowed to remain "relentless" on the issue.

KICKING IT OFF:  In an 84-minute address to congressional Republicans at the Kennedy Center, President Donald Trump delivered a performance mixing familiar grievances with a stark warning: maintain control of the House in the 2026 midterms or face his impeachment.  Addressing a caucus with a razor-thin five-seat majority following the death of Rep. Doug LaMalfa, Trump acknowledged the historical difficulty of midterms for incumbent parties. Despite boasting of a "successful first year," he displayed unusual defensiveness regarding his lack of credit for economic policies and frustration over polling numbers. "I wish you could explain to me what the hell is going on with the mind of the public," he admitted.  The speech comes amid signs of GOP fracturing. Rep. Marjorie Taylor Greene has resigned in dissent, and the House is poised to override two Trump vetoes—a rare defiance from a typically loyal chamber. Ultimately, Trump’s message was personal and urgent: losing the House would likely halt his agenda and endanger his presidency. 

APPROPRIATIONS:  Appropriators released a new spending package Sunday to fund Financial Services and the State Department through fiscal year 2026, moving Congress closer to a full funding deal before the January 30 deadline. Notably, the text excludes Homeland Security funding, contrary to earlier expectations.  House Republican leaders aim to vote on this measure later this week. Concurrently, the Senate is expected to take up a separate package passed by the House last week covering Commerce, Justice, and Energy programs.  Appropriators intend to bundle the remaining major bills—including Defense, Labor, and Transportation—into a final package. While leaders remain optimistic about meeting the deadline, political friction is increasing. The House Freedom Caucus, critical of earmarks in previous votes, is demanding greater scrutiny of the remaining legislation. Chairman Andy Harris (R-Md.) confirmed his group expects "more access" as Congress tackles the largest share of discretionary spending.

AVs:  The House Energy and Commerce Committee will review the bipartisan "SELF DRIVE Act" this week. Authored by Reps. Bob Latta (R-Ohio) and Debbie Dingell (D-Mich.), the bill establishes a federal framework for autonomous vehicles (AVs), expanding NHTSA’s authority to regulate vehicle operations rather than just equipment.  The legislation requires automakers to submit detailed safety cases, including operational limitations like weather or geography. It permits the production of vehicles without manual controls—such as steering wheels or pedals—provided they include mechanisms for passengers to initiate a safe stop. Additionally, the bill replaces existing rules with a centralized crash data system accessible to state officials.  Jeff Farrah, CEO of the Autonomous Vehicle Industry Association, endorsed the proposal, calling it a "turning point" that provides the clear rules and regulatory certainty needed to scale American AV deployment.

FROM THE STATES:  New York, California, Minnesota, Illinois, and Colorado sued the Trump administration Thursday to restore $10 billion in frozen federal aid. The lawsuit, filed in Manhattan federal court, accuses the administration of withholding funds for childcare and family assistance programs as political retribution against Democratic leadership.  The Department of Health and Human Services (HHS) announced the freeze Tuesday, citing "serious concerns about widespread fraud" and the need for fiscal responsibility. However, the states argue the administration bypassed legal requirements for identifying fraud and provided no evidence justifying a targeted freeze on these five specific states.  New York Attorney General Letitia James condemned the move as "political games," while the complaint warns of immediate, devastating impacts on low-income families relying on the Child Care and Development Fund and Temporary Assistance for Needy Families (TANF). The White House has not commented on the suit (State of New York v. Administration for Children and Families).

HOUSING:  President Donald Trump has directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds, aiming to lower housing costs ahead of the November midterm elections. Trump stated the move utilizes cash reserves amassed during his first term to drive down mortgage rates and monthly payments.  The announcement caused mortgage-backed securities to rally. FHFA Director Bill Pulte confirmed the agencies will execute the purchases "very quickly," describing the initiative as part of a "one-two punch" alongside Trump’s proposed ban on institutional home buyers. While the National Housing Conference predicts the action could lower mortgage rates by at least 0.25%, skeptics like Renaissance Macro’s Neil Dutta warn the impact may be limited as spreads are already tight.  Analysts suggest this intervention indicates that any plans to privatize Fannie and Freddie are now unlikely, as the administration leverages the government-sponsored enterprises to address voter concerns about the cost of living.

HOUSING II:  President Donald Trump proposed banning institutional investors from purchasing single-family homes, a move aimed at curbing housing costs ahead of pivotal midterm elections. "People live in homes, not corporations," Trump declared, promising to elaborate at the World Economic Forum in Davos later this month.  The announcement triggered a market sell-off, driving down the S&P 1500 Homebuilding Index and causing Blackstone shares to drop nearly 9%.  The proposal highlights GOP concerns that the cost-of-living crisis threatens their control of the House, with Trump’s approval rating hovering at 36%.  Political reaction was mixed: Republican Senators Bernie Moreno and Josh Hawley signaled support, while Democrat Elizabeth Warren dismissed the plan as unserious. Economists remain skeptical of the ban’s potential impact, noting that institutional investors own only roughly 2% of single-family rentals. Experts argue the primary driver of high prices is a historic supply shortage, not corporate ownership.

REDISTRICTING:  With the 2026 midterms underway, House district lines in several states remain in flux. Legislatures in Virginia and Kansas are weighing last-minute redrawing efforts. Virginia Democrats are pursuing a constitutional amendment to revise maps, while Kansas Republicans aim to target Democrat Sharice Davids but lack the votes to override a governor's veto. In Florida, Governor Ron DeSantis set an April special session where the GOP hopes to gain up to five seats, a move likely to spark litigation.  Nationally, eyes are on the US Supreme Court’s pending decision in a Louisiana case regarding a second Black-majority district. This ruling could reshape the interpretation of the Voting Rights Act.  Meanwhile, legal battles continue elsewhere. New York Democrats are challenging Rep. Nicole Malliotakis' district, and Wisconsin Democrats are seeking new maps. Litigation is also active in Utah and Missouri regarding partisan gerrymandering disputes. With the first primaries on March 3, this legal uncertainty looms over the election cycle.

WATCH THIS SPACE:  Labor Secretary Lori Chavez-DeRemer faces a major crisis following a New York Post report detailing an inspector general complaint accusing her of an affair with a subordinate, on-the-job drinking, and misuse of official travel. The White House and Labor Department categorically denied the allegations, attributing them to a "disgruntled former employee" and indicating Chavez-DeRemer is considering legal action.  The report surprised GOP and labor circles, where she is viewed as having a clean record. Though not originally in President Trump’s inner circle—he has jokingly called her "functionally a Democrat" due to Teamsters support—she recently appeared at rallies with Trump and Vice President JD Vance.  Scrutiny of her schedule is intensifying. Chavez-DeRemer was absent from Friday’s high-profile jobs report release, with Deputy Secretary Keith Sonderling stepping in. The complaint targets her frequent cross-country travel, a priority she pledged would reach all 50 states but which has been hampered by the recent government shutdown.

FARE THE WELL:  Thanks for the music Bobby….