Washington on One - 10/13/2025

THE LEDE:   Shutdown grinds on… Speaker Johnson scraps votes as Leader Jeffries calls his Dems to DC…Trump has signaled openness to negotiating ACA subsidy extensions, though Democrats push back that no formal talks have yet begun, and AF1 is in the Middle East…OMB’s Vought says Federal Worker layoffs have begun, but Troops to be paid (removing a pretty huge pressure point to get this thing over)…Israel and Hamas agree to ceasefire…China punches back with limitations of rare earth exports Trump threatens to cancel Xi meeting…The Senate adopted a bipartisan NDAA / defense policy bill (77–20) despite the ongoing shutdown; it includes war powers reforms and authorizes oversight of domestic troop deployments… Meanwhile, the delay in swearing in Adelita Grijalva (AZ 7), despite her having won a special election, remains a flash point tied to controlling the vote threshold for pushing Epstein file disclosures… New York AG Letitia James indicted for fraud…The White House published a Presidential Memorandum approving the Ambler Road Appeal, restoring federal approval obligations to Alaska permitting…A new “concierge / white glove” permitting aid program for fossil fuel companies was disclosed, offering fast track regulatory navigation support, while energy permitting for renewable projects remains deprioritized…Pete Hegseth says US will host Qatari air force facility in Idaho…Colombia’s President Petro calls for Qatar to deescalate US maritime strikes in suspected drug traffickers in the Caribbean Sea…lflAstraZeneca becomes the latest to strike a deal with White House on drug prices, promising $50 billion in US manufacturing & research…

SHUTDOWN:  The Senate left town Thursday night with no deal in sight to end the government shutdown, signaling that the standoff could stretch well into November.  Earlier in the day, there was brief optimism that Senate leaders might find a way forward. But by nightfall, both parties were more entrenched than ever. President Trump, preoccupied with the Israel-Hamas peace deal, immigration battles, and new National Guard deployments, has shown little engagement on the shutdown.  Sen. Ruben Gallego (D-Ariz.) predicted the impasse would last until at least Nov. 1, when open enrollment begins. Meanwhile, both parties are continuing their fundraising retreats — Democrats in Napa Valley and Republicans on Kiawah Islandfjije.  Senate GOP leaders floated offering Democrats a future vote on extending enhanced Obamacare premium tax credits in exchange for reopening the government, but Democrats rejected it without formal guarantees.  The Senate adjourned until Tuesday after passing the defense authorization bill, all but ensuring 1.3 million active-duty troops will miss their Oct. 15 paychecks. Civilian federal employees will begin missing pay today.  With Senate Majority Leader John Thune blocking additional votes on Democratic funding bills, the shutdown’s duration now hinges on whether Trump intervenes — something lawmakers in both parties say is increasingly necessary.

WHAT IS THIS ALL ABOUT AGAIN?:   At the center of the shutdown fight are enhanced Affordable Care Act (ACA) subsidies that help millions afford coverage. Democrats insist on extending the higher subsidies enacted in 2021, during Covid,  before reopening the government, arguing that allowing them to lapse would sharply raise premiums. Republicans warn about unsustainable spending and have long targeted the ACA, but some worry the GOP will be blamed if costs spike.  The ACA is now embedded in the health system, with marketplace plans covering more than 24 million people. The enhanced credits—capping premiums at 8.5% of income and expanding eligibility—have driven enrollment growth, including in many Republican-led states.  Premiums are projected to rise in most states next year, with many insurers planning increases of at least 20% and some estimate as high as 100%. Most enrollees don’t pay full freight because subsidies cover much or all of their monthly bill. If the enhancements expire, fewer people will qualify and the value of subsidies will shrink. KFF estimates average annual out-of-pocket premiums could more than double, from $888 to $1,904.  CBO estimates 3.5 million fewer people would have coverage in 2027 without the enhanced subsidies, while extending them would add billions in annual federal costs. Support for extension spans party lines in polling, ‘cause yea, nobody pays retails anymore, why should we?  FOR A GLANCE AT AGENCY LEVEL IMPACTS SCROLL ALL THE WAY DOWN

ISRAEL / HAMAS:  Israel’s government on Thursday approved a deal to free hostages held by Hamas and launch a cease-fire in Gaza, following both sides’ tentative acceptance of President Trump’s 20-point plan. Hamas agreed to implement the first phase but has not accepted the entire plan; negotiations on later phases continue.  Trump dispatched special envoy Steve Witkoff and Jared Kushner to Egypt to finalize terms and said the hostages could be released early next week; he is also weighing a regional visit.  Key first-phase elements:  Hostage releases: All living hostages held by Hamas are to be freed. Roughly 20 are believed alive; Trump said releases could begin Monday or Tuesday, noting the logistics are complex. Mediators are finalizing arrangements. Hamas will also return the remains of about 28 deceased hostages, which it says may take at least 10 days to locate.  Prisoner releases: After all hostages return, Israel is expected to release 250 Palestinians from Israeli prisons and 1,700 Palestinians detained in Gaza during the conflict. Lists are being finalized. Hamas is pressing for high-profile prisoners, including Marwan Barghouti.  Cease-fire and security: A cease-fire has begun. Israeli troops started withdrawing from parts of Gaza Friday, though the scope and lines of the initial pullback remain under negotiation. Hamas seeks an Israeli exit from roughly 70% of Gaza; Israel favors a smaller withdrawal.  International support: About 200 U.S. troops are arriving to help monitor the truce, support a transition to civilian governance, and facilitate humanitarian aid.  Border access: The Rafah crossing with Egypt will reopen to increase aid flows and enable controlled movement of Palestinians.

NDAA:  The Senate approved its version of the FY2026 National Defense Authorization Act (NDAA) late Thursday on a 77–20 vote, ending weeks of stalled negotiations that nearly sidelined the must-pass bill.  Before final passage, senators adopted amendments to repeal outdated war authorizations, boost congressional security, authorize the Coast Guard, restrict Chinese pharma and tighten oversight of outbound investments. The breakthrough followed tense behind-the-scenes talks, including a last-minute standoff with Sen. Tammy Duckworth (D-Ill.), who threatened to block the bill until she secured a Defense Department briefing on National Guard deployments. Duckworth later received a commitment from Senate Armed Services Chair Roger Wicker (R-Miss.) for a hearing “in the coming weeks.”  A key amendment from Sen. Tim Kaine (D-Va.) repeals the 1991 and 2002 Iraq War AUMFs—matching language in the House bill and increasing the odds of full repeal in conference. Another, from Sens. John Cornyn (R-Texas) and Catherine Cortez Masto (D-Nev.), targets U.S. investments in China after Sen. Maria Cantwell (D-Wash.) won assurances it would be revised to address corporate concerns.  Financial policy also surfaced briefly. Sen. Rand Paul’s proposal to end Federal Reserve interest payments on bank reserves failed 14–83, though Sen. Elizabeth Warren (D-Mass.) backed it as “the start of a bipartisan fight.” A Warren–Rick Scott (R-Fla.) amendment to make Fed and CFPB inspectors general presidential appointees garnered 53 votes—short of the 60 needed.

CHINA:  China escalated pressure ahead of a planned Xi–Trump meeting, imposing new port fees on U.S.-owned and U.S.-built vessels effective Oct. 14—the same day Washington plans new charges on large Chinese ships at U.S. ports. Separately, China’s market regulator opened an antitrust probe into Qualcomm’s acquisition of Autotalks; Qualcomm shares were little changed mid-morning in New York.  Beijing also tightened export controls on rare earths—adding five mid- and heavy elements to existing curbs—and has continued a halt on U.S. soybean purchases, squeezing farm states. The moves follow fresh U.S. actions, including planned ship levies, expanded sanctions aimed at restricting Huawei’s access to U.S. goods, and other proposed aviation and trade measures.  The rare-earth curbs underscore China’s leverage: it dominates production and refining of heavy rare earths essential for high-performance magnets, semiconductors, and defense systems. However, several light elements remain exempt, limiting near-term impact. Earlier permit delays already disrupted manufacturers in Europe and Asia.  Both sides appear to be stockpiling bargaining chips before a leaders’ meeting at this month’s APEC summit. A fragile tariff truce—after U.S. duties climbed as high as 145%—expires Nov. 10 unless extended. Analysts warn the tit-for-tat risks complicating talks even as Beijing signals interest in re-engagement and potential concessions on purchases of U.S. goods. US President Donald Trump said he saw “no reason” to meet Chinese President Xi Jinping and threatened a “massive increase” of tariffs on goods from China, citing recent “hostile” export controls on rare-earth minerals.  “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Trump posted Friday on social media.  

THE COURT:  The Supreme Court opened its 2025–26 term this week with a slate of six closely watched cases spanning criminal rights, speech regulation, and election law. In Villarreal v. Texas, the justices examined whether a trial judge can bar a defendant from consulting with counsel during an overnight recess, testing the boundaries of the Sixth Amendment. Berk v. Choy raised a procedural question of whether state “expert affidavit” requirements in medical malpractice suits can apply in federal court under the Erie doctrine and the Rules Enabling Act. On Tuesday, Chiles v. Salazar drew attention as Colorado’s ban on “conversion therapy” for minors faced scrutiny over whether it regulates speech or professional conduct. The same day, Barrett v. United States explored double-jeopardy implications of dual firearm charges under 18 U.S.C. §§ 924(c) and (j). Rounding out the week, Bost v. Illinois State Board of Elections tested whether candidates have standing to challenge mail-ballot receipt deadlines, while United States Postal Service v. Konan asked whether the Federal Tort Claims Act’s “postal exception” shields the Postal Service from claims of intentional nondelivery.  On the orders docket, the Court denied Google’s request to stay a lower-court injunction in Google v. Epic Games, keeping pending Play Store reforms in place. It also denied review in Maxwell v. United States, leaving Ghislaine Maxwell’s conviction intact, and declined to hear Live Nation and Ticketmaster’s arbitration appeal. The justices further denied a stay of execution in an Alabama case and granted review in Hunter v. United States, which will decide how strictly appeal waivers in plea agreements bind defendants. The next round of oral arguments begins November 3, 2025, with major implications expected for criminal law, free speech, and election administration

THE MORE THINGS CHANGE…:  Control of the White House changed in FY2025, but the budget picture didn’t: it remains grim. According to the Wall Street Journal, despite a historic jump in tariff revenue, the deficit for the year ended Sept. 30, 2025, matched 2024 as core drivers—Social Security, Medicare, and interest—kept rising.  Tariffs delivered $195 billion, more than double 2024, though they still accounted for just 3.7% of federal receipts versus 51% from individual income taxes.  Net interest on the debt reached about $1.029 trillion—more than Medicare or defense—roughly $1 of every $5 collected. Higher rates and a larger debt stock leave little short-term relief.  Spending didn’t shift much under the Department of Government Efficiency (DOGE). Non-interest outlays rose $220 billion (4%). Excluding a $131 billion noncash adjustment from student-loan changes recorded in September, non-interest spending would have increased by $351 billion. Declines were limited to FDIC (fewer bank-failure costs) and SBA (fewer disaster loans).  Social programs continued to climb: Social Security rose 8% (including expanded benefits for some public employees), and Medicare and Medicaid each increased 8%; Medicaid growth may slow under new eligibility limits.  The deficit was about $1.8 trillion (~6% of GDP), nearly flat year-over-year. Debt held by the public is nearing 100% of GDP and could surpass the 1946 record (106%) in coming years. Trump’s policies are mixed: extended tax cuts and higher defense spending widen gaps; tariffs and cuts offset modestly.

HIGHER ED:  MIT President Sally Kornbluth publicly rejected the Trump administration’s “Compact for Academic Excellence,” which promised priority access to federal funding and private support for signatory universities. In a letter to Education Secretary Linda McMahon, Kornbluth affirmed MIT’s commitment to free expression and to the principle that research funding must be awarded on scientific merit alone.  The compact’s terms included prohibiting consideration of gender, race, or political views in admissions and programs; freezing tuition for five years; adopting a strict definition of gender; and enforcing institutional neutrality. Critics warned the sweeping conditions threatened university independence and hinted at risks to research funding, student loans, and visas for noncompliance.  Kornbluth noted MIT already meets or exceeds many benchmarks—need-blind admissions, free tuition for most families under $200,000, and a STEM-heavy curriculum—yet opposed provisions that would restrict speech or institutional autonomy. MIT, she wrote, remains committed to a federal research partnership grounded in independent inquiry and open competition.

LETITIA JAMES:  New York Attorney General Letitia James has been indicted by a federal grand jury on bank-fraud and false-statement charges tied to a 2020 mortgage for a Norfolk, Va., property. An initial court appearance is set for Oct. 24 before a magistrate judge in Norfolk.  Lindsey Halligan, the U.S. attorney for the Eastern District of Virginia, said the charges reflect “intentional, criminal acts and tremendous breaches of the public’s trust.”  James called the case “a continuation of the president’s desperate weaponization of our justice system,” arguing it is retaliation for her civil fraud case against him.  Prosecutors allege James obtained favorable “second home” loan terms and then rented the property, yielding roughly $19,000 in improper benefits; they also cite alleged misstatements on insurance and tax forms.  U.S. District Judge Jamar Walker has been assigned to the case. James, represented by Abbe Lowell, said she will fight the charges “aggressively.

MORE ON THE SHUTDOWN:  ANTICIAPTED AGENCY IMPACTS:  Below is an Agency level look at impacts felt or expected to be felt over the next 7 days. 

Treasury / IRS

• Operations: ~46% furloughed; call centers, paper processing, and IT/security work slow.

• Investigations: Criminal tax cases proceed; most civil exam/compliance slows; interagency data support constrained.

• Payroll: Excepted staff unpaid; furloughed no pay; IRA/multiyear funds don’t broadly cover salaries.

• Grant Disbursement: IRS has no grants; Treasury community-program grants (e.g., SSBCI/State & Local) funded from prior appropriations continue on drawdown, but new awards/mods requiring FY26 funds on hold.

USDA / WIC & FEMA / NFIP

• Operations: WIC temporarily bridged; NFIP cannot issue/renew policies.

• Investigations: USDA program-integrity and civil-rights inquiries slow; FEMA fraud/waste checks continue if tied to active disasters/life safety.

• Payroll: USDA excepted staff unpaid; FEMA disaster-funded personnel paid only when DRF supported; NFIP staff on annual funds unpaid.

• Grant Disbursement: WIC reimbursements continue via temporary bridge; other USDA competitive grants/new obligations paused. FEMA disaster grants (PA/IA/HMGP) proceed as DRF allows; non-disaster grants slow.

Transportation — FAA / NTSB & Rural Air (EAS)

• Operations: FAA flow control/throughput metering where coverage thin; DOT injected $41M to stabilize EAS; overflight fees pro-rata.

• Investigations: NTSB accident investigations and FAA safety probes continue; non-safety analytics/rulemaking slip.

• Payroll: Controllers and excepted FAA/NTSB staff unpaid; furloughed tech/admin no pay.

• Grant Disbursement: AIP grants (contract authority/prior-year) can continue reimbursements; new discretionary AIP obligations slow; BUILD/RAISE reimbursements may lag without staff.

HHS (FDA, CDC, NIH, OCR) & OPTN/UNOS

• Operations: FDA/CDC core safety, NIH clinical care continue; UNOS >90 furloughs; matching continues, committees paused.

• Investigations: OCR (HIPAA) investigations continue at reduced tempo; other program-integrity/quality oversight not tied to immediate risk defer.

• Payroll: Excepted HHS staff unpaid; select FDA user-fee work may continue payroll; UNOS (contractor) furloughs active; reimbursements delayed.

• Grant Disbursement: NIH/CDC/SAMHSA/ACF: new awards and many continuations delayed; drawdowns on already obligated grants often still possible via PMS, but approvals/NOAs slow.

Environmental Protection Agency (EPA)

• Operations: Furloughs underway (~15k); permitting/inspections/civil enforcement paused; emergency response continues.

• Investigations: Civil/criminal environmental cases largely paused unless imminent risk; EJ/climate oversight slows.

• Payroll: Excepted cadre unpaid; furloughed no pay; contractor invoices slip.

• Grant Disbursement: State revolving funds & prior-obligated grants (IIJA/annual) may reimburse with delays; new grant obligations/awards and amendments largely paused.

Financial Regulators — SEC / CFTC

• Operations: SEC >90% furloughed; CFTC ~6% staffed; SEC allowing limited automatic effectiveness to avoid IPO freeze.

• Investigations: Emergency market-fraud/stability matters proceed case-by-case; most enforcement and reviews slow.

• Payroll: Excepted staff unpaid; furloughed no pay; fee collections don’t broadly solve salaries during lapse.

• Grant Disbursement: Minimal grants at these agencies; contractor payments delayed, impacting market-data/support vendors.

DHS — CISA & ICE Detention Oversight

• Operations: CISA ~one-third staffed; incident response continues; outreach/training curtailed. ICE detention oversight paused.

• Investigations: Exigent cyber incidents supported; broader sector assessments and joint investigations slow.

• Payroll: Excepted cyber/LE staff unpaid; paused oversight staff no pay; contractor SOC/IR retainers at risk of stop-work/slow pay.

• Grant Disbursement: FEMA preparedness grants (HSGP, UASI, Port, Transit) drawdowns from prior awards can continue; new FY26 obligations/approvals paused. CISA grants/tech assistance largely delayed.

State Department

• Operations: Consular (fee-funded) passports/visas continue; policy/support thin.

• Investigations: Sanctions/anti-corruption and fraud-prevention proceed where excepted; other audits/inquiries slow.

• Payroll: Fee-funded consular staff can be paid; appropriated-fund staff unpaid if excepted/no pay if furloughed; LES payroll depends on local funding mix.

• Grant Disbursement: ECA/DRL/INL/PRM: new awards & mods delayed; drawdowns on obligated awards may continue, but program officer approvals and payments slow.

Education

• Operations: Pell/loans disburse; servicing delays; new grants/oversight slow.

• Investigations: Civil-rights investigations defer absent imminent harm.

• Payroll: Excepted unpaid; furloughed no pay; servicer (contractor) payments delayed, affecting call-center staffing.

• Grant Disbursement: Title I/IDEA formula funds already obligated continue via states; new discretionary awards/NOFO actions and amendments paused.

Labor (OSHA, WHD)

• Operations: OSHA limited to imminent danger/fatalities; WHD investigations paused; grants slow.

• Investigations: Non-emergency safety and fair-pay investigations defer.

• Payroll: Excepted inspectors unpaid; furloughed no pay; grantee/contractor payments lag.

• Grant Disbursement: ETA formula grants (WIOA, UI admin) continue draws where obligated; competitive grants/approvals and modifications delayed.

HUD

• Operations: Program ops slow; reliance on state/local partners increases.

• Investigations: Fair-Housing (FHEO) cases proceed mainly where partner agencies lead; HUD-run investigations delayed.

• Payroll: Excepted staff unpaid; furloughed no pay.

• Grant Disbursement: CPD formula (CDBG, HOME, ESG): jurisdictions can draw obligated funds, but approvals, amendments, and monitoring slow; new awards paused.

Commerce — BIS / BEA / Census / NOAA

• Operations: BEA/Census data releases delayed; NOAA forecasting continues; BIS prioritizes national-security licenses, routine processing delayed.

• Investigations: Trade/competition/supply-chain studies slow; urgent export-control enforcement continues.

• Payroll: NOAA forecasters often excepted and unpaid; BIS/BEA/Census largely furloughed/no pay; isolated units with working-capital/multiyear funds may continue payroll.

• Grant Disbursement: EDA, NIST, NOAA grants: drawdowns on obligated awards can proceed but approvals/NOAs & amendments slow; new funding actions paused.

DOE / NNSA

• Operations: Nuclear-safety/one-of-a-kind ops continue; some labs operate on multiyear funds.

• Investigations: Nuclear-safety investigations continue; non-emergency supply-chain/industrial-base reviews defer.

• Payroll: Excepted DOE/NNSA staff unpaid; labs with non-lapsed funds continue payroll short-term; others constrain hiring/overtime.

• Grant Disbursement: EERE/OE/NE/ARPA-E: drawdowns on obligated awards typically allowed; new selections/awards/mods and invoice approvals slow.

DoD

• Operations: Military ops continue; civilian support constrained.

• Investigations: NCIS/OSI and critical safety/accident inquiries continue; audits and non-urgent reviews slow.

• Payroll: Oct 15 pay at risk without a CR or stand-alone fix. Active duty/excepted civilians unpaid; furloughed civilians no pay; contractor invoices lag.

• Grant Disbursement: Limited DoD grants (e.g., research via DURIP/MURI/Minerva) drawdowns may continue if obligated; new awards/CLINs and mods delayed.

Judiciary (cross-cutting)

• Operations: Courts funded by fees through Oct 17; then essential-only.

• Payroll: Judiciary staff paid while fees last; then excepted unpaid.

• Grant Disbursement: DOJ/OJP/OVW court-related grants: draws on obligated funds may continue; new obligating actions slow.