Republicans stress over economic whiplash from Iran conflict

Republican lawmakers are sounding the alarm over how voters view President Trump’s handling of the economy after Iran announced over the weekend it would keep the Strait of Hormuz closed, raising the prospect of high fuel prices through Election Day.

Growing Republican concern about a likely voter backlash in November has spurred some Republican senators to call for their leaders to broaden the scope of the pending budget resolution to address cost-of-living issues, including housing, gas and medical costs.

Facing pressure from GOP colleagues, Senate Majority Leader John Thune (R-S.D.) on Monday acknowledged that Republicans could do more in a new budget reconciliation bill to address the economy.

“I think elections generally are about the economy. I think most people are pocketbook voters. Yes, we need to be speaking to the needs of the American people. I think we’ve done a lot of that. If there’s more that we can do, I’m certainly open to it,” he said.

“I think that some of our colleagues have good ideas about how to approach it,” he said.

Sen. John Kennedy (R-La.) warned fellow Republicans that their failure to emphasize economic issues such as affordability could cost them control of Congress after November.

“If we lose the midterms, it will be because we didn’t talk about what moms and dads are worried about when they lie down to sleep at night and can’t, and that’s primarily the cost of living,” he said on Fox News’s “The Big Weekend Show.”

Kennedy is one of a group of GOP senators who want to expand the scope of the budget reconciliation package, which can avoid a Democratic filibuster and pass the Senate with a simple-majority vote. The package, however, is the Republicans’ vehicle for passing funding for immigration enforcement, which is why leadership had been leery of weighing it down with other priorities.

“The disagreement that we’ll have in our caucus will be skinny versus chunky,” Kennedy told reporters on Capitol Hill. “I’d rather do chunky, but you can’t do chunky unless you’re very confident that everybody is OK with the extra weight. That includes the House, as well.”

Sen. John Cornyn (R-Texas), who is running for reelection and faces a tough primary challenger, said he agrees with Kennedy that voters’ view of the economy will determine how Republicans fare on Election Day.

He expressed hope that the conflict with Iran will wind down soon so Republicans can put more focus on economic and cost-of-living issues in the summer and fall.

“I think that’s probably right, which is why I’m hoping that the Iran situation stabilizes soon and then we can turn to talking about the things that voters care about most,”  he said when asked about his colleague’s blunt assessment on voters’ views of the economy will be the biggest factor on Republicans’ political fates.  

Sen. Ted Cruz (R-Texas) has urged colleagues to use the budget reconciliation package they plan to advance in the next few weeks aggressively to address voters’ economic concerns.

He has floated using it as a vehicle to allow taxpayers to index capital gains taxes to inflation, which he argues would energize the economy and help more Americans afford to buy housing.  

“That would have a massive positive stimulus effect for the economy, and affordability is a huge issue for the voters,” Cruz said last week on his podcast, warning that Republican leaders could be repeating the mistake them made in 2018 by not trying to push another ambitious reconciliation package packed with GOP priorities before the midterm election.

Thune said Senate Republicans would have a discussion Tuesday about the budget resolution and potentially expanding it beyond its current narrow focus on funding Immigration and Customs Enforcement and Border Patrol over the next 3 1/2 years.

But Thune warned it could be difficult to get enough consensus on proposals to pass them through both chambers of Congress.

“In the end, as I’ve said before, it’s all about the math; it’s what can you get 50 and 218 for?” he said, referring to the votes needed to pass legislation. “In this environment, that’s going to be challenging, to say the least.”

And he noted that expanding the budget reconciliation bill beyond funding for immigration enforcement could delay final passage of a measure that Trump wants on his desk as soon as possible.

“Right now the goal is to ensure those DHS agencies are funded,” he said, referring to the Department of Homeland Security.

Financial markets rallied Friday after Trump had declared the critical Strait of Hormuz was open to ship traffic.

But the euphoria was short-lived as the Islamic Revolutionary Guard Corps announced Saturday it would target any ship moving through the narrow channel.

Another troubling sign came this weekend when Energy Secretary Chris Wright said gas prices could remain elevated for months, backing away from his claim last month that gas would drop below $3per gallon within “weeks.”

Hoping to win over voters angry about rising gas prices, some Republicans are pitching a suspension of the federal gas tax, which stands at 18.4 cents per gallon.

Sen. Josh Hawley (R-Mo.) has proposed eliminating taxes on health expenses.

But Thune and other Republican leaders are reluctant to include tax-related proposals, such as indexing capital gains to inflation, in the budget reconciliation bill.

That’s because doing so would open the way for Democrats to offer amendments to the bill to challenge many of the core elements of the One Big Beautiful Bill Act, which Congress passed last year to enact Trump’s tax agenda.

Thune pointed out that adding the proposal to index capital gains to inflation to the budget reconciliation bill, for example, “implicates the Senate Finance Committee, which brings into play … lots of other tax policies and health care policies that could get considered on the floor, too.”

“Everything gets harder,” he explained. “The goal in this was to try and keep this [bill] confined and narrow, knowing full well that in order to get it across the floor in both the House and Senate, it would have to be fairly narrowly constructed.”

Trump’s approval rating sank to a new low in his second term, according to an NBC News poll released Sunday.

The survey of more than 32,000 adults conducted from March 30 to April 13 showed that only 37 percent of Americans approve of his job performance, compared to 42 percent who expressed approval in December.

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Only 32 percent of adults said they approved of Trump’s handling of inflation and the cost of living. The respondents identified the economy as the most important issue.

That’s why GOP senators such as Kennedy say the war’s impact on the economy could have bigger political ramifications than the war itself.

“If we lose the midterms, it won’t be because of Iran,” Kennedy predicted.

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