How Republicans lost their groove

IN THIS EDITION

Political winds whip the MAGA movement

Senate Dems will huddle on emerging shutdown deal

What Virginia and New Jersey tell us about 2026

Tech: House GOP leaders skeptical of chips bill in NDAA

Two big job moves — and more

THE TOP

Political winds whip the MAGA movement

Happy Thursday morning.

The political winds in Washington whip around wildly — especially with President Donald Trump in the White House.

Since Trump signed the One Big Beautiful Bill Act into law four months ago, Republicans have seemed adrift. Trump has his own agenda; he’s consumed with foreign affairs, immigration and remodeling the White House, among other things. The president seems to view Congress as a nuisance he’d rather avoid than have to deal with.

Whether it’s tariffs, attacks on alleged drug-trafficking boats in the Caribbean, or unilaterally freezing congressionally appropriated funding, Congress oftentimes seems like an afterthought for the Trump administration.

Instead, Trump has found a rhythm on the global stage, jetting to the Middle East to celebrate a ceasefire in Gaza and traveling throughout Asia during the now 37-day government shutdown.

On Wednesday, after his party suffered a drubbing at the ballot box, Trump implored Senate Republicans to blow up the filibuster “this afternoon.”

Trump directly contradicted GOP congressional leaders in declaring that the shutdown has been worse for Republicans than Democrats. The president then jetted off to Miami for a speech. Needless to say, Senate Republicans largely ignored Trump’s demands and went about their day.

As Trump has grown more enamored with international affairs, his domestic agenda has suffered — and that’s now impacting Capitol Hill. This worrisome dynamic for Republicans has come into sharper focus during the last 48 hours.

1) The election. If there’s one truism about U.S. politics, it’s that the media overhypes the results of off-year elections while officials on the losing side underplay them.

On Wednesday, Speaker Mike Johnson explained that “blue states and blue cities voted blue” while asserting that House Republicans would expand their majority in the midterm elections. Senate Majority Leader John Thune similarly downplayed the outcome and blamed lackluster Republican candidates.

We’ll dive deeper into the warning signs for Republicans coming out of Tuesday night down below. But just look at the exit polls. In Virginia, 59% of independents voted for Democrat Abigail Spanberger for governor. Nearly half of Virginia voters said the economy was the most important issue facing the commonwealth — and they clearly don’t feel Republicans are doing enough to address their needs.

The entire state of Virginia is trending away from Republicans. In New Jersey, Democrats flipped Hispanic voters, a key bloc for Trump in 2024.

Some Republicans acknowledged this should be a wake-up call for 2026, when affordability and the cost of living will continue to be front and center.

“A lot of people are hurting and the Republicans can’t let that just pass them,” Sen. Jim Justice (R-W.Va.) told us. “Because if it does, there’ll be a bad day coming. Last night was an awakening for a lot of folks, and if we didn’t pick up on it then, then we’re not gonna pick it up.”

Justice added that if Republicans “gloss over” the growing economic hardship facing Americans, “it’ll be a bad day in the midterm.”

In California, Democratic Gov. Gavin Newsom pushed through Prop 50, a ballot initiative that could wipe out as many as five GOP congressional seats in the state. Republicans barely even pretended to compete in the Golden State, allowing Democrats to dominate the airwaves en route to a 27-point victory.

2) The shutdown and a Trump chasm. Trump and Hill Republicans are now in completely different places on the political impacts of this seemingly endless shutdown.

Johnson and Thune have been making the case incessantly that Democrats are to blame for the spending impasse, hyping up the expiration of premium Obamacare tax credits as a way to curry favor with a leftward-drifting Democratic base.

But at a breakfast on Wednesday, Trump trampled all over that message, saying the election results showed that the shutdown has been “worse for us than for [Democrats].”

It was a headsnapping comment that threw Hill Republicans back on their heels. And it led many in the top rungs of the GOP leadership to wonder whether Trump would try to cut a deal with Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries.

Despite what the GOP congressional leaders say, most Trump aides recognize that skyrocketing health care premiums will hurt Republicans. It would be Trump who has to take the lead on a deal like that, which could cause further angst with Hill Republicans

3) Tariffs. Trump’s tariff regime — a hallmark of his first 10 months in office — is now at risk of collapsing.

Three conservative Supreme Court justices seemed skeptical of the government’s argument that IEEPA gives the administration broad authority to levy tariffs without congressional approval.

It could be weeks or months before SCOTUS issues a decision. But if the justices rule against Trump, it would be a seismic decision. A Republican Congress deeply skeptical of international economic warfare may be forced to vote on tariffs — perhaps several times. This would be a major headache for both Thune and Johnson.

All told, this is a crucial moment for Democrats when it comes to the shutdown, which we’ll get into in the next item. Trump’s comments about the politics of the shutdown, paired with the election victories, served as validation of Democrats’ focus on affordability.

“I think the Republicans are realizing…what we have realized for months — that skyrocketing health care costs are not a good thing, and people can’t afford it,” Sen. Mark Kelly (D-Ariz.) said.

Two more notes:

— Sen. Chris Murphy (D-Conn.) is our guest on Fly Out Day today.

— Thanks to everyone who came to the Punchbowl News Townhouse Wednesday night. We hosted Hill staffers from both parties — who haven’t been paid in weeks — for pizza and drinks.

— Jake Sherman, Andrew Desiderio, Max Cohen and Laura Weiss

Seeking real-time reporting and answers to your pressing questions? Upgrade your subscription today and save nearly 20% per month by opting for an annual membership that includes monthly virtual briefings and Q&A’s led by our editorial team that give you a front-row seat to the news shaping the country.

THE SENATE

Senate Dems will huddle on emerging shutdown deal

Senate Democrats spent Wednesday touting their big Election Day wins and President Donald Trump’s reaction. Today, we’ll find out whether that will derail bipartisan talks to end the 37-day-long government shutdown.

Democratic senators are scheduled to hold a special caucus meeting later Thursday. Senators and aides believe the session will determine whether enough Democrats will back an emerging deal to reopen the government and vote on a bill extending expiring Obamacare subsidies.

Many Senate Democrats feel emboldened to continue the fight, pointing to the election victories, as well as Trump’s acknowledgment that the shutdown has hurt Republicans politically more than their party.

At the same time, Democrats involved in the bipartisan talks believe that even just a guaranteed vote on Obamacare subsidies could entice enough Republicans to strike a bipartisan compromise that gets 60 votes.

“The goal of all Democrats is to extend the tax credits for all Americans. It’s a very simple goal,” said Sen. Peter Welch (D-Vt.), who wants an Obamacare deal before voting to end the shutdown. “How we get there in the face of Trump’s opposition remains to be seen.”

Speaker Mike Johnson, though, has not committed to a vote in the House on Obamacare subsidies, which is giving some Democrats pause.

It only takes a handful of Democrats to vote to reopen the government. As we reported on Wednesday, senators and aides involved in the bipartisan talks came away from a closed-door huddle believing there are still a dozen or so Democrats willing to stay the course.

Those Democrats, however, were tight-lipped on Wednesday, preferring to let their party’s election wins marinate. Other Democrats sought to convince their colleagues to hold out for a better deal.

“I think we’re in an enormously strong position right now to make a big difference for the people we represent,” Sen. Chris Murphy (D-Conn.) said. “Nobody in my state whose premiums are doubling cares about a failed vote that has some relevance for a future election… The American people told us last night to use our power to fight for the things we believe in.”

The Senate is scheduled to have floor votes later in the day than usual for a Thursday. Senate Majority Leader John Thune hasn’t decided yet whether to keep the chamber in session through the weekend. Thune previously said he’d need to see real signs of progress in order to keep senators in town.

In the meantime, more shutdown-induced pain is coming. The Department of Transportation announced a 10% reduction in flight capacity at 40 major airports beginning Friday. This will snarl air travel nationwide.

Fault lines. The debate among Senate Democrats is the same as it’s always been — whether to accept a commitment for a vote rather than a pre-negotiated Obamacare deal with both Trump and the GOP-run House.

Senate Republicans remain adamant in their view that Democrats want something that GOP leaders simply cannot deliver.

“We’ve made it very clear that you open up [the] government and then we can work on a solution that will actually stand the test of time, including one that our president could perhaps consider supporting and convincing the House to support,” said Sen. Mike Rounds (R-S.D.), who’s involved in the bipartisan talks.

But Democrats are pointing to Trump’s belief that the shutdown has hurt Republicans more than Democrats as evidence that it’s entirely possible Trump wants to end the crisis by cutting a health care deal with Democrats and making Hill Republicans vote for it.

It’s why Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries re-upped their request for a bipartisan meeting with Trump.

“Trump may not be able to bully them on the filibuster, but he can absolutely muster 10 votes for anything he wants,” Murphy added.

— Andrew Desiderio

ELECTION POST-GAME

What Virginia and New Jersey tell us about 2026

Democrats notched wins across the nation Tuesday, from a little-known state office in Georgia to snagging the governorships of New Jersey and Virginia. These races delivered a trove of data on how the electorate feels about both parties and President Donald Trump’s first year in office.

Two things stuck out to us as we sifted through the results. One trend gives Democrats reason for optimism ahead of 2026. Another offers a note of caution.

Let’s dive in.

Hispanic voters in New Jersey. Trump found surprising strength in New Jersey in 2024, propelled by a rightward shift among Latino voters. But it was unclear that what happened last year was Trump-specific or in fact indicative of a wholesale disillusionment with the Democratic Party.

The three most Latino counties in New Jersey — Passaic, Cumberland and Hudson — offer key insight.

Rep. Mikie Sherrill (D-N.J.) won Passaic County, which is 43% Latino, by a whopping 15 points. In 2024, Trump won it by three points.

Sherrill won Cumberland County by four points, a seven-point shift from Trump’s three-point win there in 2024. And in Hudson County, Sherrill pulled a 50-point win, nearly doubling former Vice President Kamala Harris’ 28-point margin.

This is just one state, but it suggests that Latino voters aren’t wedded to the GOP, especially amid Trump’s harsh immigration crackdown. Trump and the 2024 election may have been an outlier than a permanent realignment.

This matters because Democrats have to defend a slew of heavily Latino districts in South Texas, New Mexico, Nevada, California and Florida. They’re banking on Latino voters swinging back in their direction. Meanwhile, Republicans drew maps in Texas hoping Trump’s Latino support would transfer to generic GOP candidates.

Virginia’s House of Delegates. What happened in the state legislature drew less attention than the governorship, but Democrats grew their majority in the Virginia House of Delegates. They’re on track to flip 13 districts.

Which seats Democrats won are also informative. They swept the eight GOP-held seats that Harris carried in 2024. Then Democrats flipped another five that Trump carried by between one and five points.

But Democrats didn’t flip any seats that Trump won by more than five points, though one such race does remain too close to call. That’s not great news for Democrats when you extrapolate it out.

In Congress, there are only three Republicans in Harris-won seats. And there are only a dozen or so GOP-held House seats that Trump won by five points or less, thanks to redistricting. That number is growing smaller thanks to the mid-decade round of remaps.

This doesn’t mean Democrats can’t retake the House. But Virginia didn’t signal that the environment is favorable enough to help them push deep into Trump turf. And Democrats may need that in these House races.

– Ally Mutnick

… AND THERE’S MORE

Two big job moves — and more

News: Derek Harley, Speaker Mike Johnson’s director of House operations, is leaving to become the CEO of the Congressional Institute.

Harley has worked on Capitol Hill on and off since 1999. The Congressional Institute is a non-profit that, among other things, organizes the House Republicans’ annual legislative retreat.

Johnson said that Harley has, for 25 years, “faithfully served the People’s House with distinction, ensuring that Members of Congress have the tools they need to best serve their constituents.”

“We are all very grateful for his years of service to the Congress, and we look forward to his tenure at the helm of the Congressional Institute in these historic times,” Johnson said. “No one is better prepared to carry out the Institute’s mission to develop effective public servants for the American people.”

Downtown news: Matt Bravo is becoming the managing partner of S-3 Group. Bravo was a top aide to House Majority Leader Steve Scalise. Bravo’s clients include T-Mobile, Google, Shield AI, the NFL, Meta and JPMorgan Chase.

Basel III Endgame, extended, continued: Republicans on the Senate Banking Committee urged the Federal Reserve to finalize Basel III capital reforms and avoid “structural overcapitalization,” according to a letter we obtained.

The letter, led by Sens. Mike Rounds (R-S.D.) and Tim Scott (R-S.C.), is a technical takedown of different aspects of the capital increases proposed by regulators under the Biden administration. The message is fairly simple: don’t overdo it.

“Using current capital levels as the reference point would institutionalize excessive requirements,” the senators wrote. Read the letter here.

– Jake Sherman and Brendan Pedersen

MOMENTS

CLIPS