Key Takeaways:
- Trump demands Senate pass the SAVE America Act, which has failed five times
- FISA surveillance powers expired June 12 after Trump blocked a hearing
- Lindsey Graham's death complicates a third budget reconciliation package
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Trump and Senate GOP clash on 3 fronts as tensions simmer
President Donald Trump and Senate Majority Leader John Thune are struggling to align on at least three major legislative fronts — the SAVE America Act, expired FISA surveillance authorities and a third budget reconciliation package — as the White House pushes for $350 billion in emergency defense funding tied to the months-long conflict with Iran.
"Trump is the one who's putting the pressure on Senate Republicans to move in his direction, so the more Trump applies the pressure, the more conflict there is — the more pushback there is," said Ron Bonjean, a GOP strategist and former Senate leadership aide.
June proved particularly rocky for Thune. Trump blindsided the majority leader by refusing to allow Jay Clayton, his nominee for director of national intelligence, to testify before the Senate Intelligence Committee. The president then refused to sign a bipartisan housing affordability bill that was a top Thune priority, though it became law without his signature on July 11. Trump has since threatened political retaliation against any Republican who votes against the SAVE America Act, which would restrict mail-in voting, ban transgender athletes from women's sports and prohibit gender reassignment surgery for minors. The Senate has voted on the bill or its components five times, and it has never secured a simple majority — four GOP senators voted against Trump's preferred version.
The standoff carries direct market implications. Enhanced surveillance authorities under the Foreign Intelligence Surveillance Act expired on June 12 after Trump told Clayton to skip his confirmation hearing, leaving what Thune called a "dark" period for intelligence-gathering programs. Trump has insisted on linking any FISA extension to passage of the SAVE America Act, declaring on June 14: "I'm against FISA if it doesn't come with The Save America Act (Full version!) firmly attached to it." The Intelligence Committee has rescheduled Clayton's hearing for July 16, but the broader impasse remains unresolved.
The death of Sen. Lindsey Graham (R-S.C.) on July 12 from a "brief and sudden illness" has added another layer of complexity. Graham chaired the Senate Budget Committee, and his passing removes a key figure needed to advance the third budget reconciliation package Trump is demanding. Sen. Ron Johnson (R-Wis.), a staunch Trump ally, is in line to take over the gavel. Trump wants $350 billion for the Pentagon through reconciliation, arguing on Truth Social that "the SAVE AMERICA ACT, which everyone is asking for, paired with the full funding of our Great Department of War, can be passed very quickly." Thune has instead urged colleagues to move $67.1 billion in emergency defense spending through regular appropriations, a slower process that avoids the filibuster-proof reconciliation route.
The Pentagon is running low on munitions after months of conflict with Iran, which has escalated to include U.S. airstrikes and Iranian retaliation across the Gulf region. The Strait of Hormuz, through which about 21% of global oil trade passes, has been a flashpoint. The last time the U.S. faced a comparable Middle East escalation — the 2019 attacks on Saudi Aramco facilities — Brent crude spiked 15% in a single session. While oil markets have so far priced in a risk premium, any disruption to the Strait of Hormuz shipping lanes could trigger a sharper move in crude benchmarks.
Thune spent time with Trump in South Dakota over the July 4 recess celebrating the nation's 250th anniversary, part of an effort to mend fences. He is planning a "blitz" to confirm as many of Trump's nominees as possible this work period, including Todd Blanche to head the Justice Department and Keith Sonderling to lead the Labor Department. But Republican strategists warn the calm may be temporary. "It feels as if things have calmed down for a little bit for right now because tensions were really high, but they could return to being very tense shortly," Bonjean said. "It really depends on where Trump is. He's not letting the SAVE Act go."
This article is for informational purposes only and does not constitute investment advice.
