Washington, DC

1. Oil price playbook
2. Iran war spooks markets
3. More inflation data
4. Housing bill troubles
5. Texas Sen update
6. US squeezes Sudan

PDB: Another DHS funding bill fails

Vance visits North Carolina … Trump signs executive orders … US releases GDP estimate

White House revives oil price playbook

As the war in Iran drives oil prices higher, the Trump administration and its allies are trying to persuade a price-sensitive public that the short-term pain will be worth the long-term gain. If it sounds familiar, that’s because it is — the GOP used the same playbook when shopping President Donald Trump’s tariffs and their tax legislation, Semafor’s Eleanor Mueller, Shelby Talcott, and Burgess Everett report. But this time around will be a tougher sell. Oil supply was on track to outpace demand before the war began. But economists say returning to that trend will depend on when the Strait of Hormuz can be reopened and whether oil infrastructure survives unscathed. And right now, there’s little guarantee of either. Meanwhile, midterms are approaching fast. “The longer [the price of oil] stays up, the more electoral danger there is for Republicans,” Sen. Rand Paul, R-Ky., told Semafor.

War fears send oil back above $100

Fears over the Iran war sent stock markets plummeting and oil closed above $100 a barrel, as the Treasury temporarily eased Russian sanctions to allow the purchase of oil currently stranded at sea. The S&P 500 fell 1.5% Thursday, its worst single-day performance of the war so far, while US gas prices rose for a 12th straight day. It came as a refueling plane crashed in Iraq, the military said, killing four crew. The tanker plane is the fourth manned aircraft lost since the war began; while none of the air losses came from enemy action, Iran’s weapons are finding targets, with 16 commercial ships attacked in the Persian Gulf. The White House “significantly underestimated” Iran’s willingness to close the Strait of Hormuz, CNN reported, and although it has pledged to escort tankers, it is “not ready” to do so, the treasury secretary said.

Fed gets pre-war inflation update

With the conflict in Iran driving up costs, a forthcoming inflation report will offer the Fed pre-war data to chew over ahead of its meeting next week. January’s Personal Consumption Expenditures price index is expected to show the Fed’s preferred inflation gauge still hovering around 2.9%, even after a rosier reading of a different inflation measure earlier this week. The Fed is widely expected to hold rates steady on Wednesday, and it’ll be a while before the government releases inflation data that sheds light on the impact of the war. But gas prices are already rising, and those costs will soon filter down to other industries. Goldman Sachs pushed off its estimated timeline for more rate cuts, citing war-induced inflation. “We’re looking at some really scary inflation ratings — pervasive inflation throughout the country,” one oil analyst told the Financial Times.

House and Senate split on housing bill

The Senate passed its housing package by a lopsided margin, but the House has no plans to take it up when it returns next week. Though the bill includes some House-passed provisions, Republicans in the lower chamber have groused about the Senate leaving them out of the drafting process. Now, leaders say a final bill should be negotiated between both chambers, but it’s not clear if they’d support hashing out differences through a conference committee, even as some House Republicans push for one. “It seems to me that there are outstanding concerns with the Senate’s housing bill as currently drafted,” like its requirement that institutional investors sell any rental properties they build within seven years, said Rep. Mike Flood, R-Neb., who chairs the Financial Services subpanel on housing. A conference committee “may be the most viable path forward,” he said.

— Nicholas Wu and Eleanor Mueller

Trump endorsement still in play in Texas

Conservatives are enjoying the contortions of Sen. John Cornyn, R-Texas, who abandoned his career-long support for the Senate filibuster as he seeks Trump’s endorsement to save his reelection bid. Cornyn voiced support for scrapping the filibuster in a New York Post op-ed this week, aligning himself with the president and conservative activists who want to pass the SAVE Act, a package of voter ID requirements that can’t get the support needed to overcome the 60-vote threshold. The drama over the bill has stalled any Trump endorsement in the May runoff between Cornyn and Texas Attorney Gen. Ken Paxton, who said he’d consider quitting the race after multiple outlets reported that Trump was about to get behind Cornyn.

— David Weigel

US puts the squeeze on Sudan

Washington is ramping up pressure on groups involved in Sudan’s civil war, a sign the Trump administration is taking a growing interest in the conflict. The State Department moved to designate the Sudanese Muslim Brotherhood as a foreign terrorist organization, a step widely seen as a win for the UAE, which has long sought to discredit the Brotherhood. The announcement drew calls for similar penalties to be leveled on the UAE-backed Rapid Support Forces, the paramilitary group fighting Sudan’s armed forces. The US Commission on International Religious Freedom also recommended labeling the Rapid Support Forces an “entity of particular concern.” The group is “committing particularly severe violations of religious freedom … including drone attacks on mosques and the shelling of churches,” commissioner Mohamed Elsanousi told Semafor. Sudan seems to be noticing: The country hired lobbying firm The Williams Group as it looks to more aggressively shape its image in DC.

— Adrian Elimian

Debatable: Iran war funding

Congress will soon weigh whether to approve additional funding for the Iran war effort, as the US military burns through its weapons stockpiles. Pentagon officials reportedly told lawmakers earlier this week that the first six days of the war cost the US more than $11.3 billion. “I would say by the end of the month, we will have a pretty good idea of what the request will be,” Senate Armed Services Committee Chair Roger Wicker told Semafor’s Morgan Chalfant. Congress should approve a war supplemental “ASAP so we can rebuild our munitions and stockpiles, not just for Iran but for anything else that we do,” said Sen. Jim Banks, R-Ind. But Sen. Andy Kim, D-N.J., argued that Congress shouldn’t approve “any additional funds” because the administration hasn’t sought authorization from Congress for the war effort.

Atlantic editor-in-chief Jeffrey Goldberg joins Mixed Signals on the one-year anniversary of the scoop known as Signalgate — when he was accidentally added to a top-secret Trump administration group chat. Max and Ben ask if anything actually changed after the scandal, how Trump reacted to the story, and why the president invited Goldberg to the Oval Office afterwards. Goldberg also talks about falling out with Benjamin Netanyahu, The Washington Post’s struggles under Jeff Bezos, and why he believes The Atlantic’s mix of magazine storytelling and newspaper reporting is the key to its success.

Beltway Newsletters

Punchbowl News: “The relationship between Senate Majority Leader John Thune and President Donald Trump is under increasing stress, as the two diverge on legislative strategy and tactics.”

Playbook: Leading Washington strategist Juleanna Glover communicated with the late sex offender Jeffrey Epstein for more than a year before his death in 2019; she says it was with the aim of sinking President Trump’s reelection.

WaPo: “What the Democrats in Joe Biden’s time were trying to do is shove everything down, all the social issues, when, in all reality, we had some real issues that were going on, with economics, border … infrastructure needs,” former Webb County Democratic Judge Tano Tijerina, who is running as a Republican in Texas’s 28th Congressional District, said of his decision to switch parties.

White House

• President Trump advised Venezuelan opposition leader María Corina Machado during a recent breakfast meeting not to return to Venezuela for the time being. — NYT
• Trump nominated State Undersecretary Sarah Rogers to replace Kari Lake atop the agency that runs Voice of America (Rogers says she’s keeping her current job).

Congress

• Senate Democrats blocked a bill to fund the Department of Homeland Security, further prolonging the partial shutdown.
• Rep. Jim Clyburn, D-S.C., announced plans to run for reelection at the age of 85.
• The House Homeland Security Committee is investigating the $220 million DHS ad campaign that eventually led to Kristi Noem’s ouster. — NY Post

Outside the Beltway

• TSA workers will miss their first full paycheck today as the partial shutdown continues.

Campaigns

• Silicon Valley billionaires are considering assembling a $500 million fund to shape California politics. — Bloomberg

Economy

• Fed vice chair for supervision Michelle Bowman said the central bank plans to loosen capital requirements for large banks.