Capitol Hill Chaos: GOP Budget Battle and the 2026 Midterms

Money Explainers

21/6/2025

A Republican Congressman fears the budget bill could cost the GOP the House in 2026. The controversial SALT cap is a major hurdle for the House GOP's budget plans.The Fed warns of rising inflation from tariffs and potential economic slowdown.
#GOPUnderPressure. #SALTtaxShowdown. #StagflationAlert.

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00:00A Republican congressman is openly admitting fears that the House GOP's ambitious budget bill could

00:05be a political death knell for the party in the 2026 midterm elections. Representative Mark

00:11Alford of Missouri confessed to Fox Business that the legislation, dubbed the big, beautiful bill,

00:16as it currently stands, is a major threat to Republican members in crucial swing districts.

00:22His primary concern? The controversial salt cap, the limit on state and local tax deductions.

00:29Alford warned that if a compromise isn't found, the GOP risks losing its House majority,

00:34paving the way for Joaquin Jeffries to become Speaker in 2027 and ushering in an era of impeachment,

00:40impeachment, impeachment. He hopes the cap can land somewhere between $10,000 and $40,000.

00:47But without a deal, it reverts to pre-2017 levels, a prospect that deeply worries Republicans in

00:53high-tax states like New York. Meanwhile, the Federal Reserve is navigating its own challenges.

01:00They've kept interest rates steady, but their latest forecasts show inflation, measured by the

01:05Personal Consumption Expenditures Price Index, rising above 3% in 2025. Federal Reserve Chair Jerome Powell

01:12explicitly stated that tariffs are expected to cause a meaningful increase in inflation in the coming

01:17months, with consumers ultimately bearing the cost. While recent economic data, like stronger job

01:23growth and improved consumer sentiment, has been positive, Powell cautioned that these gains might

01:28be temporary, a delayed reaction to how tariffs infiltrate the economy. The looming concern is

01:34stagflation, that toxic mix of higher prices and slower growth, a scenario now on the Fed's radar.

01:41Adding to the complexity, President Trump remains undecided on ordering a U.S. strike on Iran,

01:46even after multiple White House meetings with his national security team.

01:51J.P. Morgan analysts predict that a regime change in Iran resulting from military action

01:55could have a profound impact on the global oil market. This geopolitical uncertainty,

02:01combined with the inflationary pressures from tariffs and the potential for slowing economic growth,

02:06paints a challenging picture for the U.S. economy and the political landscape leading into 2026.

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