The Bellevue Compass

If there’s a topic you’re interested in our analysis of, feel free to drop us a line. We’ll be doing deeper dives on the big stuff as it happens, but we’re always happy to hear what you want to know.

Congress is still out on recess until next week, but that doesn’t mean anything has been quiet. In fact, it’s been a loud couple of days out of Washington, beginning with President Trump’s FY2027 proposed budget, handed to Congress last week, and his online threats against Iran that enraged both the Democratic Party and his own. We’ll break it down below. 

Iran

After a few days of aggressive and substantial threats to attack Iranian bridges and power plants, President Trump backed off—with two hours to spare before his self-imposed deadline. 

Prior to his 8 PM press conference, the president announced that the US and Iran had agreed to a two-week ceasefire, contingent on Iran reopening the Strait of Hormuz. 

Israel has also reportedly agreed to the ceasefire, which Iran proposed. The president called it a “workable” 10-point peace plan, and negotiations began between the United States and Iran on Friday in Islamabad. Passage through the Strait will be allowed under Iranian military control, according to Iranian Foreign Minister Abbas Araghchi, and the plan allows both Iran and Oman to charge fees on ships transiting the Strait (via AP News). Iran’s other conditions for a ceasefire include the withdrawal of U.S. combat forces in the region, lifted sanctions, and the release of its frozen assets. 

There’s a high likelihood that when Congress returns, we’ll see a renewed push for a war powers resolution through the House. House Democrats have already called on Speaker Johnson to reconvene the chamber early from recess to address the topic. 

FY2027 Budget 

President Trump released his 2027 $1.81 trillion budget proposal Friday, requesting a total of $1.5 trillion for defense spending—a 44% increase and the largest defense request in decades—while cutting many non-defense programs by 10%. The document clearly reflects the administration’s stated priorities: more money for the Pentagon, immigration enforcement, and a $10 billion “construction and beautification” fund for Washington, D.C. (At least we can say they stayed on message.) Also included is a $481 million increase for hiring air traffic controllers. 

On the cuts side, the budget proposes a 13% reduction to HUD, a 12% decrease to Health and Human Services—and cuts to programs like LIHEAP, the low-income home heating assistance program—and cancels more than $15 billion from the Biden-era infrastructure law targeting renewable energy and NOAA grants. Community Block Service grants, which fund things like financial counseling, job assistance, and housing support for low-income communities, are also on the chopping block. 

As always, a presidential budget is a statement of values, not law. Congress is free to reject the budget, and often does, but the priorities outlined in the budget will set the terms for the upcoming appropriations fights. Part of the proposed defense spending, somewhere around $350 billion, could be passed through reconciliation by Republicans, as it was last year. Still, the remaining $1.1 trillion would require bipartisan support through regular appropriations. That might be a high bar, given the current DHS budget impasse. The nation is running nearly $2 trillion in annual deficits, and the total debt has surpassed $39 trillion. Two-thirds of the U.S’s estimated annual $7 trillion spending covers Medicare, Medicaid, and Social Security. 

The Sector Breakdown

The PA Impact

We won’t know the real impact of the FY27 budget until the details get ironed out, and we’ve certainly covered the impact of the ongoing DHS shutdown in previous editions. If you’d like a refresher, here’s the most up-to-date analysis. There are a number of other things impacting Pennsylvania this week that are important to note. 

The impact of last year’s cuts to government agencies saw thousands of federal workers laid off or losing their jobs entirely, and an Inquirer article breaks down where the cuts occurred. The Department of the Treasury, the Department of Veterans Affairs, and the Social Security Administration were the hardest hit, and the metropolitan area saw a total 16.7% decline in federal workforce members, based on data from the U.S. Office of Personnel Management. 

As the DHS funding fight continues, many states have money wrapped up in the ongoing conflict—Pennsylvania included. A group of Pennsylvania counties have billed the federal government more than $21 million in recent years to detain immigrants in local jails, according to an investigation by Spotlight PA. The review found that five county jails have or had agreements—some predating the Trump Administration by years or decades—with federal immigration enforcement agencies to hold people in their centers in exchange for fees. You can read the full report here at Spotlight PA. 

In other news, the U.S. Forest Service is closing four facilities in Pennsylvania as part of a restructuring plan by the Trump administration to move the service’s headquarters from D.C. to Salt Lake City. Similar to how, during his first term, Trump moved the Bureau of Land Management to Colorado—the Biden administration moved it back to D.C.—he’s citing a desire to put officials nearer to the lands they oversee. As a result, Pennsylvania will have a state office in Warren, but existing facilities in Irvine, Long Pond, Williamsport, and York will close.

🔥 What We’re Watching

Did You Know? Pennsylvania just opened its first underground state park, Laurel Caverns, with over four miles of underground passages to walk through.

Till next time,