WHAT IS HAPPENING
The United States and Iran have concluded the first round of talks related to the ambitious Memorandum of Understanding (MOU), which provides for a 60-day negotiation period to address the most contentious issues between the two countries, including: 1) the unblocking of frozen Iranian assets; 2) the future of Iran’s nuclear program (for example, which country will actually carry out the removal of uranium); 3) the lifting of sanctions against Iran (some of which would require Congressional action, while others would not, as demonstrated by the 60-day waiver granted this morning on Iranian oil, here); as well as 4) the future of tolls on goods passing through the Strait of Hormuz. Support for Iran’s proxy groups remains a relevant issue but was not mentioned in the MOU. U.S. negotiators (led by Jared Kushner and Steve Witkoff) are expected to remain in Switzerland this week to continue working on the technical details of the “foundations” of the agreement (here).
NOT PARTICULARLY HELPFUL
Despite the relatively constructive tone of the negotiations, over the weekend President Trump stated that the United States would “strike” Iran if it “continued to attack Israel in Lebanon,” an opinion shared yesterday by some Capitol Hill hawks, including Senator Lindsey Graham (R-SC), who predicted the deal would fail and that Trump would ultimately have to “annihilate” Iran (here).
NOTHING NEW
Despite ongoing uncertainty, the oil market continues to experience declines (here), offering some relief to the average gasoline price – and to members of Congress running for re-election – which currently averages below $4 per gallon (here).
NATO SECRETARY GENERAL VISITS WASHINGTON
In the context of ongoing negotiations with Iran, NATO Secretary General Mark Rutte will travel to Washington this week, where he will meet with Secretary of Defense Hegseth — who recently described NATO as a “one-way street” — and is also expected to meet with President Trump; topics on the agenda for both meetings include Iran, Ukraine, and more generally, NATO alliance military spending. These are the same issues discussed when Trump and Rutte met in April this year, following the start of the conflict with Iran, after which Trump hinted at considering the withdrawal of the United States from NATO, writing on social media: “NATO WAS NOT THERE WHEN WE NEEDED IT, AND IT WON’T BE IF WE NEED IT AGAIN.”
Yes, but: remember that Trump cannot unilaterally withdraw the United States from NATO. Keep in mind that in 2023 Congress – led by then-Senator Marco Rubio (R-FL) – voted and ultimately enacted, under President Biden, a law that prohibits the president from “suspending, terminating, denouncing or withdrawing the United States from the North Atlantic Treaty” without the advice and consent of the Senate (60 votes) or an act of Congress (also with 60 votes in the Senate and 50% in the House). Not to mention that NATO continues to enjoy broad support among Americans (here), as well as widespread backing throughout the U.S. Congress.
In fact: Congress not only has no intention of approving a U.S. withdrawal from NATO, but is also quietly trying to prevent the Administration from significantly reducing ground troops – below 76,000 units – even in Europe. As Republican Senator Rounds (R-ND) stated: support for NATO “is not a controversial issue. It enjoys broad consensus within Congress. We recognize how important it is to send a strong message to our NATO allies, to let them know that we are still good partners.” (here)
In conclusion: Although President Trump likes to call NATO a “paper tiger,” one could argue that the real “paper tiger” is the threat that the United States might withdraw from NATO.
ABOUT CONGRESS
Congress is legislating on housing! Both chambers of Congress are in session this week and are ready to pass a revised housing bill – the first comprehensive housing law passed in decades. The bill is the result of months of negotiations between the two chambers, during which the House of Representatives and the Senate approved (multiple times) their respective versions of the text and disagreed on several points (here). Nevertheless, House Ways and Means Committee Chairman French Hill attributed these bicameral tensions to how the legislative process is supposed to work (here), praising the work done and noting that “making laws means pursuing progress, not perfection.” The bill is expected to be approved by the Senate today and will move to the House for consideration, most likely on Wednesday, after which Trump is expected to sign it into law.
WHAT THE HOUSING BILL ENTAILS
Summaries of the bill are available here, here, and here. Although the bill contains more than 45 provisions, it mainly provides for:
Modernizes rules related to both the construction and financing of manufactured and modular homes: Among other things, the bill removes the requirement to equip manufactured homes with a permanent frame, provides streamlined financing options for this type of housing, and designates HUD as the primary regulatory authority for this type of housing, often used in affordable housing complexes;
Offers incentives to increase local housing construction: The bill allocates Community Development Block Grants (CDBG) and other federal funding to growing a community’s housing supply, incentivizing local entities to build more housing;
Provision related to institutional investors: The legislation prohibits institutional investors – defined as those owning more than 350 single-family rental units – from purchasing additional single-family rental units, although the updated bill protects “build-to-rent” companies by exempting single-family homes built specifically for rental from restrictions imposed on investors. The final version removes a Senate proposal that would have required private equity firms to divest their single-family real estate portfolios within seven years;
Simplified development: The bill accelerates housing construction by reducing federal regulations and speeding up environmental assessments, providing greater flexibility under the National Environmental Policy Act (NEPA) for affordable housing, specifically:
Permanent renewal of the HOME program: The bill reforms and permanently renews the HOME Investment Partnerships program to facilitate the use of funds for the purchase of affordable housing and infrastructure; and,
No funding: Despite the wishes of Senator Elizabeth Warren (D-MA), a prominent member of the Senate Banking Committee, the bill does not provide funding for new public housing programs; however, given the popularity of programs such as the Low-Income Housing Tax Credit (LIHTC), more direct funding could be provided in future legislative measures.
IN SUMMARY
Although the bill is not a miracle solution, since most building permits, zoning, and urban planning are under state and local jurisdiction, it nevertheless represents gradual progress aimed at promoting the supply of a housing stock that continues to face an estimated deficit of 3-4 million homes across the United States (here) and addressing a fundamental issue for voters (here). Although this session of Congress has been one of the least productive in recent history, the housing bill, which required considerable bipartisan and bicameral effort, demonstrates that Congress is capable of tackling (gradually) complex issues when it chooses to. It also reinforces the idea that the GSEs continue to represent an important tool in the housing policy arsenal, highlighting the low likelihood that the GSEs will be removed from conservatorship in the short term (if that ever happens).
