The Washington brief

Executive summary

• As the window for passing legislation narrows, geopolitical developments in Iran and the broader Middle East further complicates the process and timing for enacting important portions of President Trump’s policy agenda. Major policy initiatives are further complicated by the start of the midterm election season, whereby legislators are busy defending their seats over the coming months.
• Several initiatives, such as ratepayer protection for AI-driven energy demand and a partial ban on institutional investors purchasing single family homes, have stronger bipartisan support. Conversely, the passage of several key bills appears unlikely in this Congress, including comprehensive tariff legislation and a second reconciliation bill aimed at addressing energy production regulations and health care insurance reforms.
• President Trump is also advocating for a comprehensive cryptocurrency bill. However, questions involving the ethical role of government in cryptocurrency regulation have complicated the bill's progression.

Our take

Revisiting the current Trump policy agenda

With the House of Representatives out of session, the Republican Conference gathered last week for its annual policy retreat in South Florida. A key topic on the agenda was whether the party should pursue a second reconciliation bill that would enable Republicans to pass certain policy measures with a simple majority vote and bypass the filibuster. The megabill would aim to address energy production regulations and health care insurance reforms.

Despite support from House Speaker Mike Johnson, reconciliation continues to face internal division among key Republicans. Due to the procedural challenges involved and the lack of widely supported policy ideas following last year’s attempt, advancing another reconciliation bill appears unlikely.

Midterms and SAVE Act. The timing around major policy initiatives is further complicated by the start of the midterm election season, which officially kicked off last week in several southern states. In the coming months, lawmakers will be busy defending their seats amid ongoing redistricting battles. Additionally, the President's efforts to enact a voter verification law, also known as the Safeguard American Voter Eligibility Act (SAVE Act) -- that requires enhanced proof of citizenship for voter registration may influence voter sentiment. The legislation is currently being debated in the Senate and could be voted on this week.

Cryptocurrency Market Structure. The President is also advocating for a comprehensive cryptocurrency bill after successfully securing the passage of a more limited stablecoin measure in Congress. This policy initiative strengthens the President’s image as a leader in the innovation economy, especially during an election season in which digital asset stakeholders are expected to play a major role in political spending and influence. However, several related challenges have surfaced that complicate the bill’s progression. These include broader questions about the definition of banking in the 21st-century economy, the need to enhance ethics rules for government officials engaging in financial services businesses, and whether to expand AML/BSA requirements across the rapidly evolving and increasingly global financial ecosystem.

A look back at State of the Union

During the 2026 State of the Union address, President Trump discussed a broad range of prospective policy initiatives with significant implications for banks, capital markets, and individuals considering wealth strategies. The President’s agenda emphasizes tax relief, investment incentives, and structural reforms to major markets, such as health care, energy, and financial services. However, the Iran conflict complicates the Trump policy agenda, and Congress has yet to exercise its war powers by voting to support (or limit) the President’s actions. Ultimately, duration of the engagement in Iran will be key to managing public support for major policy initiatives.

Here’s a quick summary of the salient points raised during the President’s State of the Union, which touched on year-one accomplishments and prospective agenda items.

I. Tax, savings, and wealth accumulation

The President touted his tax law’s permanent large-scale tax reductions:

• Elimination of taxes on tips and overtime income
• No tax on Social Security benefits for seniors
• Expanded child tax credit
• Interest on auto loans deductible for U.S. manufactured vehicles

Implications: Americans could see higher disposable income and increased consumption, while tax planning and estate strategies may need to adjust to lower taxable income streams. However, these cuts may put downward pressure on federal revenue from labor and retirement income sources.

He touted his “Trump Accounts” – Tax-free investment accounts for children:

• Accounts would be seeded with $1,000 from the federal government
• The program would be jump-started by large private philanthropic contributions, including $6.25 billion pledge to help 25 million children in certain areas
• Potential for balances exceeding $100,000 by age 18 with modest contributions

Implications: This could create new, long-term retail investment flows and expand the role for custodial accounts and asset management, while significantly shifting toward early-life capital formation as a national objective.

The President proposed expansion of government-matched retirement savings:

• Workers without employer-sponsored plans gain access to a federal-style retirement plan
• Government matches contributions up to $1,000 annually

Implications: Likely to drive significant inflows into equity and fixed-income markets, increase competition for private retirement platforms, and improve household balance sheets and market participation over the long term. We view the probability of passage as uncertain. Currently, this proposal does not have a "score" and is not part of any legislative package. If Republicans decide to push for another reconciliation bill, the likelihood of this provision passing would increase.

II. Trade and tariffs

The President touted tariffs as revenue replacement for income taxes

• Tariffs communicated as a structural, long-term replacement for income taxes
• Current arrangements to remain in place; no Congressional action needed

Implications: This represents a major rebalancing of federal revenue sources, with potential long-term impacts on inflation, foreign exchange markets, and trade finance. Multinational banks and cross-border capital flows could face increased material exposure.  While the President has made significant progress in advancing his tariff agenda, parts of it have been complicated by legal action and a wholesale replacement of America’s income tax regime is not likely.

Furthermore, tariffs will remain central to economic and geopolitical strategy, elevating policy risk for globally exposed banks and companies, increasing volatility in trade-dependent sectors, and sustaining the need for hedging and advisory services.

III. Housing, credit, and asset markets

The President called for a ban on institutional ownership of single-family homes:

• Prohibits large investment firms from purchasing significant quantities of single-family homes
•  Calls for Congressional action to permanently codify the ban

Implications: Both the Senate and the House have passed different housing affordability bills that need to be reconciled either privately or through a formal conference process. Both bills aim to increase housing supply and lower costs. The Senate version includes a partial restriction in single-family home purchases that could reduce institutional investor participation in real estate, potentially repricing housing assets, and altering strategies in mortgage origination and private credit. Unrelated proposals, such as prohibiting the Federal Reserve from issuing a digital currency, and ongoing disagreements over broader banking policies, are creating additional obstacles to bill passage. With bipartisan and bicameral support, some version of a housing affordability bill could pass by the summer.

IV. Health care and insurance market restructuring

The President has called for eliminating federal payments to large insurance companies

• Redirects funds directly to individuals for healthcare; enforces maximum price transparency

Implications: Could disrupt traditional insurance business models, reallocate large healthcare cash flows, and affect credit and equity markets for insurers and lenders. Although this idea has some bipartisan support, it would radically change the healthcare market; thus, it probably requires years of work before it being enacted.

Most-Favored-Nation prescription drug pricing:

• Americans to pay the lowest prescription prices globally
• Presidential call for Congressional codification

Implications: Pharmaceutical margins may compress, with downstream effects on healthcare equities and portfolios, as well as reduced household healthcare costs.

V. Energy, infrastructure, and AI-driven demand

“Ratepayer Protection Pledge” for AI energy demand:

• Requires major tech firms to secure the power for their AI and data centers
• Sheilds household electricity rates from AI-driven increases

Implications: Drives private energy infrastructure investment, creates opportunities for project finance, and reduces regulatory risk for consumer utility pricing. The White House is pressuring firms to pledge to cover the costs of the power they consume.

VI. Fiscal discipline and governance

The President called for a “War on fraud” for budget balancing

• Large-scale fraud recovery to reduce deficits and potentially balance the budget

Implications: Increases enforcement and compliance requirements for financial institutions, expands government oversight, and aims to achieve fiscal consolidation without new taxes. The President’s efforts here are ongoing and may ramp up as he has designated his Vice President as the fraud czar.

Bottom line

President Trump’s 2026 policy agenda centers on tax relief, investment incentives, and structural market reforms, but its progress is increasingly constrained by the Iran conflict, varying congressional support, and the onset of the midterm election cycle. While a second reconciliation bill and expansive tariff authority are being discussed, both face significant procedural and political hurdles, making passage unlikely. As a result, only narrower, more bipartisan measures, such as housing affordability and protecting consumers from AI-driven energy costs, have a realistic chance of advancing in the near term. Additionally, lawmakers continue to negotiate how to fund current DHS operations, which include cybersecurity related resources that are relevant to today’s heightened threat levels.

Our full report is reserved for clients only. Let’s work together.

A caring advisor can help you uncover opportunities and take on challenges—and provide greater confidence, clarity, simplicity, and direction.