Washington, DC

1. Inflation pressures Warsh
2. $20M to Lone Star State
3. Russia sanctions problems
4. Trump sells Iran
5. GOP populism

Average mortgage rates hit a 52-week high of 7.08%

Inflation pressures Federal Reserve on rates

Annual inflation remained stubbornly high last month at 3.4%, according to new Labor Department data — driving up to 90% the market odds of the Federal Reserve raising interest rates at its meeting next week. Core prices of goods, excluding food and energy, accelerated in August, rising 0.3% higher than July; that shift suggests the problem isn’t limited to the energy shock of the Iran war. Still, American households also spent 27% more on gas last month than a year ago. Diesel crossed $6 per gallon nationally this week and is surging higher in some states. In California the average is approaching $8 per gallon. New data out today also showed consumer sentiment dropped in September to a near-historic low, according to a monthly survey by the University of Michigan.

Why Republicans feel compelled to lift Paxton

Republican outside groups are now spending big on behalf of Texas Attorney General Ken Paxton, showing just how critical the state is to the party’s chances of keeping the Senate — and how important it is that Texas stay red. Republicans don’t think Paxton is the best candidate, but they can’t afford to leave him adrift and risk losing Senate control. President Donald Trump demonstrated best how Republicans feel about Paxton, dinging his appearance and public speaking, then imploring the GOP to vote for him. Senate Leadership Fund, a super PAC aligned with Majority Leader John Thune, launched an 8-figure spend via a group on Friday, aligning with Trump’s super PAC pouring $10 million into the race. Republicans thought Sen. John Cornyn wouldn’t have needed that help in the general. But they are stuck with Paxton, and they need him to win.

Why Russia sanctions will wobble in the House

The House is teeing up a vote next week on a bipartisan Russia sanctions bill that will face major turbulence on the floor. Republicans are aiming to pass a rule for debate on the Senate-passed sanctions plan, which would empower Trump to impose tariffs as high as 100% on imports from nations that do business with Moscow. But given the GOP’s narrow majority in the House, passing a rule to advance the legislation will require near-total party unity — a herculean task. Democrats generally don’t support GOP-led procedural votes (and a recent backlash against two centrists who defected on a rule vote is further disincentive to break from the party), Many House Democrats are skeptical of the Senate-passed legislation because of the tariff authority it hands to Trump, so Republican leaders likely couldn’t bypass the rule with a two-thirds majority vote on the sanctions measure.

— Nicholas Wu

Trump makes case for Iran war in 9/11 speech

President Trump made the case for his decision to go to war with Iran today during a speech at the Pentagon commemorating the 25th anniversary of the September 11 attacks. “We salute the service members working right now to ensure the world’s Number One sponsor of terror, the Islamic Republic of Iran, will never ever have a nuclear weapon,” Trump said. The war, which was expected to end within weeks, has stretched beyond the six-month mark and it has grown more complex: The crown prince of Saudi Arabia asked Trump yesterday for help with the Iran-backed Houthis in Yemen. Yesterday the Houthis hit the kingdom’s East-West pipeline, which has been critical to keeping oil flowing amid upheaval in the Strait of Hormuz. They also seized a strategic island in the Bab al-Mandab Strait in the Red Sea, the other main oil export route in the Gulf.

Republicans leave Dallas with a populist agenda

DALLAS — Trump closed out the GOP’s midterm convention by repeating his proposal for a $5000 “dividend,” capping two days of populist ideas designed to blunt Democratic momentum. Republicans touted their “Working Families Tax Cuts” all day Thursday, and Vice President JD Vance said that their party had done what Democrats “failed to do” by expanding Biden-era policies that lowered drug prices, taking on “big pharma.” Vance and other convention speakers hammered the opposition on cultural issues, crime, and immigration, but put special emphasis on their most popular tax policies, touting ideas that were once supported by progressives – but got no Democratic votes last year.

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White House

• President Trump reiterated his promise to give all Americans $5,000.
• The contractor that renovated the Lincoln Memorial Reflecting Pool said errors in its own work caused the pool’s liner to peel and break loose. —NYT

Congress

• Democratic Rep. Joe Neguse of Colorado, who’s currently the assistant leader, is going to run for the assistant speaker position if Democrats flip the House this fall. There’s some dispute in the caucus over the job’s ranking in the leadership hierarchy.

National Security

• A moment of silence was added to the annual 9/11 memorial service at Ground Zero to honor those who died of cancer and other illnesses caused by toxic air in the aftermath of the attacks.
• The Central Intelligence Agency released never-before-seen intelligence shared with the White House ahead of 9/11. —NYT

Foreign Policy

• More than 100 military advisers are in Saudi Arabia supporting the kingdom’s response to the Iran-backed Houthis in Yemen. —CNN

Technology

• Anthropic said Iran used its American AI model to target US war ships. —WSJ

Campaigns and Elections

• Former Sen. Al Franken, D-Minn., and two dozen other Jewish Americans endorsed Abdul El-Sayed in the Michigan Senate race.

Courts

• Republican election officials from seven states wrote in brief to the Supreme Court that it’s too late for President Trump’s mail-in ballot order to be implemented before the midterm election.
• An Afghan woman accused of supporting the Islamic State was deported after being tried in an obscure terrorism court set up 30 years ago. —NYT

— Treasury Secretary Scott Bessent

Laura McGann, editor

With help from Elana Schor, senior Washington editor, and Morgan Chalfant, Washington briefing editor

Graph Massara and Lauren Morganbesser, copy editors

Contact our reporters:

Burgess Everett, Ashley Gold, Eleanor Mueller, Shelby Talcott, Nicholas Wu, David Weigel, David Lim