Good morning. Pete Hegseth is having a rough week, and it’s the thread running through today’s newsletter. Army Secretary Daniel Driscoll resigned after months of clashes with him, sources say his culture-war focus is actively undermining Army modernization, and he’s now spiking promotions for officers who don’t fit his vision, drawing criticism from Republicans and Democrats alike. He also picked a fight with Canadian teenagers, of all people. Meanwhile the Iran war ramped back up overnight, with Tehran accusing the US of striking a wedding party and retaliating against American allies across the Gulf, oil prices climbing as a result.
On the economy, the picture keeps darkening: weak job growth, rising mortgage rates, and a global bond selloff that’s pushing borrowing costs higher everywhere. Plus a birthright citizenship crackdown, Ed Markey’s primary win, Russia’s escalating drone war with Ukraine, and more below.
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Here’s the news:
Pete Hegseth is in trouble:
Pete Hegseth is in trouble today. Army Secretary Daniel Driscoll resigned after just 18 months on the job following months of clashes with Hegseth, and Senator Jack Reed, the top Democrat on the Senate Armed Services Committee, said Hegseth has “hollowed out” the Army’s senior ranks, firing or blocking the promotions of dozens of officers including Chief of Staff Gen. Randy George and half of all four-star generals. A source told NBC that Driscoll raised concerns directly with Trump about Hegseth blocking the Army’s modernization efforts by firing the generals responsible for them before submitting his resignation. Driscoll had publicly said as recently as this year that he had no plans to leave, and the White House called his tenure “highly effective” without addressing why he’s departing. His exit adds to a growing list of senior departures under Hegseth, including Navy Secretary John Phelan, Southern Command chief Adm. Alvin Holsey, and Gen. Chris Donahue.
CNN reports that multiple sources believe Hegseth’s fixation on culture war issues, rather than modernizing the Army for drone warfare and 21st-century combat, is actively disrupting the service’s progress. One former senior Army official said firing technically skilled leaders “for arbitrary reasons... creates confusion and a void,” while a defense official in Europe said Hegseth talks about reform in memos but in practice focuses on “muscles, dudes in dresses, testosterone.” Gen. Christopher LaNeve, whom Hegseth installed as acting chief of staff after ousting George, is reportedly seen internally as “isolated,” “in over his head,” and pushing a “back to basics” approach that a defense official called “absolutely” antithetical to the modernization work Driscoll, George, and Donahue were pursuing. LaNeve’s nomination hasn’t been sent to the Senate and he’s widely believed to lack the votes for confirmation. The Pentagon insists it’s a “total fabrication” that Hegseth isn’t focused on modernization, with spokesman Sean Parnell calling him “a transformative leader.”
Hegseth’s promotion purges are continuing and expanding. He spiked at least six Army officers from a two-star general promotion list this week, just days after blocking four officers from one-star promotions, several of whom had ties to the ousted George and Donahue. The New York Times reported the removed officers include two Black officers and two women, and NBC reported several were logisticians who manage fuel, food, and equipment for troops. Republican Senator Susan Collins publicly criticized Hegseth in July for firing more than two dozen senior officers and blocking promotions, saying the military “is one of the greatest meritocracies in the free world” and needs to stay that way, while Democratic Senators Cory Booker and Brian Schatz have demanded an Inspector General investigation into whether Hegseth is using “personal views on race and gender” to interfere with merit-based selections. Hegseth’s office has said officers serve “at the pleasure of the president” and denied gender or race factor into the decisions.
Hegseth also picked an odd fight with Canadian teenagers this week, reposting an image of a youth cadet award ceremony in British Columbia with the caption “(this is real),” seemingly mocking the size of the instructor presenting the medal. The post drew immediate backlash, with critics accusing him of body-shaming a minor and a civilian instructor in a program for 12-to-18-year-olds that isn’t even part of Canada’s military. Canadian Prime Minister Mark Carney called the post “beneath their office” and said the U.S. needs to “stop doing memes, stop throwing shade” if it wants serious trade talks. The Pentagon stood by the post, with a spokesperson saying it “speaks for itself.” The episode is the latest escalation in the broader U.S.-Canada trade war, layered on top of tariffs, insults, and the fight over renaming Lake Ontario.
Amid the ongoing war with Iran, Hegseth is facing calls for impeachment from several members of Congress. Arizona Democratic Rep. Yassamin Ansari said on social media that in the six months since strikes on Iran began, 120 children died in a strike on a school, 18 American servicemembers have been killed, gas prices have hit record highs, and Trump and his sons have profited from investments in defense contractors receiving government business. “Neither Trump nor Pete Hegseth have achieved an objective in this war,” she wrote, calling for Hegseth’s impeachment. That statement was reported by Iran’s state-affiliated Mehr News Agency, so it’s worth reading in that context, though Ansari’s underlying claims about troop deaths and gas prices reflect a real and growing frustration among some lawmakers over the war’s costs. It comes as fighting has flared again, with the U.S. launching fresh strikes and Iran claiming retaliatory attacks on American bases in the region.
Iran war:
Iranian officials say a U.S. airstrike hit a wedding party in a private home in the southern Hormozgan province late Tuesday, with the foreign ministry claiming more than 50 people were killed or wounded and state TV later reporting at least four dead and dozens hurt, with six in critical condition. Iranian state TV interviewed a local fisherman who said the wedding was for his daughter, and described one missile crashing through the roof and another destroying a courtyard wall. Iran’s foreign ministry spokesman called it part of a “chain of atrocities” alongside an earlier strike on a school in Minab that killed dozens of children, an attack U.S. officials say was likely American but unintentional, possibly caused by outdated intelligence. CENTCOM said it was aware of the wedding reports, which originated from Iranian state media, and insisted the “U.S. military never targets civilians,” without confirming or denying the strike occurred.
Iran retaliated overnight by targeting U.S. allies Jordan, Bahrain, Kuwait, and the UAE with missiles and drones, a day after the U.S. carried out fresh strikes on Iranian military targets including air defense sites, radar systems, and mine-laying capabilities. Jordan’s military said 13 ballistic missiles were fired at it, with 10 intercepted and three landing in remote areas with no casualties, while Bahrain confirmed it intercepted Iranian drones aimed at a military base there. Iran’s Revolutionary Guard claimed it struck at least seven bases across the region, including one in Jordan it said killed multiple U.S. personnel, but CENTCOM dismissed that claim and noted the U.S. doesn’t actually maintain bases inside Jordan. In Kuwait, a residential complex caught fire after being hit by what officials called “criminal Iranian aggression,” though the blaze was brought under control with no casualties reported.
President Trump dismissed the idea of a near-term peace deal on Tuesday, telling Fox News “an agreement with them isn’t worth the paper it’s written on” and warning Iran that “if they retaliate, they’ll be hit much harder. And if they do it again, they’ll be no longer.” He also renewed his call for Iranians to “rise up and fight” against their government, writing on Truth Social that the regime’s economy is “totally collapsing” and that he “couldn’t care less” if they sign what he called a worthless agreement. It echoes rhetoric from when the war began in February, though Trump has wavered over the months, at one point saying he “never cared about regime change” and even calling Iran’s leadership “very rational” back in June. The mixed signals underscore how unsettled U.S. strategy remains nearly seven months into the conflict, with no resolution in sight.
Oil prices climbed further as the renewed fighting dims hopes the war might be winding down, with Brent crude trading near $95 to $96 a barrel and U.S. benchmark West Texas Intermediate above $90. Both benchmarks have risen roughly 1% to 2% a day since hostilities resumed over the weekend, putting them about 40% higher than a year ago, before the war choked off tanker traffic through the Strait of Hormuz. The renewed volatility reflects fears that the conflict, now stretching toward seven months, could further disrupt one of the world’s most important oil chokepoints. That pressure adds to broader inflation and rate concerns already rattling global bond markets this week.
Economy:
More rough economic news: US private-sector employment rose by just 38,000 in August, according to ADP, well below the 47,000 economists expected and following a downwardly-revised 46,000 gain in July. ADP’s chief economist Nela Richardson said pay growth has become harder to read given demographic shifts, persistent inflation, and AI’s effects on jobs. The weak print raises fresh doubts about Friday’s official jobs report from the Bureau of Labor Statistics, which the Fed will weigh heavily as Chairman Kevin Warsh navigates pressure from Trump to cut rates against still-elevated inflation and a divided FOMC. The dollar barely reacted, ticking up 0.1% to 99.75 on the index, but the soft number adds to a string of underwhelming labor readings that make a September rate hike look less likely.
Mortgage rates are climbing right along with it, and that’s pushing more borrowers into riskier loans. The average 30-year fixed rate rose to 6.79%, the highest in four weeks, which MBA chief economist Mike Fratantoni attributed to investors demanding higher yields globally amid inflation and deficit worries. Total mortgage applications inched up just 0.8% for the week, with refinancing down 1% and 19% below year-ago levels since there’s little incentive to refinance at these rates. More telling: adjustable-rate mortgages, which offer lower initial rates but carry more risk since they reset later, jumped to an 8% share of applications, their highest level in five weeks, as buyers look for any way to make monthly payments work.
Behind both of those stories is a bigger one: interest rates are surging worldwide, and it’s rippling through everything from mortgages to the federal government’s own borrowing costs. The 10-year US Treasury yield climbed to nearly 4.8%, Japan’s 10-year bond topped 3% for the first time since 1996, and Germany’s benchmark bund hit 3.33%, its highest since 2011. Renewed fighting in the Middle East, persistent inflation, and a national deficit that just crossed $40 trillion are all feeding the sell-off, compounded by heavy AI-related corporate debt issuance crowding the bond market. Analysts also flagged that stocks and bonds are now moving together instead of offsetting each other the way they used to, meaning bonds aren’t providing the safety cushion investors are used to when equities fall. UBS expects the pain to continue, projecting the 10-year yield near 4.5% and the 30-year near 5% by year’s end.
Other news:
A POLITICO survey of over 70 House and Senate Republicans found most either aren’t attending next week’s GOP midterm convention in Dallas or remain undecided, with dozens more declining to say. Reasons vary widely: scheduling conflicts (weddings, district fundraisers, 9/11 anniversary events, even a dove hunt), reluctance to pay the NRCC’s suggested $25,000+ attendance donation, and, particularly for battleground-district members like Rep. Tom Barrett (R-Mich.) and Sen. Susan Collins, a desire to avoid being closely associated with Trump so close to the election. Trump and JD Vance will headline the two-day event at the American Airlines Center, and top leadership (Speaker Johnson, Leader Thune) plus some 2028 hopefuls and marquee Senate candidates like Mike Rogers and Jon Husted plan to attend. Johnson defended the convention’s value while acknowledging many members need to be home given how close it is to early voting. The RNC pushed back on characterizations of low enthusiasm, calling turnout and interest “incredible.”
The State Department has proposed requiring parents to prove their own citizenship or immigration status when applying for passports for their children, the first detailed look at how it might enforce Trump’s August 6 executive order targeting “birth tourism” and narrowing birthright citizenship. Parents would need to submit a valid passport, birth certificate, or immigration documents like an I-94 or green card, a step up from the current process, which only asks parents to check a box confirming citizenship without documentation. The new rules would withhold citizenship from children whose parent works for a foreign government, engaged in fraud to obtain citizenship, or is classified as an “alien enemy.” This follows Trump’s broader, harder-fought attempt to end birthright citizenship entirely, which the Supreme Court struck down in a 6-3 ruling this summer for violating the 14th Amendment. Lawyers pursuing class-action suits on behalf of affected babies are now asking federal judges to block this narrower order too.
Senator Ed Markey, 80, won Massachusetts’s Democratic primary, beating back a challenge from Rep. Seth Moulton, 47, who argued the incumbent was too old for the job. Markey is heavily favored to win a third full term in November against Republican John Deaton, and the race played out against a backdrop of Democratic anxiety over aging leadership following Biden’s troubled 2024 campaign. The dynamic was something of a reversal from other 2026 primaries, where voters unseated older incumbents for younger progressives; here Markey, a longtime progressive champion backed by Bernie Sanders and Elizabeth Warren, defeated a more moderate opponent. Age became a flashpoint in an August debate, where Moulton pounced after Markey said he used “whatever comes up” for AI on his phone, telling him “this is why we need a new generation of leaders.” Moulton also apologized before the primary for comments about not wanting his daughters “getting run over on a playing field by a male or formerly male athlete.”
A federal judge dismissed the Trump administration’s year-long lawsuit trying to force California to ban transgender girls from girls’ school sports teams, a major win for trans rights advocates. Judge Cynthia Valenzuela ruled the federal government never gave California clear notice that its funding was contingent on banning trans athletes, despite Trump’s executive order and DOJ’s Title IX lawsuit targeting five trans girls specifically. The ruling came two months after the Supreme Court upheld similar state bans in West Virginia and Idaho, but Valenzuela noted that decision was narrow and didn’t mandate a nationwide ban or resolve whether Title IX itself permits trans-inclusive policies. California has allowed trans girls to play on girls’ teams since 2013, affecting an estimated fewer than 10 athletes out of nearly 6 million K-12 students statewide. The DOJ said it’s “evaluating options for appeal,” while advocates and the father of one targeted athlete called the ruling proof the administration has been overreaching since Trump’s first days back in office.
Ukrainian President Volodymyr Zelenskyy warned that Russian airspace is becoming unsafe for commercial airlines as Ukraine ramps up long-range drone strikes deep inside Russian territory, urging airlines and insurers using Russian airspace to take note. Ukraine is now capable of launching several hundred drones a day and is reportedly chasing a target of 1,000 daily, having struck oil refineries and industrial sites more than 2,000 kilometers from its border this year. Putin called the warning “state terrorism” and refused to negotiate with what he called terrorists, while separately vowing to escalate strikes on Ukraine’s energy grid ahead of winter to damage heating and electricity supplies. Putin also claimed Russian forces had captured the town of Sviatohirsk, a claim disputed even by pro-war Russian bloggers and unsupported by battlefield-tracking maps. He dismissed speculation of a new troop mobilization as “nonsense,” while acknowledging talks with Trump envoys Steve Witkoff and Jared Kushner remain “frozen, to a certain extent.”
The USS Abraham Lincoln docked in Laem Chabang, Thailand on Wednesday after 286 days, more than nine months, at sea, the first full port stop of a deployment that included a record-setting stretch of over 250 uninterrupted days supporting the US war against Iran. AP journalists on the scene noted the ship’s hull was visibly rusted near the waterline and flight deck, and when asked about it, commanding officer Capt. Dan Keeler said only that it was “normal for a long deployment” and declined further comment; asked about Trump’s remark that the deployment was “not nearly long enough,” Keeler replied curtly, “the president speaks for himself.” The visit comes after mounting concern over deteriorating crew mental health and shortages of food and hygiene supplies, and the Lincoln was ultimately relieved in the Middle East by the USS George Washington in August. Family members traveled to meet returning sailors, including Shakeira Fairfax of Paterson, New Jersey, who described the fear of losing contact with her daughter Jada after the initial US strikes on Iran in February and helping keep her spirits up during a period of low shipboard morale. Many crew members are expected to head to nearby Pattaya for rest and recovery, with local officials stepping up security and welcoming the economic boost before the strike group departs for its US base.
The Teamsters union’s national leadership is backing Republican candidates in several 2026 races even as rank-and-file members and local chapters endorse their Democratic opponents, deepening internal tensions. President Sean O’Brien, who became the first Teamsters president to speak at the 2024 RNC, has personally donated to Republican Senate candidate Scott Brown in New Hampshire (whose own local Teamsters chapter backed his Democratic rival) and to DHS Secretary Markwayne Mullin, despite the two once nearly coming to blows at a Senate hearing. In Pennsylvania, the state Teamsters conference endorsed a Democratic mayor for Congress, only for the national PAC to back her Republican opponent after his campaign received a $5,000 union donation. The union also endorsed embattled Ohio Republican Max Miller, who faces domestic abuse allegations and resignation calls from his own party, citing his vote for a labor bill despite his dismal 14% lifetime AFL-CIO labor score. O’Brien, who once called Trump “our enemy” before his 2021 election as union president, was reelected unopposed this year after a rival slate failed to qualify for the ballot.
The House passed a resolution condemning socialism “in all its forms” on a 220-192 vote, with eight Democrats, including Kathy Castor, Henry Cuellar, Jared Golden, and Marie Gluesenkamp Perez, joining every Republican in favor, while two Democrats voted present. Republicans scheduled the vote as a messaging exercise tying recent Democratic Socialists of America primary wins, like those of Darializa Avila Chevalier in New York and Melat Kiros in Colorado, to their push for Trump’s stalled SAVE America Act, a voting regulations bill that lacks majority support in the Senate. House Minority Leader Hakeem Jeffries opposed the resolution specifically because it endorsed the SAVE Act, calling it “toxic voter suppression legislation,” while Caucus Chair Pete Aguilar noted Democrats had offered a competing resolution condemning socialism without the SAVE Act language attached. The vote nearly collapsed earlier Tuesday when a handful of Republican hardliners protested a short-term funding bill during a procedural vote, until Democrats Jared Golden and Marie Gluesenkamp Perez unexpectedly crossed over to help Republicans pass it. That defection infuriated House Democratic leadership, with Jeffries, Katherine Clark, and Aguilar calling it “a significant breach of trust” and referring the matter to the Democratic Caucus’s rules committee for review.
The family of Benjamin Halona, a 67-year-old New Mexico man mauled to death by a bear inside his Navajo Nation home, is choosing to remember his career as a wildland firefighter and his beloved tamale business rather than the manner of his death. Halona, who used a walker after a recent seizure, was home alone when the bear got in through a door his stepson thought he’d locked; the stepson barricaded himself in his room and called for help, and police shot the bear after it emerged outside. It was the first fatal bear attack in New Mexico since 2001, coming just over a week after state wildlife officials warned of rising bear conflicts driven by drought and food sources like garbage and rotting fruit. Family members shared a cherished memory of Halona singing with country legend Waylon Jennings during a Navajo Nation performance, which Gloria Halona called “probably the happiest moment of Benjamin’s life.” He’s survived by two siblings, four children, five stepchildren, 15 grandchildren, and one great-grandchild, with strong community turnout at his memorials and funeral.
Aid experts are blasting the US’s initial $500,000 emergency contribution to Nepal’s catastrophic flash floods, which have killed more than 1,000 people with 4,400 still missing, as “embarrassing” and “pitiful” for a disaster of this scale. The sum has since been raised to $3.6 million for food and emergency supplies, but former USAID officials say even that pales next to what the agency would have mobilized before Trump dismantled it in 2025, folding its functions into the State Department. Former USAID disaster chief Mark Ward, once nicknamed “Mr. Disaster” by President George H.W. Bush, said Nepal used to have the closest disaster-response relationship of any country with USAID given its earthquake and flood risk, and that expertise is now gone. Brookings fellow George Ingram said the US would have been better off saying nothing than announcing such a small figure, while the State Department defended its approach as “needs-based” rather than driven by “arbitrary funding targets.” Relief efforts are now being led by India and China instead, which Ward warned undermines US influence and long-term interests in regional stability.
The Equal Employment Opportunity Commission is moving to stop collecting EEO-1 data, the 60-year-old demographic reporting requirement that has been central to identifying and proving workplace discrimination, in a move experts say will hollow out civil rights enforcement. The data, which breaks down company workforces by race, ethnicity, sex, and job title, has helped the EEOC investigate systemic disparities and win cases like a $5.5 million settlement against trucking company Central Transport for discriminating against female applicants. Trump-appointed commissioner Andrea Lucas argues the data collection is unconstitutional and incentivizes discrimination against white workers, part of a broader agency shift that includes dropping cases for transgender workers, rescinding harassment guidance, and prioritizing complaints from white men. The change follows Trump’s early firing of two Democratic EEOC commissioners to secure a Republican majority, and comes as the agency’s staffing sits at a 45-year low even as it fields nearly 90,000 discrimination complaints annually. Advocates like Maya Raghu of the Lawyers’ Committee for Civil Rights Under Law call it part of a pattern of “weaponizing our civil rights agencies” to advance an anti-DEI agenda rather than enforce existing law.
See you soon.
— Aaron
