Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, senior editor Joe Sobczyk looks at the Republican drive to get their tax-cut bill passed. Sign up here and follow us at @bpolitics. Email our editors here.

Contingency Plans

President Donald Trump is shifting his gaze back to matters at home — specifically his “One Big Beautiful Bill” — and probably not a moment too soon for Republicans in Congress.

The latest stumbling block popped up when the Senate parliamentarian judged that a plan to slice $250 billion from Medicaid and other health-care spending didn’t meet the chamber’s arcane rules, Bloomberg’s Rachel Cohrs Zhang, Erik Wasson and Erin Durkin report.

Trump Photographer: Francis Chung/Politico

That sends the provision back for a rewrite, just a day before Senate Republican leaders were aiming for a vote on their version of the bill.

The Medicaid proposal had already been causing trouble.

Republicans facing potentially tight races for reelection next year, like Maine’s Susan Collins and North Carolina’s Thom Tillis, balked at such a steep cut — more than what the House had passed. It would hit hit rural hospitals as well as some working-class Republican voters.

Missouri Republican Senator Josh Hawley, who may be eying a run for president in 2028, had called the proposed cuts political “suicide.” Trump himself had promised in his campaign that he wouldn’t cut Medicaid, though what constitutes a cut is open to interpretation.

On the flip side, hardline conservatives in the Senate and the House are demanding more spending cuts and threatening to delay or block the bill.

In addition, Republicans also are still negotiating over a state and local tax deduction limit.

Trump is ready to weigh in, after being occupied by the Israel-Iran conflict and a NATO summit. The bill represents the heart of his domestic agenda and many Republicans view it as key to their goals for next year’s midterm elections. (Democrats are honing their counter-message, as well.)

While he’s not known for getting into the nitty-gritty of legislative negotiations, Trump is willing and able to twist arms. Press secretary Karoline Leavitt said the president is “very much engaged” with House and Senate Republicans.

Trump was hosting an event at the White House this afternoon to promote the bill and add to the pressure on Congress. “There’s something for everybody” in the legislation, he said.

Getting a bill to Trump’s desk by July 4 remains the GOP goal.

“We’ve got contingency plans,” Senate Majority Leader John Thune said. “We’ve got a plan B, plan C.”— Joe Sobczyk

Don’t Miss

Tariff negotiations with the Trump administration are running into roadblocks, as partners balk at signing deals without knowing how badly they’ll be hit by separate levies on exports including chips, drugs and steel.

The Treasury Department announced a deal with G-7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing a “revenge tax” proposal from Trump’s tax bill.

Trump won back the White House in 2024 with the help of a racially diverse group of inconsistent voters — not necessarily by changing their minds, but by just getting them to show up.

Several Federal Reserve officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way.

The White House said Trump’s decision on a successor for Federal Reserve Chair Jerome Powell isn’t imminent, after the Wall Street Journal reported the president could make a pick as soon as the summer.

The Pentagon gave new details on its decision to slash its request for F-35 fighter jets in fiscal year 2026, saying continued problems with upgrades to avionics and computing power were partly to blame.

Defense Secretary Pete Hegseth used a press briefing today to berate the media over reports that questioned the effectiveness of strikes on Iran’s nuclear program.

New York Mayor Eric Adams, who is running for reelection as an independent, is suddenly looking less toxic to a class of moderate voters with the ascendancy of democratic socialist Zohran Mamdani.

Vice President JD Vance is scheduled to headline a political fundraiser in Nantucket in July, courting the Massachusetts island’s wealthy summer crowd to bolster Republicans before the midterm elections.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kailey Leinz interviewed Representative Troy Downing, a Montana Republican, about getting Trump’s tax-cut and spending bill through Congress and the future of crypto legislation.

On the program at 5 p.m., they talk with Commerce Secretary Howard Lutnick about the GOP tax-cut bill and the latest on negotiations with US trading partners.

On the Big Take podcast, host David Gura and Bloomberg’s Nick Wadhams sit down with former Energy Secretary Ernest Moniz, who helped negotiate an Iran deal reached in 2015, to discuss the current state of Iran’s nuclear program, what’s succeeded at the negotiating table in the past and Trump’s objectives as he tries to broker a deal. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

There’s a single line on the Treasury Department’s daily cash statement that mostly got little notice for decades as it remained largely unchanged from day to day and month to month. But now, government and private economists are closely tracking the line labelled “DHS - Customs and Certain Excise Taxes,” which gives a daily accounting of how much the government is collecting in Trump’s new and existing tariffs. Since about two-thirds of import duties are paid monthly, one day a month tends to stand out — and that day came Wednesday as a $19.9 billion spike reflected payments for May tariffs that were due earlier in the week. Treasury has collected a record $26 billion so far in June. That’s short of the $2 billion-a-day pace that Trump promised with April’s “Liberation Day” announcement, but many of his tariffs have been suspended while he seeks to renegotiate trade deals. One thing that economists are watching for is a sign that tariff income is stalling as US consumers and manufacturers change their purchasing behavior in a shift to domestic goods. That would be a win for Trump’s industrial policy — but a loss for the federal balance sheet. — Gregory Korte

What’s Next

The Fed’s preferred inflation gauge for May, the core PCE deflator, is set for release tomorrow.

The University of Michigan’s final reading of consumer sentiment in June is scheduled for release tomorrow.

Construction spending for May will be reported Tuesday.

May’s job openings and layoffs data also will be released Tuesday.

Job cut announcements compiled by Challenger, Gray & Christmas will be reported Wednesday.

Financial markets in the US will close early on July 3 and won’t be open July 4.

The 90-pause for Trump’s reciprocal tariffs on most counties is scheduled to end on July 8.

(Programming note: Washington Edition will be on a limited schedule next week, publishing Tuesday and Thursday.)

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