Washington On One - June 30, 2025

THE LEAD:  After a long weekend in session the Senate moves ahead on Tax Bill, stop us if you’ve heard this before, but the House Rs don’t like the bill…US Canada trade discussions get chippy…Trump says he has ‘3 or 4’ picks in mind to replace Fed’s Powell…The Supreme Court has handed the Trump administration a major victory by narrowing nationwide injunctions…Supreme Court clears way for states to cut Planned Parenthood out of Medicaid… Supreme Court OKs rapid deportations to countries where immigrants have no ties… Supreme Court OKs opt-out for LGBTQ+ materials in school…The Supreme Court upheld a Texas law that requires people to upload a photo of their driver's license to view porn websites, roughly 20 states have adopted similar age-verification laws…Senate Banking Republicans won’t take up cryptocurrency market structure legislation until September, the latest twist in senators’ standoff with the House over how to advance legislation governing digital assets… Israeli Prime Minister Benjamin Netanyahu wants to meet with President Trump at the White House in the coming weeks to celebrate the joint U.S-Israeli bombing of Iran's nuclear program… The Department of Housing and Urban Development will move out of its D.C. headquarters and relocate to northern Virginia. HUD Secretary Scott Turner has called the brutalist structure "the ugliest building in D.C." … Spirit Airlines is asking the Transportation Department to block a proposed partnership between JetBlue and United Airlines, calling it "anticompetitive."…Speaker Jeffries and Leader Schumer offered guarded praise for Zohran Mamdani Wednesday after his seismic upset in the Democratic primary for New York City mayor… UVA president resigns amid pressure from Trump administration… California Gov. Gavin Newsom sued Fox News for $787 million, accusing the outlet of defamation in its reporting on a phone call between him and President Trump. Fox called the suit a "transparent publicity stunt…RIP Bill Moyers, the former LBJ press secretary and renowned television journalist, died today at age 91,,,

THE WEEK AHEAD: At 9 a.m., the Senate returns and Republicans plan to start a vote-a-rama on H.R. 1 during which senators can propose an unlimited number of amendments to the bill — with both practical and political implications. The House holds a pro forma session today at 2 p.m.  Members have been told that votes are possible as early as Wednesday at 9 a.m. pending Senate action on the megabill.   Both chambers were scheduled to be out this week, and will look to wrap up business as quickly as they can to return to their planned breaks.

NUMBERS: The S&P 500 closed at a new all-time high — a major rebound after earlier rounds of President Trump's tariff threats caused massive sell-offs.  

IRAN:  Days after the U.S. dropped bunker-buster bombs on two Iranian nuclear sites, questions persist about the strikes’ effectiveness. While President Trump and senior officials claim the facilities were “completely obliterated,” a leaked Defense Intelligence Agency assessment reportedly concluded Iran’s program may only be delayed by months. The administration has pushed back, with CIA Director Ratcliffe and DNI Tulsi Gabbard asserting the sites were destroyed. Trump threatened legal action against media outlets and attacked a CNN reporter by name. Defense Secretary Hegseth called the strikes “historically successful,” while blaming media bias for doubts about their impact. Verification remains difficult.

RECONCILIATION: The Senate’s vote-a-rama on the GOP’s sweeping megabill begins at 9 a.m., with passage uncertain. Senate Majority Leader John Thune can afford to lose just one more vote, as Sens. Rand Paul and Thom Tillis have already opposed key provisions. Tensions are rising over Medicaid: Sen. Rick Scott’s plan to curb Medicaid funding post-2030 has Thune’s backing, but it risks alienating moderates like Sen. Susan Collins, who proposed doubling the rural hospital fund to $50 billion. The provider tax crackdown is another flashpoint. Sen. Murkowski’s vote remains in play, pending rulings on Alaska-specific provisions. On green energy, moderates may attempt to ease proposed cuts to IRA credits, risking conflict with House conservatives. On AI, Sens. Cruz and Blackburn are pushing to shorten the federal moratorium on state enforcement. A final manager’s amendment may be used to reconcile differences before the House vote, scheduled for Wednesday morning.   A Cheat sheet is at the bottom on this piece.

HOUSE:  House Republicans narrowly approved their version in May, and some of the Senate changes threaten to disrupt the fragile coalition pieced together by Speaker Mike Johnson (R-La.).   Already two Republicans who voted yes last month threatened to flip due to Senate changes: Rep. David Valadao (R-Calif.), who’s concerned about Senate cuts to Medicaid and funding for rural hospitals, and Rep. Nick LaLota (R-N.Y.), who’s angry about changes that would slim down the House’s expansion of the state and local tax deduction.  The House passed the bill without a single vote to spare.

TILLIS:  Senator Thom Tillis (R-N.C.) announced he will not seek reelection in 2026, following a primary threat from President Trump. “It’s not a hard choice,” Tillis said, citing a lack of enthusiasm for another term. His retirement opens a potential pickup opportunity for Democrats, with Sen. Alex Padilla calling it “high on the list.” Tillis, one of the most vulnerable GOP incumbents, recently voted against advancing Trump’s tax and spending bill, citing Medicaid and green energy cuts. Trump responded by attacking Tillis online and hinted at backing a primary challenger. Republicans can lose only three votes for the bill to pass.  The race portents to be the barn burner.

NATO:  NATO allies agreed to a major defense spending increase, aiming to solidify U.S. President Trump’s support and deter Russia. Leaders endorsed a new target of 5% of GDP by 2035 — 3.5% for traditional military capabilities and 1.5% for related areas like cyber and logistics. The deal, finalized before the summit to ensure smooth proceedings, was framed as a win for Trump, who called it “a monumental victory.” NATO Secretary-General Mark Rutte praised the outcome, noting Trump’s dual message: the U.S. remains committed to NATO, but expects increased contributions from European allies and Canada — a goal now in motion.

APPROPRIATIONS:  The House continued its appropriations process, but Appropriations Chair Tom Cole noted that his initial goal of marking up all 12 appropriations bills before the August recess is “aspirational,” and said September floor votes could be challenging, given the GOP’s narrow majority in the House. Notably, top-line defense and nondefense spending levels are still largely in flux, making it impossible to on allocations for all 12 fiscal 2026 funding bills. The pace of the appropriations process coupled with the upcoming September 30 funding deadline makes a stopgap funding measure increasingly likely, with Cole stating that the stopgap “beats a [government] shutdown.”

RECISIONS:  Senate GOP Leader John Thune faces his next challenge: rallying Republicans behind Trump’s proposed rescissions package before the July 18 deadline. Senators remain divided after a hearing with OMB Director Russ Vought, who swayed Sen. Lindsey Graham to support cuts to PEPFAR, citing waste. Sen. Susan Collins, the top GOP appropriator, opposes cuts to PEPFAR, public broadcasting, and emergency alert funding, and is considering an alternative rescissions package. Sens. Boozman and Hoeven are withholding judgment until more details emerge. Hoeven is focused on preserving USAID’s Food for Peace program, which supports international food assistance.

Sanctuary Cities. U.S. District Judge John McConnell on Thursday issued a preliminary injunction that paused Department of Transportation (DOT) efforts to withhold Congressionally appropriated funds from State Governments on the basis of a new DOT requirement that States “"cooperate generally with Federal authorities in the enforcement of Federal law” – primarily focused on the enforcement of Federal immigration law. The lawsuit was brought forward by a group of twenty primarily Democratic-led states, that does not include Georgia. The judicial ruling comes as the Trump administration has broadly threatened to withhold Federal funding for “sanctuary jurisdictions” that prevent local law enforcement agencies from cooperation with Federal immigration enforcement officials.

HIGHER ED:  University of Virginia President James E. Ryan announced his resignation today, a swift response to calls from the Trump administration to step down amid the Justice Department’s probe into the school’s diversity, equity and inclusion practices. “To make a long story short, I am inclined to fight for what I believe in, and I believe deeply in this University. But I cannot make a unilateral decision to fight the federal government in order to save my own job,” Ryan said in an email sent to UVA community members.  Ryan is the latest university leader to come under pressure from the Trump administration, as dozens of other elite universities face scrutiny and pressure from the president to claw back DEI policies.

WATCH THIS SPACE:  Zohran Mamdani’s surprise win in the New York City mayoral primary has sparked outsized national commentary, with some calling him “the feeling of dawn” and others a “100% Communist Lunatic.” Yet much of the hype comes from outside New York and overlooks local political realities. While Mamdani’s victory is being framed as a progressive turning point, he himself has downplayed national implications, focusing instead on city governance and affordability issues.  The NYC mayoralty has long been a political trap rather than a springboard. Eric Adams, once seen as a rising Democratic star, now faces record-low approval ratings. Every modern mayor since David Dinkins has seen their political ambitions stall under the weight of City Hall’s impossible demands — from battling Albany to balancing the city’s vast contradictions.  Mamdani’s win is being studied for its message and method, but he has shown little public interest in higher office. Even if that changes, the Uganda-born politician is constitutionally ineligible for the presidency, sparing the country another failed presidential run by a New York mayor. For now, Mamdani’s appeal lies in his focus on local issues — not in chasing national spotlight.

SENATE BILL CHEAT SHEET:  The Senate’s reconciliation amendment to OBBBA expands upon the House-passed version by permanently extending key provisions from the 2017 tax law, increasing the debt limit by $5 trillion, cutting federal health and nutrition spending, scaling back clean energy tax incentives, and investing heavily in oil and gas development, defense, and border security.

Key Fiscal Estimates

•             Traditional Baseline (CBO/JCT): $3.3 trillion deficit increase over 10 years.

•             Current Policy Baseline (GOP): $507.6 billion deficit increase.

•             House-Passed Version: $2.4 trillion net deficit increase.

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1. TAX POLICY CHANGES

Individual Tax Cuts:

•             Makes 2017 tax cuts permanent, including lower marginal rates, expanded standard deduction, and AMT adjustments.

•             Increases SALT cap to $40,000 for households earning <$500,000 (expires in 2029).

•             Expands child tax credit to $2,200 and indexes to inflation.

•             Repeals personal exemptions permanently.

•             Enhances estate tax exemption to $15 million.

New Deductions (Temporary unless stated):

•             Tip Income: Up to $25,000.

•             Overtime Pay: Up to $25,000.

•             Senior Deduction: $6,000.

•             Auto Loan Interest: Up to $10,000 for US-assembled new cars.

Business Tax Changes:

•             R&D costs fully deductible again (domestic only).

•             Bonus depreciation restored to 100% permanently.

•             Increased deductions for small business equipment.

•             New benefits for chip manufacturing, opportunity zones, and pass-through income.

Trump Accounts:

•             Creates new tax-advantaged child savings accounts with federal seeding ($1,000).

Other Provisions:

•             Reduces gun transfer taxes to $0.

•             Imposes excise tax on remittances (3.5%) and litigation financing (31.8%).

•             Terminates IRS free e-file program.

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2. MEDICAID & HEALTH CARE

Provider Taxes:

•             Gradual phase-down of provider tax “safe harbor” from 6% to 3.5% for expansion states.

•             Stricter rules for redistributive tax structures.

Rural Hospitals:

•             $25 billion in grants over 5 years for staffing, IT upgrades, AI training, and substance use treatment.

Work Requirements:

•             Mandates “community engagement” (80 hrs/month) for non-exempt adults 19–64 starting 2027.

•             Includes verification, exemptions, disenrollment and appeals process.

Immigration Restrictions:

•             Narrows Medicaid/CHIP and ACA tax credit eligibility to LPRs and select groups.

•             Cuts FMAP to 80% for states offering coverage to undocumented individuals (starts 2027).

•             Eliminates 5% FMAP boost unless non-expansion states expand Medicaid by 2026.

Eligibility Tightening:

•             Reduces retroactive coverage; increases income/asset tests.

•             Requires more frequent eligibility checks and cross-state SSN tracking.

•             Caps long-term care eligibility based on home equity ($1M max).

State Directed Payments:

•             Caps provider payments to 100% (expansion states) or 110% (non-expansion states) of Medicare.

Other Health Provisions:

•             Defunds gender transition procedures, family planning clinics offering abortion, and Biden-era Medicaid eligibility rules.

•             Blocks HHS nursing home staffing rule.

•             Ends enhanced ACA credits for certain immigrants and disqualifies “special enrollment” abuse.

•             Permanently allows telehealth in high deductible health plans.

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3. NUTRITION PROGRAMS

SNAP Changes:

•             Shifts some benefit costs to states based on error rates (up to 15%).

•             Caps federal admin contribution to 25%.

•             Blocks Thrifty Food Plan benefit recalculations.

•             Raises ABAWD work requirement age exemption to 65.

•             Tightens noncitizen eligibility.

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4. ENERGY & ENVIRONMENT

Fossil Fuel Expansion:

•             Mandates quarterly onshore lease sales and reinstates noncompetitive leases.

•             Requires offshore sales (Gulf & Alaska), reverses ANWR restrictions.

•             Lowers royalty rates for oil, gas, and coal.

•             Reinstates methane extraction exemptions.

•             $171M for SPR petroleum purchases.

Clean Energy Rollbacks:

•             Phases out most IRA-era clean energy credits.

•             Imposes new excise taxes on wind/solar using foreign components.

•             Restricts credits for Chinese- or adversary-controlled firms.

•             Ends EV credits after Sept. 2025.

•             Rescinds funding for DOE loan programs and EPA’s GHG reduction initiatives.

Permitting:

•             Allows project sponsors to pay fees for expedited NEPA reviews.

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5. AGRICULTURE & FARM BILL

Commodity Programs:

•             Extends and enhances ARC and PLC programs through 2031.

•             Boosts reference prices and expands base acres.

•             Increases income caps and disaster relief payment thresholds.

Conservation Programs:

•             $33.4B through 2031 across EQIP, CSP, RCPP, and ACEP.

•             Rescinds IRA climate funding.

Trade and Research:

•             $285M/year for export promotion.

•             Boosted funding for specialty crop research and historically Black colleges.

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6. EDUCATION & LOANS

Student Loans:

•             Ends current IBR plans for new borrowers in 2026.

•             Creates “Repayment Assistance Plan” with payments based on AGI.

•             $1B for loan servicing.

K-12 & Higher Ed:

•             Expands 529 plans to cover more K-12 expenses and vocational training.

•             Adds new tax credits for donations to scholarship-granting organizations.

•             Modifies university endowment tax with tiered structure and broader income definitions.

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7. MISCELLANEOUS

•             Kennedy Center: $256.7M for repairs and security.

•             US 250th Anniversary: $150M for celebrations.

•             AI Research: $150M for DOE-industry collaboration.

•             Alaska & Hawaii: Adjusted CMS outpatient rates and higher FMAPs (ruled Byrd-ineligible).

•             Telehealth: Permanently allowed in HDHPs and DPCs.