Washington On One - July 28, 2025

THE LEDE:  House starts recess early...US EU reach trade deal -imposes baseline tariff of 15% on the U.S.’s biggest trading partner…Trump says Thailand, Cambodia agree to hold immediate ceasefire talks…Gaza ceasefire negotiations were cut off as the U.S. team — led by envoy Steve Witkoff — backed away from the table and said Hamas “shows a lack of desire” to stop fighting and end the war…Trump unveils AI policy vision…Bessent offered support for Fed Chair Jerome Powell…POTUS gets a tour of FED renovations… The Justice Department wrapped its interviews with Ghislaine Maxwell, the convicted child sex trafficker and associate of Jeffrey Epstein — totaling nine hours over two days… Columbia University agreed to pay $200 million to settle a Trump administration lawsuit alleging it failed to prevent the harassment of Jewish students…Third court blocks Trump birthright citizenship order nationwide after Supreme Court decision…The Trump administration is canceling $4.9 billion in federal financing for a US transmission project that’s faced backlash from Republican lawmakers over ties to wind energy… White House will release $5.5 billion for schools, after surprise delay…House members will get more money for personal security as lawmakers prepare to leave for a monthlong recess with growing concerns about threats to their safety… Democratic brand gets lowest rating from voters in 35 Years, WSJ poll finds… Former Rep. George Santos (R-N.Y.) reports to prison today to begin his seven-year sentence. “The curtain falls, the spotlight dims and the rhinestones are packed,” Santos wrote on X in his farewell message.

THE WEEK AHEAD:   House is GONE…In the Senate Monday: The Senate Agriculture Committee will hold a hearing on two nominees: Brian Quintenz to be chair of the CFTC and Michael Boren to be under secretary of agriculture for natural resources and environment.  Tuesday: The Senate Armed Services Committee will receive a closed briefing on Operation Midnight Hammer, the U.S. attack on Iranian nuclear facilities back in June.  Wednesday: The Senate Banking Committee will have a hearing on AI’s role in capital and insurance markets. Tal Cohen, the president of Nasdaq, will be among the witnesses.  The Senate Energy and Natural Resources Committee will hold a nominations hearing. Senate Agriculture will have a hearing on the reorganization of the USDA with Stephen Vaden, the deputy secretary of agriculture.  Thursday: The Senate Armed Services Committee will hold a hearing on a number of Naval nominees.  The Senate Appropriations Committee will have a markup on the Defense and Labor-HHS spending bills.  OFF THE HILL - A high-stakes Federal Reserve meeting headlines a week packed with key economic events. The Fed is expected to hold rates steady despite White House pressure for “dramatically lower” borrowing costs. Investors are also watching for data on U.S. growth, jobs, and inflation, a looming tariff reprieve deadline, and a court case challenging Trump’s authority to impose levies. With earnings from Amazon, Apple, Meta, and Microsoft, CNBC called it “the Olympics for market watchers.”…A two-day UN conference on how to create a two-state solution to the Israel-Palestine conflict is due to take place in New York.

NUMBERS: Applications for unemployment benefits fell for a sixth straight week, underscoring the resilience of the labor market and beating the forecast of economists. Initial claims decreased by 4,000 to 217,000 in the week that ended July 19, still the lowest since mid-April. That marked the longest stretch of declines since 2022

CONFIRMATIONS:  Senators remain stuck in “nominee purgatory” as the chamber faces a growing backlog of President Trump’s judicial and executive nominees. While Republicans celebrated confirming over 100 nominees last week, they acknowledge the list of pending nominations is even longer. With the House in recess, the Senate is bracing for late-night votes — including 8 p.m. votes today — as Trump urges them to delay the August break. Democrats have blocked unanimous consent for civilian nominees, slowing progress. Still, confirmations are moving faster than during Trump’s first term. Key votes this week include David Wright for the Nuclear Regulatory Commission and Emil Bove for a federal appeals court, despite Democratic opposition. Paul Ingrassia’s nomination for Special Counsel is faltering, while Mike Waltz’s U.N. ambassador bid advanced after a deal to release $75 million in foreign aid. GOP leaders are keeping August recess plans flexible, with Sen. Thune warning Democrats: “We can do it the hard way or the easy way.”

EPSTEIN:  The GOP-led House abruptly adjourned for August recess a day early amid turmoil over President Trump’s reversal on releasing Jeffrey Epstein-related files. Speaker Mike Johnson (R-La.) canceled Thursday votes after infighting over how to handle the issue, a flashpoint for the MAGA base. Trump, who once pledged full disclosure, recently called the matter a “hoax.” A bipartisan discharge petition from Rep. Thomas Massie (R-Ky.) to force release of the files becomes viable in September. Meanwhile, a nonbinding GOP resolution (H. Res. 589) has stalled. The House Rules Committee recessed indefinitely, halting movement on party-line bills. Republicans are deferring action to give the Trump administration more time. The Oversight Committee, however, voted unanimously to subpoena Ghislaine Maxwell. Lawmakers now return to their districts facing pressure from constituents. Massie called it a “watershed moment,” warning Johnson not to block disclosure through procedure. Johnson said Republicans will “do the right thing.”

GHISLAINE:  Ghislaine Maxwell is still weighing whether to comply with a congressional subpoena to testify before the House Oversight Committee in August, her attorney David Oscar Markus said. Maxwell, convicted of sex trafficking and serving a 20-year sentence, recently completed a two-day interview with Deputy Attorney General Todd Blanche as part of the Trump administration’s investigation into Jeffrey Epstein’s associates. Markus said Maxwell answered all questions, naming about 100 individuals, and “didn’t hold back.” He added there’s been no discussion of a pardon “just yet,” but expressed hope President Trump would act “in the right and just way.” Maxwell, who is appealing her conviction, could invoke the Fifth Amendment before Congress unless granted immunity—a rare move. Speaker Mike Johnson questioned her credibility, noting her conviction for “unspeakable acts.” While DOJ officials are skeptical of Maxwell, Republicans view the interview as a step forward. Oversight Republicans declined to comment on next steps.

GAZA:  Israel announced a daily “tactical pause” in fighting in Gaza to allow humanitarian aid to flow amid growing concerns of mass starvation. The pause, in effect from 10 a.m. to 8 p.m. until further notice, will enable aid deliveries via air drops and U.N.-approved routes. It marks the first such suspension since March and comes after Prime Minister Benjamin Netanyahu approved measures to ease the worsening humanitarian crisis under mounting international pressure. The U.N. estimates 470,000 people in Gaza face famine-like conditions. The World Food Program welcomed the pause, noting it has enough food in or en route to sustain the 2.1 million population for nearly three months. Asked Sunday about the crisis, President Trump claimed Hamas is stealing food, though Israeli officials say no evidence supports that. “It’s a mess,” Trump said, blaming past failed peace efforts. “The Gaza Strip was given many years ago for peace. That didn’t work out too well.”

AI:  President Trump’s new “AI Action Plan” emphasizes innovation, deregulation, and worker training but omits protections against discrimination, pay disparities, and surveillance—issues addressed under President Biden. The plan shifts focus from Biden-era safeguards to promoting AI infrastructure, exports, and apprenticeship integration. It also directs agencies like the Department of Labor to remove rules that may “hinder” AI development and evaluate state-level regulatory climates when allocating funds. Critics argue the plan strips out labor-friendly policies, including those promoting union engagement and DEI principles. Trump rescinded Biden’s responsible AI executive order, along with related guidance on wage and discrimination compliance. Legal experts note Title VII may still apply but caution that rigid AI rules risk obsolescence due to rapid tech evolution. Supporters call the approach pragmatic and market-driven, while Congressional Democrats warn it invites a “wild west” environment, leaving companies unchecked and workers unprotected in the face of transformative workplace technologies.

APPROPRIATIONS:  Senate Republicans say President Trump has made clear he wants to avoid a government shutdown, and they’re urging House Republicans to adopt a more pragmatic approach ahead of the Sept. 30 funding deadline. After the House passed a partisan funding bill in March, Senate Democrats reluctantly supported it to prevent a shutdown. But pressure on Senate Majority Leader Chuck Schumer (D-N.Y.) to resist further GOP tactics has increased. Senate Republicans believe passing bipartisan appropriations bills now—like the VA and military construction measure advanced 90–8—could prevent a last-minute showdown. They hope this strategy will deter the House from sending over a partisan stopgap packed with conservative policy riders. Trump, focused on trade deals and messaging victories from the recently passed “One Big Beautiful Bill Act,” is signaling he wants stability. Schumer and House Democrats insist on a bipartisan process, while GOP leaders want to avoid a shutdown that could damage their election-year positioning.

FIELD TRIP:  During a high-profile visit to the Federal Reserve’s renovation site, President Trump and Fed Chair Jerome Powell clashed over construction costs, with Trump claiming a $3.1 billion price tag. Powell corrected him, noting Trump had included a separate, already completed building. The tense exchange followed weeks of Trump pressuring Powell to cut interest rates, though he dismissed talk of firing him, calling such a move “unnecessary.” Trump used the visit to spotlight cost overruns and amplify criticism of Powell’s leadership. While the Fed cited unexpected conditions—like asbestos and soil contamination—for the budget increase, Trump and allies, including Commerce Secretary Howard Lutnick, argued the project reflects broader mismanagement. Meanwhile, some Republicans warned against undermining Fed independence, fearing damage to the dollar and inflation control. Powell’s term ends next May, and while Trump wants rate cuts, Treasury Secretary Scott Bessent insists there are no plans to remove him. The Fed is expected to hold rates steady next week.

EU TRADE:  President Trump announced a major trade agreement with the European Union, setting a 15% baseline tariff on most EU goods, including automobiles. In return, the EU pledged $750 billion in U.S. energy purchases and $600 billion in direct investment. The deal, finalized during talks with European Commission President Ursula von der Leyen in Scotland, is Trump's most significant trade pact to date. While Trump touted broad EU market access, von der Leyen emphasized sector-specific zero-tariff agreements and a framework for further cooperation. Neither side released the full agreement text. Analysts say the 15% tariff may raise U.S. prices but avoids a broader trade war and brings predictability. EU officials expect limited GDP impact, with Germany’s auto sector hardest hit. The agreement follows similar deals with Japan, Vietnam, and others, all setting baseline tariffs above pre-2025 levels. Talks with China resume July 28, with a possible extension of the current tariff truce beyond August 12.

JAPAN TRADE:  Top Trump trade officials say Japan’s $550 billion investment pledge in exchange for a reduced 15% tariff could serve as a model for EU talks ahead of an Aug. 1 deadline. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent stressed that Japan’s financing commitments and acceptance of U.S. vehicle standards secured a favorable deal. EU negotiations remain fluid, but officials say progress is being made, though Europe hasn’t matched Japan’s innovative approach. Bessent dismissed reports of EU retaliation as negotiating tactics and warned that Europe’s trade surplus makes it more vulnerable to escalation. Talks with China resume July 28–29 in Stockholm, where Bessent plans to address oil purchases, cybersecurity, and exit bans. He indicated a potential 90-day extension of the tariff truce. Despite tensions, both sides have shown signs of de-escalation. Bessent emphasized that recent Chinese actions won’t shift U.S. negotiating positions. Lutnick said the Japan deal idea originated from him in January.

CHINA TRADE:  U.S. and Chinese officials will resume trade talks Monday in Stockholm, aiming to extend their tariff truce by 90 days ahead of an August 12 deadline. Without a deal, triple-digit U.S. tariffs could snap back, disrupting global supply chains. The talks follow Trump’s major trade pact with the EU and are expected to prevent escalation, though no breakthrough is anticipated. A Trump-Xi meeting in late October is being discussed, and the truce extension could help facilitate it. U.S. negotiators want China to shift toward domestic consumption, while China seeks reductions in tariffs—currently totaling 55%—and easing of tech export controls. China has also hinted it may fulfill prior pledges to boost U.S. farm imports. Talks remain focused on reducing immediate tensions, with deeper issues—like state subsidies and rare earth leverage—yet to be addressed. Trump has paused tech curbs to preserve negotiation momentum. A 90-day extension appears the most likely outcome for now.

H1B VISAS:  The Trump administration plans to overhaul the H-1B visa program to favor higher-wage foreign workers, according to Joseph Edlow, the newly confirmed director of U.S. Citizenship and Immigration Services. Edlow said the current system allows companies to hire lower-paid workers over Americans and should better align with national economic priorities. He also proposed tightening the U.S. naturalization test, calling the current version too easy and advocating a return to a more rigorous Trump-era format. The changes reflect a broader second-term agenda focused on immigration restrictions and labor market protections. Critics argue the proposed H-1B revisions would undermine companies’ access to top international graduates. Edlow, who previously served in an acting capacity at USCIS, said immigration should provide a “net positive” for the U.S. economy. While some Trump-era policies—like penalizing immigrants for using public benefits—won’t return, Edlow signaled continued efforts to reshape citizenship and legal immigration processes through regulatory changes.

HEAD START:  The Trump administration violated federal law by withholding $825 million in Head Start funds, according to a Government Accountability Office report. GAO found the Department of Health and Human Services broke the Impoundment Control Act by reducing spending on early childhood education and services for low-income children between Jan. 20 and April 15, compared to 2024. The administration failed to justify the delay and didn’t cooperate with GAO inquiries. Senator Patty Murray (D-Wash.) called the move illegal and harmful to working families. GAO has launched multiple investigations into similar funding delays under the Trump administration.

WATCH THIS SPACE:  Democratic plans for emergency gerrymandering to counter Trump’s push for congressional gains in Texas and Missouri are accelerating, with California emerging as the leading option, according to POLITICO. Initially skeptical, lawmakers and operatives are warming to Gov. Gavin Newsom’s proposal, believing the state has both the authority and political will. New York is the next-best option, with Maryland and New Jersey also in consideration. However, legal and political obstacles remain significant, even in California. At the National Governors Association meeting, Hawaii Gov. Josh Green said Republicans are trying to steal the election and urged Democrats to “fight fire with fire.”