Washington On One - May 12, 2025

THE LEDE:  India and Pakistan announce a ceasefire…U.S. and China dramatically scale back tariffs after weekend trade talks in Switzerland, given themselves 90 days to work a deal…Bessent says Congress needs to raise debt limit by July…Trump unveiled the framework of a trade deal with the U.K… Trump said the U.S. would stop bombing Houthi rebels in Yemen, because they had "capitulated" and agreed to stop attacking cargo ships in the Red Sea…Trump waffled Friday on a proposal to raise taxes on the wealthiest Americans…Trump said he plans to order a cut in US prescription drug costs. While predicting that pharmaceutical prices could drop 30% to 80% in the US, Trump also said prices would likely “rise throughout the World in order to equalize.”…A federal judge has ordered Tufts student Rümeysa Öztürk to be released…Trump said he would name Fox News host Jeanine Pirro to be Washington’s top federal prosecutor on an interim basis…President Trump fired three Democrats on the Consumer Product Safety Commission…The Department of Justice is proposing Google sell two of its advertising products following a judge’s ruling that the tech giant illegally acquired and maintained a monopoly in the ad tech sector…The Supreme Court said Trump's ban on transgender people serving in the military can take effect while lawsuits over the policy work their way through the courts…Trump said he would nominate a MAHA-movement personality, Dr. Casey Means, to be the next surgeon general…The White House says it is "actively looking" into suspending habeas corpus as part of the administration's crackdown on immigration…President Trump fired Carla Hayden, the librarian of Congress…The GOP-led House passed a bill to rename the Gulf of Mexico the Gulf of America (Don’t see 60 votes for this in the Senate)… American cardinal elected Pope…RIP Former Supreme Court Justice David Souter…

THE WEEK AHEAD:   Trump, and multiple Cabinet Secretaries head to the Middle East… Reconciliation markups continue. The Ways and Means Committee and Energy and Commerce Committee will meet at 2 p.m. to begin marking up the tax title. The House Agriculture Committee will meet at 7:30 p.m. to begin marking up its part of the reconciliation package.  The Senate Commerce Committee will meet to consider nominations, including David Fink to be administrator of the Federal Railroad Administration and Robert Gleason to be on the Amtrak board of directors.  DHS Secretary Kristi Noem will be in front of the House Homeland Security Committee to talk about her agency’s budget.  The House Appropriations Committee will have HHS Secretary Robert F. Kennedy Jr., Transportation Secretary Sean Duffy and acting ICE Administrator Todd Lyons.  The Senate Appropriations Committee will have a hearing with EPA Administrator Lee Zeldin. USCP Chief Thomas Manger and Senate Sergeant at Arms Jennifer Hemingway will be in front of Senate Appropriations.  Kennedy will also be in front of the Senate HELP Committee.  The Senate Commerce Committee will have a hearing on the FAA’s reauthorization one year later.  Thursday. Zeldin, VA Secretary Doug Collins, Labor Secretary Lori Chavez DeRemer, Acting CBP Commissioner Pete Flores and FTC Chair Andrew Ferguson will be in front of House Appropriations.

CONFIRMATIONS:  Senate leaders teed up more nominees for floor votes, starting with Monica Crowley to be State Department chief of protocol at 5:30 p.m. Monday.

Others include: Reed Rubinstein to be State’s legal adviser; Michael Rigas to be State’s deputy secretary for Management and Resources; Troy Meink to be Air Force secretary; James Danly to be deputy energy secretary; and Katharine MacGregor to be Interior deputy secretary.

NUMBERS:  Fed holds rates steady… The U.S. trade deficit ballooned 14% to a record $140.5 billion in March as businesses stockpiled goods to get ahead of tariffs…

THE FED:  The Federal Reserve held rates steady Wednesday, citing rising risks of inflation and unemployment. Chair Jerome Powell called the economy “solid” but noted growing uncertainty. Despite pressure from President Trump to cut rates, the Fed urged patience. U.S.-China tariff talks are set to resume in Switzerland this week.

DEBT LIMIT:  Treasury Secretary Scott Bessent warned congressional leaders today that the U.S. must raise the debt limit by mid-July to avoid default, citing a “reasonable probability” that cash and extraordinary measures will run out during the August recess. His letter gives House Republicans a hard deadline to pass their reconciliation package, which includes a $4 trillion debt-limit increase. GOP leaders are advancing key markups next week, with a floor vote planned soon after.

CHINA TRADE:  The U.S. and China agreed to temporarily lower tariffs in a bid to ease tensions and extend trade negotiations by three months, according to a joint statement from Geneva. U.S. tariffs on Chinese imports will drop to 30% by May 14, while China will reduce its levies to 10%. Treasury Secretary Scott Bessent said the sides had “robust” talks on fentanyl and agreed not to pursue economic decoupling. While the White House called it a “trade deal,” key issues remain unresolved. Past efforts have faltered, raising questions about whether this truce will lead to a lasting agreement.

UK TRADE:  President Trump on Thursday announced a preliminary trade deal with the United Kingdom—his first since imposing “Liberation Day” tariffs. The agreement, still being finalized, will expand U.S. market access in the U.K., reduce non-tariff barriers, and streamline customs for American exports. Trump, joined by Vice President Vance and Commerce Secretary Howard Lutnick, called British Prime Minister Keir Starmer to celebrate the deal. Starmer called it a “historic day” that will create jobs and boost trade. Key provisions include increased U.S. exports of beef and ethanol and easier U.K. access to luxury cars. A separate $10 billion Boeing purchase is also included.

CANADA: President Trump and Canadian Prime Minister Mark Carney shared a friendly but pointed exchange in the Oval Office Tuesday, despite ongoing tensions over tariffs and Trump’s repeated quips about annexing Canada. Trump joked he helped Carney’s political comeback by provoking trade fears, while Carney firmly responded, “Canada is not for sale.” Trump reiterated his 51st-state idea, saying “never say never.” On trade, Trump downplayed the USMCA as a “transitional deal,” while Carney called it a foundation for tariff talks. Trump also announced a pause in planned strikes against the Houthis and teased a major announcement ahead of his Middle East trip.

RECONCILIATION:  House Republicans face a critical week as three key committees—Ways and Means, Energy and Commerce, and Agriculture—prepare to mark up their pieces of President Trump’s “One Big Beautiful Bill.” Tax writers are under pressure, with GOP lawmakers clashing over the SALT cap, clean energy credits, and Trump’s unfulfilled campaign tax promises. The Energy and Commerce draft includes Medicaid work requirements but avoids controversial caps and FMAP cuts (unless you service the undocumented). Conservatives are demanding deeper savings, while the CBO estimates the bill could leave 13.7 million more Americans uninsured. The Agriculture text remains unreleased, as Speaker Johnson targets passage before Memorial Day.

MEDICAID:  Energy and Commerce Chair Brett Guthrie late Sunday unveiled the slice of the budget reconciliation bill that his committee is set to take up Tuesday. It appears to be an attempt at striking a compromise between GOP moderates and conservative hardliners who have been at odds over how much to cut Medicaid to help pay for the bill’s latest round of Trump tax cuts.  But it could still lead to millions losing Medicaid coverage and force states to make difficult decisions. Guthrie is declining to cap federal funding to states that have expanded Medicaid, a proposal that moderates were wary of. But the plan would limit taxes that states levy on hospitals and providers to help finance their Medicaid programs, which could lead states to cut benefits. State officials are poised to fight back.

TAXES:  Ways and Means Chair Jason Smith is expected to unveil the full details of his tax package today, ahead of Tuesday’s 2 p.m. markup. The current draft, circulated Friday, carries an estimated $5 trillion price tag—exceeding the $4.5 trillion limit set in the GOP budget framework—raising speculation about potential tax increases. Key Trump 2.0 proposals, including eliminating taxes on tips and overtime, remain unaddressed. SALT also remains unresolved. SALT-focused Republicans will meet with Smith and Speaker Mike Johnson in search of a deal.

DRUG PRICING:  Trump is set to sign an executive order today that could limit Medicare drug costs by tying them to the lower prices other nations pay. It comes after Hill Republicans balked at a similar proposal for Medicaid as an alternative to steep cuts to the program in their megabill.  The pharmaceutical industry has slammed the proposals. The new executive order could cost companies billions of dollars.  “This Foreign First Pricing scheme is a bad deal for American patients,” PhRMA CEO Stephen Ubl said in a statement about Trump’s impending order. “It jeopardizes the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines.”

WHAT’S GOING ON AT NEWARK?:  Delays and cancellations continue at Newark Liberty Airport after an April 28 communications outage left controllers unable to see or contact planes. The disruption triggered hundreds of delays, dozens of diversions, and has led some air traffic controllers to take stress-related leave. United Airlines is cutting 35 daily flights, citing staffing and system failures. CEO Scott Kirby warned Newark can't handle current traffic levels without adequate personnel and said the airline has pushed for limits tied to airport capacity. The FAA acknowledged outdated systems and staffing shortages, noting modernization may take years.  Transportation Secretary Sean Duffy and President Trump are advancing a proposal to overhaul air traffic control, recruit new staff, and extend current controller tenure. A $15 billion modernization proposal is under review in Congress. The FAA says repairs to Newark’s primary and backup communications lines are complete, but the incident exposed the fragility of the nation’s air traffic infrastructure.

SOME UNSOLICITED ADVICE FROM ONE WHO’S BEEN THERE:  Former Rep. Bob Ney, who served time for corruption, offers advice to George Santos as he prepares for prison: Stay low-key, be real, and give back. Inmates may see former lawmakers as privileged, so humility is essential. Use political skills—listening, de-escalation, and humor—but don’t expect special treatment. Focus on self-help, stay busy, and avoid embellishments. Volunteer to tutor, mentor, or assist with GED programs. “You’re one of them now,” Ney says. Santos should prepare mentally, avoid isolation, and remember that surviving Congress requires similar resilience: “If you can survive the Hill, you can survive prison.”